Q2 2020 Manitowoc Company Inc Earnings Call
[music].
Please standby.
Okay.
Good day, everyone and welcome everyone Manitowoc second quarter 2020, <unk> earnings Conference call. Today's call is being recorded at this time for opening remarks, and introduction I would like to turn the call over to ion Warner Vice President marketing and Investor Relations. Please go ahead.
Good morning, everyone and welcome to the Manitowoc Conference call to review the company's second quarter 2020 financial guidance performance as outlined in last evening's press release participating on the call today, our Aaron Ravenscroft, our new President and Chief Executive Officer, and David Antolik, 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 and answers after our prepared remarks.
I would like to request that you limit your questions to one and a follow up and returned to the Q to ensure everyone has an opportunity to ask their questions.
Please turn to slide two 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 many implied or extra projections.
Due to one or more of the factors among others described in the Companys latest SEC filings.
The Manitowoc company does not undertake any obligation to update or revise any forward looking state.
Whether the result of new information future events or other circumstances.
And with that I will now turn the call over to you Aaron. Thank you very much ion and good morning, everyone.
Before we discuss our second quarter results I would like to make a few comments regarding last night CEO announcement. It is a great honored to be named the President and Chief Executive Officer Manitowoc cranes.
And I would like to thank Ken Krieger and the board of directors for the opportunity to leave the company into the future.
Globally recognized brands in some of the best service and the lifting industry. It has no coincidence. The Manitowoc has become a manufacturing leaner of cranes and lifting solutions. While this business has certainly been pace with unprecedented global crisis I'm incredibly proud of what our team has achieved as it has continued to deliver parts and services to our customers in a.
Time on essentially.
We have a strong foundation and a great team in place and I see tremendous opportunities ahead for this company.
As an introduction I have served as men at Twox executive Vice President of cranes, overseeing mobile and tower cranes globally for the past four years in this role my focus has been on improving our product quality customer service and enhancing operational efficiency and profitability.
While I certainly found my home at Manitowoc earlier in my career I worked in a variety of operational and sales and marketing roles and the global industrial and engineered equipment products space.
I also want to recognize Barry pennypacker for his years of service to Manitowoc and acknowledge the foundation that he has built under his stewardship that company has expanded the breadth of its product portfolio and significantly enhanced its profitability.
Barry was the architect of the Manitowoc way and he was a great advocate for the potential of the company I.
I look forward to continuing to benefit from various guidance and his advisory role through the end of year.
While I certainly have big shoes to fill I will be focused on continuing to build and grow the company. There are certainly some things that will not change under my leadership.
Namely and commitment to and a belief in the Manitowoc way a relentless focus on delivering for our customers and a commitment to providing superior returns for our shareholders over the long term.
Look forward to continuing to work closely with our experienced leadership team. The board on all of our team members to advance our strategic priorities and Usher in a new phase of growth and development.
With that please turn to slide three.
Moving to the second quarter I'd like to start by thanking my team for their outstanding effort and managing through the significant headwinds created by the Coven 19 pandemic.
The team did a great job of ensuring both the business continuity and the health and safety of our team while implementing the various local regulations across our global organization.
With these efforts and the prior work to rightsize the business, we delivered positive EBITDA during the quarter, which exceeded our expectations.
While we executed well in the first half of 2020, we continue to plan cautiously for the second half of the year.
Given the uncertain macro environment.
Dynamics for the quarter were largely a continuation of what we outlined in early may.
April appeared to be the trough with modest improvements as we move through May and June.
However, we are currently in the midst of one of the slowest seasonal periods in the crane business.
In the Americas, although many existing projects are resuming work there continues to be a fair amount of uncertainty among customers regarding new projects.
Demand remained soft, particularly in the energy and commercial construction end markets.
Dealer stocking levels remain elevated fleet utilization rates are down and used crane values have weakened.
As a reminder, we've historically experienced slower purchasing decisions during a us presidential election cycle and expect this one to be no different.
In Europe construction sites are working aggressively to recover last time on projects was shortened construction season.
We feel good about the short term utilization rates, but there is less confidence as we look into next year's construction season, and we expect a slower than normal order intake for our European tower Winter campaign in the second half.
Turning to EMEA, there are lots of puts and takes.
In the Middle East, we have seen a nice pickup and multi train deals. However, the fundamentals of the construction business remains weak and we feel this is more of an anomaly than a trend.
In Asia, It's a tale of two have China, and South Korea are experiencing a V shaped recovery, while the rest of Asia hasn't begun to bounce back yet.
What's the timeline for global economic recovery remains unclear and given the challenging operating environment. We're confident that the strengths that are the core to manage Fox business.
That is our people our products our brands our network and our operational excellence.
Position us for success when demand returns.
Despite these difficult market conditions, our liquidity remained strong with $375 million at the end of the second quarter.
As we've previously commented the changes we made to our capital structure last year on his better positioned us to manage the cyclical nature of the crane demand.
Looking at the second half of 2020, while we're confident we can manage through these turbulent times. We just don't have clear enough picture to reinstate 2020 guidance at this time.
And with that I will turn the call over to Dave to provide further details on our financial results Dave.
Thanks, Aaron and good morning, everyone, let's move to slide four.
As Aaron mentioned, the Cobot 19 pandemic had a significant impact on our financial results in key metrics in the second quarter.
Our second quarter orders totaled $238 million, a decrease of 36% compared to $372 million of orders last year.
The year over year decline was driven by softer demand in the Americas in Europe segments unfavorable changes in foreign currency exchange rates negatively impacted our year over year orders by approximately $2 million.
During the quarter, we did not have any material order cancellations.
Q2, ending backlog of $431 million was down 23% over the prior year.
The decrease in backlog was mainly due to the decline in orders in the Americas and Europe segments. This decrease was partly partially offset by approximately $50 million of cold in 19 related shipment delays in the Europe segment.
Net sales in the second quarter of $328 million decreased $176 million at 35% from a year ago with each of our three segments reporting a year over year decline.
This decrease was primarily attributable to lower shipments of cranes in the Americas region, