Q4 2019 Earnings Call
Please standby.
Good day, everyone and welcome to the Manitowoc fourth quarter and full year 2019 earnings Conference call today's call is being recorded.
That.
For opening remarks, and introductions I would like to turn the call a retired Warner Vice President marketing in Investor Relations. Please go ahead.
Thank you and good morning, everyone and welcome to the Manitowoc Conference call to review the company's fourth quarter 2019 performance.
2020 full year business outlook.
The outlined last evening's press.
Really.
With me today are very Pennypacker, President and Chief Executive Officer, and David Anthony 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 reserve time for questions.
She is an answer is after our prepared remarks.
I'd like to request that you limit your questions to one at a follow up and returned to the Q to ensure everyone has an opportunity to ask their questions.
Please turn to slide two.
Before we begin please note our safe Harbor statement in the material provided for this call.
During today's call.
We're looking statements as defined in the private security Analytics Litigation Reform Act.
<unk> fiber based.
On the Companys current assessment of its market and other factors that affect its business. However, actual results could differ materially from any implied or actually projections due to one or more of the factors among others describing the.
Any latest SBC styling.
The Manitowoc company does not undertake any obligation to update or revise any forward looking statement, whether the result of new information future events or other circumstances and with that I'll now turn the call to bear.
Thanks, I had a welcome everyone.
20, Nike was another year or so.
<unk> financial performance marketing and excellent year of margin expansion in cash generation.
We ended the year with approximately 200 million of cash on hand, and that's a result of good operational execution highlighted by a 91 million dollar second half inventory reduction which exceeded our.
Our initial target of 80 million.
On essentially flat year over year revenue, we delivered over $40 million of additional adjusted EBITDA.
David will provide more color on the financials for the year I like to bring your attention to the adjusted EBITDA percentage for the year.
It was eight and half percent.
This represented a two.
20 basis point improvement year over year and is evidence that 10% is not too far off if market conditions cooperate.
A great tribute to our ability to drive incremental improvements in all that we do.
Our financial performance was result of almost 5000 employees working together as a.
And making day to day improvements to the business.
I'd like to take a few minutes to highlight some of the most impactful accomplishments in here.
I want accomplishes the I'm most proud of is our 2019 safety results.
Our most important goal is to create a zero incident workplace our safety Measurables has always.
Even better than the industry average, but that's not good enough. We continue to strive for improvement in our workplaces store hazard reduction program called Slam, which stands for stop look assess manage our slant activity increased threefold in 2019 to over 18000 assessments globally.
You could find slam.
Every value stream throughout all of our factories.
While we're not a zero injuries, yet we are absolutely determined to achieve this school.
Last March we completed the recapitalization of our debt structure, which greatly reduced our borrowing costs and now allow us to deploy our capital to pursue multiple exciting new options.
Oh.
The flexibility to pursue acquisition targets that provides the ability to continue to expand our margins, while providing stable recurring revenue streams.
While we [laughter], while we haven't while we have been talking about potential acquisitions for a few quarters, we have a good pipeline of opportunities.
I will remain true to our discipline criteria when evaluating each opportunity ensuring accretive earnings in year, one of any acquisition.
The 29 team we continued our investments in new products by introducing 10, new models all of which were designed utilizing the voice of customer and brought to market much quicker than in it.
The past.
Six these models run down at the bomb a trade show last April.
<unk> response to our new models has been outstanding as our cranes are delivering the quality the customers expect from us and providing superior returns on their rigs best invested capital.
Our innovation pipeline remains robust and we're excited to introduce six new.
But the Con Expo trade show in Las Vegas.
I cannot share in more detail on these cranes, yet, but I'm confident that these new models will contribute to the continued market share expansion and further add to our recent successes.
[laughter] voice of customer process was vital in achieving another milestone in our growth strategy.
Well, the first time and minutes walks history, a new tower Crane was designed and developed by our China team specifically for the Asia Pac market.
Not only with the six month developed the time remarkable and much shorter than what was achieved in the past. The Crane was also met with excellent customer exception.
With demand.
Meeting our expectations.
Additionally, we made great progress the adaptation of the Manitowoc way by continuing to improve productivity in our operations eliminate waste and accelerate velocity.
Last month I visited our teams at aftermarket or aftermarket center in the old friends are.
Tower Crane factory Molony threats and are all terrain Crane factory in one time, Germany.
It was obvious during my Pat this visit and does locations have implemented focused actions. They touch safety by that's TPN Mad at one piece Htwo.
My biggest take away however.
Shifting to mindset relative to the Manitowoc way.
The work culture is used in defining business culture is a set of share attitudes values goals, but practices, the characterize and institutional organization.
The reflecting on my plant visits and others I remain convinced that the culture, we set out to achieve with the guiding principles with.
Manitowoc way continues to transform our organization.
My words don't define our culture no one can argue that our results do.
Late thinking it's part of our operational DNA.
I wanted to spend a minute talking about our multi purpose aftermarket facility in the old friends.
Yeah that's.
Rockies Mercer Street facilities into one in order to improve velocity and efficiency and serving our mobile and tower crane customers through parts availability training and surface service.
The 2019, our parts inventory fill rates reached record levels in excess of 90%.
Our order lines are fulfilled same.
Dave from available stock and we shipped over 225000 line items last year.
Barks order to shipment velocity is continuously improving and our customers are benefiting benefiting from this consolidation.
The facility has attracted some of the high skilled training create experts in the world to become trainers.
And grow minutes walks global service network capability.
Field service technicians gain a lot of value from the centralization.
With both the skills from the training center and the parts distribution center at their disposal.
We're already working on how we can automate the use of our crane scar dags doing that.
To add our technique to at eight our technicians when they are dispatched to a crane, which each service ultimately improving our customers experience with a great.
Great job aftermarket team.
I'm proud of what we've accomplished in 2018 as well as the rest of our value streams globally.
Which helped drive the.
Actual results the David will discuss snacks David.
Thanks, Barry and good morning, everyone, let's move to slide three.
Our fourth quarter orders totaled $472 million, a decrease of 3% compared to $486 million orders last year on a currency neutral basis Q4 orders.
Were down $9 billion for 2%.
Q4 winter campaign in our European powers business drove an increase in year over year regional waters, but this increase was more than offset by declines in the Americas region.
Our 2019, ending backlog of 475 million was down 29% over the prior year once <unk>.
8% on a currency neutral basis. The decrease in backlog was mainly due to a decline in the Americas region.
Net sales in the fourth quarter 463 million were slightly below our expectations and decreased 52 million or 10% from a year ago with each of our three regions incurring a year over year decline.
So.
Sales were unfavorably impacted by approximately 1% from changes in foreign currency exchange rates.
Our adjusted EBITDA for the fourth quarter was $31 million essentially flat year over year.
The decrease in gross profit dollars associated with the sales decline was completely offset by reduced engineering selling and administrative expenses.
As a percentage of sales adjusted EBITDA margin improved to 6.7% of sales 70 basis points over the prior year and marketing our 11th consecutive quarter of year over year EBITDA margin improvement.
During the fourth quarter, we incurred approximately $2 million of restructuring expenses predominantly related to European severance costs.
Our diluted earnings per share in the quarter was 26 cents on an adjusted basis diluted earnings per share in crude 19 cents from the prior year to 35 cents per diluted share.
Lower interest expense and tax expense, coupled with favorable currency transactions for the main contributors to the year over year increase in adjusted yes.
Moving to liquidity, our adjusted operating cash flow in the quarter was an outstanding as we generated $145 million and improvement of $109 million over the prior year. This was driven by the significant reduction in inventory along with strong cash collections, our yearend cash balance improved by $59 billion to 100.
The $9 million with no borrowings outstanding on our either go.
Now I'd like to recap the results for the full year 2019 was another successful year of operational execution and continued margin expansion in spite of our year over year to order decline.
Sales for the year totaled 1.834 billion slightly.
Below the prior year net sales for the year were negatively affected by $44 million due to unfavorable changes in foreign currency exchange rates adjusting for foreign exchange rates net sales would have grown $31 million were 2%.
As various highlighted the importance of our aftermarket business and its previous me remarks are both the.
These are recurring revenue stream during 2019, our aftermarket revenue grew by 2% on a currency neutral basis with overall margins improving as a percentage of total sales or aftermarket business was over 18% during the quarter. This was a key contributor to our excellent 2019 financial performance.
Our adjusted.
EBITDA improved $41 million were 35% over the prior year on essentially flat revenue.
In addition, our adjusted EBITDA margin improved by 220 basis points to 8.5% of sales.
Disciplined pricing actions better manufacturing performance and lower engineering, selling and administrative expenses contributed to the year over year.
The increase.
Our full year 2019, adjusted net income from continuing operations improved by $45 million.
Adjusted diluted earning per share were one dollar at 89 cents an improvement of $1.25 cents over 2018.
Our share repurchases during the year favorably impacted diluted earnings per.
For share by approximately one cents.
Full year adjusted operating cash flows were $148 million compared to use a $3 million in 2018.
In both cases after adjusting for the elimination of our accounts receivable securitization program, which occurred in 2019.
This resulted in a 2019 conversion rate up two.
Under 20% to adjusted net income.
As of December 31st our total liquidity was $445 million as compared to $276 million as of December 31, 2018.
Turning to slide four we're now providing our 220 2020 full year guidance as follows.
Revenue of approximately.
The 1.6 billion to 1.7 billion.
Adjusted EBITDA of approximately $85 million to $115 million.
Depreciation expense of approximately $35 million to $37 million.
Restructuring expense of approximately $4 million to $6 million.
Interest expense of approximately 28 million to $30 million.
Income tax expense of approximately $11 million to $15 million, excluding discrete items and capital expenditures approximately $30 million with that I'll now turn to pull back to Barry.
Thank you David.
We all know the crane industry as a cyclical one influenced by numerous factors looking at 2020, we.
He continued uncertainty and global economic conditions, the health crisis in China get geopolitical friction in developing regions of the world the fallout from Brexit and election in the U.S. all contribute to an air of conservatism in demand for our products.
In North America were not alone and facing what.
As to be a softening of construction in oil and gas end market demand.
We are carefully monitoring retail activity and expect conexpo to be the barometer of market conditions for 2020 in North America.
In Europe.
For order activity improved year over year, we will continue to monitor market conditions.
Actively manage our build schedules as we always have.
In EMEA region, we continue to be encouraged with demand levels, particularly in Australia, but the possibility of further corona virus spread in China may lead to a longer than expected plant shutdown, which complicates our outlook.
Middle East demand continues to lag behind historical levels, but it's starting to show signs of life here in the recent past.
We're not sitting idle, but rather a proactively following our strategic roadmap to attain our long term goals.
By leveraging our flexible cost structure and focusing on the.
Adams within our control, we're ready to respond quickly to changes in demand by flexing our production schedules as circumstances warrant.
Part of managing a cyclical businesses the faced the brutal facts our guidance reflects our current thinking of market conditions globally, which result, lower revenue expectations for 2020.
Just like you, we don't like it but our history shows we proactively deal with it and we will.
We will play than we are dealt and by continuing to focus on our customer shareholders and employees and by targeting our investments to the ones that yield the highest returns.
We will position Manitowoc positively when market conditions improve.
With that.
Operator, please open up the line for questions.
Yes, Sir Thank you and if you might ask a question is signal by pressing star one on your telephone keypad. If you are using it speakerphone. Please make sure. Your mute function is turned off two layers to adults rates or any equipment.
And that is star one if he would like to ask a question.
Well take our first question from Jamie Cook with credit Suisse.
Hi, Good morning, I guess, just my first question just on that that the guidance I think with that midpoint of the sales decline. It just seems sort of decrementals and 30% range or so so can you just walk me through.
Some of your assumptions on bad engineering, selling and administrative line on on the gross margin line I. Just was helpful. There would be a little more opportunity to hold up better decremental or maybe just we've we've got too much.
So I guess first there and then I guess you know my second question.
How you're sort of thinking about free cash.
For 2020, thank you.
Well, Jamie there's always opportunity for us within our.
S DNA for reductions.
We are giving you what we think is our.
Best look currently.
But rest assured that with.
The level of best DNA, we have in the business.
We certainly are not finished.
Pulling the levers that we need the pool.
And we will as market conditions dictate.
Alex this up or down depending upon.
Upon what we need to accomplish for our customers in the future with regard to the detriment I'll turn it over to David and free cash flow Yeah. Good morning, Jamie. So just to remind you. We previously communicated that expectation of between 25 and 30% flow through to EBITDA in revenue decreases and if you recall in the second quarter of 2000.
18, we recognize the 9 million dollar favorable legal settlement. So after taking this into consideration are and using the midpoint of our guidance, we would reflect the flow through within that range and I believe it comes to about 26%, whereas excluding it would give you the decrement at just over 30%.
And then with regard to your second question is on free cash flow.
We're anticipating between 30 and $60 million or free cash flow in 2020.
Thank you placed in our current revenue assumptions.
Next question will come from negative dobry with Baird.
Thank you good morning, everyone.
I wanted to ask a question about guidance as well on.
Revenue side so so.
The way I'm kind of looking at it if I look at 2019 orders.
You were at about $1.4 billion.
Midpoint of your 2020.
<unk> is 1.65 billion you did that you're essentially saying that demand is going to be flattish versus 2019 and 2020.
Or in your own assumptions are you baking in some level of backlog erosion as to your progress.
Market conditions.
This is pretty much globally, we believe will remain constant for the year.
But we do believe will be eating into backlog.
So backlog would be modestly lower.
I guess I'm, just I'm, just trying to understand exactly how you're thinking about the man just purely.
In terms of orders for 2020 versus 19 and from what you're saying you're expecting quarters, maybe modestly lower.
Modestly lower to the flat.
Modest we like that because I said in my prepared remarks, I mean I.
A substantial portion.
Of what we will be able to accomplish this year will be dependent upon con Expo.
Conexpo historically has been an order taking show.
We know.
From past.
Experience as well as talking to some of the customers that we talk to on a regular basis.
That they will be coming with their purchase orders in hand.
We don't expect that purchase order at hand to be much stronger than what we exhibited last year.
We certainly do not expect it to be down dramatically.
Okay very helpful and then my follow up.
In terms of how you're thinking about your own production came through the year given your topline outlook.
Anything to call out in terms of the first half second half or first quarter specifically thank you.
We believe our first half.
Well.
Let's back up and say the full year will.
Follow pretty much what we have seen from.
Normal seasonality over the course, the last four years.
Alright, Thank you Barry.
You're welcome.
Well take our next question from Stephen Volkmann with Jefferies.
Hi, Good morning, guys actually I'd like to Kinda go back to Jamie's question, if we could and I'm, Dave Thanks for the.
The view on decremental margins I guess many of us and maybe this is.
Our fault, but we sort of assume that base case, 25% to 30% decremental, but then that you would have the opportunity to.
Add backs, various restructuring and or lean benefits on top of that and obviously you did that in 2019 and had to had agreed margin performance and so I guess the question.
As you know or are you running out of low hanging fruit on the margin side and now you're just sort of after whim of the market to some extent or are there still significant internal improvements that you can make going forward and if so.
Why the conservative outlook on margins.
Well.
To be honest with you the conservative outlook on margins is because we're a conservative management team.
But for me to sit here and say that I felt long term and I still believe long term, we can get 10% operating margins in EBITDA margins in this business.
To say that I would.
The leave that we only need market to do that is absurd.
Of course, as I said I visited three of our largest facilities in Europe.
In the month of January and there is not one single facility that I went in where I would say Oh boy, we are out of opportunity for margin expansion.
So.
Manitowoc way, the culture is alive and well.
But when we take that revenue reduction that we have this year coupled with the fact that market conditions are pretty much flat on a global basis, which doesn't lead you to the opportunity we believe.
The lift on price.
Maybe have to give some price back we have to offset that with the improvements in the plant.
Therefore, that's why I would say that by no means will we ever sit here and say that were out of opportunities for margin expansion from our plants standpoint, David you can pick up.
Right, Yeah, so see a sneak thanks very much for your question I think when we look at where we are right now in the plan and we look at the phasing as our backlog and where we are right now I think that generally reflects our approach that the business continues to operate on a a on a flat bait flat to slightly down.
Order backlog and depending on how that takes out will will result in actions later on this year most likely so but at this point in time structurally the company is as is and this isn't it contemplates where order intake will be relative to the the full year.
Is there anything going on in terms of.
Mix that might be a headwind for margin then in 2020 <unk>. Yeah. We have recently, yeah, we do have product mix.
Issues that are within the within the product family.
So when I look at where our higher margin products are we probably have a decline for even within product categories higher margin products being.
Substituted for a little bit lower margin products within that product family. So mix does plane issue within this as well.
Okay. Thank you guys.
Your next question comes from an agreement with JP Morgan.
And and you maybe how many.
Oh, sorry, Im you've done this is Tom service on site.
Good morning.
Could you maybe just provide some more color on how Q4 has trended in the Americas bike products, particularly if you saw any fed its variation in line class markets.
Yeah. So I mean, they you know we don't.
Typically give out by product line details, but you know of in my prepared remarks I did indicate that we did have an increase in orders in our Europe region on a year over year basis that were more than offset declines in the Americas.
And that's why Barry indicated that you know waiting to see how con Expo comes out because you know we're not quite sure.
How much of the orders are being.
Put on the shelf until Con Expo comes about so orders were down in Americas, and they were up in Europe.
Okay, and just a follow up on collects Buddy.
King the potential order patterns around the side can you clarify the expected show Reggie costs in Q1.
It's around 3 million.
Yes, thank you very much.
You're welcome My next question comes from Jerry Revich with Goldman Sachs.
Hi, good morning.
They've been able to deliver new products.
Many factors margin skin can you just talked about out of the products that you're going to be delivering perclot IDE study.
Later on this year, what the embedded.
<unk> Morgan.
Setting up on those products.
Production.
Well.
Not really because we don't really provide that but what I would say is that we don't when we introduce a new crane, there's so much so much.
Overhead associated with the.
Cost of prototypes in particular to cast those screens that we really don't expect.
Back that in the first six to nine months to get margin expansion as a result of the new product introduction and maybe David could provide a little more color on that but really what we're what we're doing as we the way we account for it is that those prototype cost need to be absorbed from the revenue and then after.
After that the six to nine month period is when we truly see margin expansion coming back to us.
And it better yeah, just to add on to that Jerry. So what ends up happening is that we do build prototype cranes that then go into our or inventory that we use for all testing for for quite an extended period of time in those cranes are.
Or probably at a higher cost levels associated because of the time requirements and everything and then once we have a a sales plan device that will be then do is we then go out sourcing and we end up with lower sourcing cost for a lot of the material used within that range. So it's a it's a lower margin on the onset and that it the margins get better as time goes R.
And then where would you say better that I'm, assuming that need better but the product line that's been deployed.
Correct.
And then you go to control that's related costs nicely.
Yeah.
Given that sales outlook or want to.
Do you anticipate being able to indeed, that's junaid savings.
Cost of Keybanc.
On the topline decline or did I get published.
We're going to continue to target.
DNA reductions.
As I said, we're still in the process of transforming.
During the portfolio and we have targeted investments that need to take place, particularly.
In Europe with regards to emissions.
So that will be almost a fixed portion of SGN a for the year.
Which will not allow us to get a substantial reduction out.
To that.
But rest assured that every dollar of SGN a is under constant scrutiny and we are far from.
The ability to not pull levers.
And Jerry just to add onto what Barry said just be cognizant of the fact that in that second quarter Sq Nay was favorably impacted by approximately $9 million.
Towers.
Yes. Thank you.
Your next question comes from Mike Shlisky must adopt train company.
Hey, good morning, guys.
Your question you had mentioned you have to maybe give back some price this year and.
Cases, just wonder if you can give us a sense as to what part of the world that can be happening and I'm wondering.
Ladies and and other cost Oh, gosh, I got some better price.
Well, we're always looking at the opportunity to increase price, but when you when you see the things that some of our company.
Fishing are doing it appeared to be irrational.
We have to you know or be able to.
Participated market areas that we targeted for share gains so.
I guess, that's a a winded way of saying that when we believe the.
Revenue in the U.S. is going to be down as much as it is according to our current forecast.
We had seen for us the thing that we would not have to give some price.
But we will we will fight a as hard as we can to keep what we've done in the market and in some cases, we've you know.
Walked away from.
Some business already because of a crazy pricing or that happens from some of our competition. So.
It's not a strategy.
The lead me to give back price.
But strategically when we need to we will.
Sure. Thanks, and my other question in my follow up things I was kind of glad to see that you had.
Aftermarket.
And.
<unk> constant currency basis that was great to see.
Because there are opportunities for further growth here in 2020, I can't resist cost goes through.
Initiatives and strategy.
Yeah.
Absolutely as I tried to.
Telegraph, a little bit in our prepared remarks.
In Europe, we are trying to utilize technology that we have already built into the cranes with grain star Diaghilev diagnostic tool with.
Our service men, who are now all co located in Leone, France.
So that they can actually when a call comes in from a customer.
Our our Phil people that are are taking the order for a service can tie into the crane see with the.
Issue is give the.
Technician the parts of the he needs to fix the crane and dispatching accordingly so.
We are absolutely resolutes on focusing on the aftermarket and as I've stated in the past its a substantial portion.
Uh huh.
What our acquisition strategy is to make sure that everything we do inorganically is aimed at increasing our recurring revenue percentage of sales.
But just to clarify Oh, sorry, buying a little less new.
They choose to use their older cranes that there are opportunities for additional just.
Parts revenue stream.
And this coming year straight yes, absolutely.
Absolutely. Thanks, Garen. Thanks, so much.
You're welcome.
Well now take our next question from Seth Weber with RBC.
Capital markets.
Hey, good morning, guys.
Oh good morning.
Question, I guess, you know kind of looking for about $5 million of restructuring expense in 2020, I, you know, which will be down from 2019.
What are you looking for.
It could get a more aggressive with some restructuring and some additional.
Oh, Yeah facility actions and what would it take I guess, where you kind of take that to another level at this point given.
Currently pretty a pretty muted market conditions. Thanks.
Okay. So in.
America, we have one facility right. So I mean to say that we're going to do a facility rationalization in North America. Yeah. I think is just you know.
Not in the cards you heard me also say that in my prepared remarks that our European order rate in the quarter was up so the.
I think that we're in a situation, where we're going to be able to do up quicker plant rationalization in Europe with our order rates up it's also not in the cards. So that leaves our operation in China.
And if anything we will be expanding our presence in China. So there won't be any restructuring.
During their so you know where we know of whereas a 5 million is going to go anything beyond that we'll continue to update you as the year goes on.
Okay fair enough.
Secondly, just follow up question the product warranty expenses moving higher.
Is there anything.
Right.
Of note there that you'd call already some say as a particular products through a particular site pits.
Getting some challenges thanks.
Oh, you know I would just say you know, it's you're right <unk> product warranty is up a bit on a year over year basis, it's predominantly.
You know in Europe, where we're seeing some of these things up but we don't typically give you specifics on that we took a conservative approach as a as to the product warranties and Ah you know, we believe that somebody some of the changes that we're going to be making and some of the some of the things that we're going to be rolling out the field will will help that so.
I would say, it's just you know teething teething issues on new products and and normal normal from a normal standpoint, but nothing nothing extraordinary so nothing structurally that I would say is the driver.
Okay.
Hey, just to go back to Mikes question.
Pricing I think next question.
That's a function of other competitors getting aggressive because there's too much inventory.
Mr inventory in how would you characterize as an industry inventory I guess, thanks, Yeah, I mean, I and any U.S., there's a lot of industry inventory I mean, we know a we know where our competitors.
Store there.
Story, and we do drive ice and there's a lot of it there.
Your dry by our factories, you don't see a lot of inventory and shady Grove inventory that you see is our dealer stock because we basically are not producing inventory.
So the industry itself in North America does.
Yes.
I think a little bit.
Too much inventory.
Which is why we have taken the view that we've taken.
In North America for this year.
There's a lot of dealer inventory.
Okay into North America, Kevin.
Okay. Thank you very much.
You're welcome.
Well now take our next question from Stanley Elliott with Stifel.
Hi, Good morning, guys. Thank you for a fit me and [noise].
A quick question on the products, you're gonna luxury or show at Conexpo, how quickly can you ship those products.
Is that going to be later 2020 that then curious to what extent you had a prototype being within that is impacting kind of the 200 basis point delta on the margins.
The some of the products will be available for sale immediately and some of the products might one of the.
Thanks, Mike go as late as a the beginning of 2021 for shipments.
Perfect and then they'd we've talked about the kind of the 30 to 60 million to free cash flow kind of what our expectations for inventory than that you've got obviously get the sales decline, but then I would imagine there's going to be some level of build just.
Just to support all of the 60 launches so how do we think about ending inventory into 2020.
Yeah. So I had great questions Stanley I think generally speaking.
You know, we feel we have opportunities in our inventory and that surely baked into our guidance of 30 to 60 million into free cash flow and it's one of the primary driver.
Divers of it.
Perfect guys. Thanks, very much special it.
Thank you.
In that same thing the remainder Dennis Star one if you really have can't question.
Well pause for just a moment.
Well now take any follow up at some Mig dobre with Baird.
Hey, guys. Thanks for taking a follow up I appreciate the color on a new equipment pricing.
But I also know you know quite a bit about used crane prices is there.
Any color that you can give us there enemies. If you can also found that geography I'd be curious on that as well. Thanks.
We track most of our the used inventory a in the U.S.
We don't own very much of it any longer we.
Good do a good job in my opinion of.
With dating most of that.
There is a it's almost a pause if you will.
Hi Inn used equipment.
Sales outside of the U.S.
Some of that has to do with the aggressive nature of the Chinese and about road countries.
Now a substantial portion of the used cranes that are used to lead the U.S. or went to regions, where the Chinese have no.
Infiltrated with their.
Lower priced cranes.
However, we still believe that as we see South America, particularly Brazil.
Again its recovery.
You know we believe there is a market for the.
The cranes that or are used here in the U.S. and I believe that we will.
We continue to see opportunities.
And I'm, sorry, if I, Miss that's but as far as U.S.
Grain prices.
Stable.
Great appreciate it thank you.
You're welcome.
Yeah. That's all that aren't question answer session for today I would now let's turn the conference back over to Mr. Warner for any additional or closing remarks.
Thank you before we conclude today's call. Please note that a replay of our fourth quarter 2019 conference call will be available later this morning by accessing the Investor Relations section of our web site at.
W.W. that Manitowoc Dot com. Thank you everyone for joining us today and for your continued interest in the math what company. We look forward to speaking with you again next quarter have a good day everyone.
Once again that does conclude today's presentation. We thank you all for your participation you may now disconnect.
Right.
[music].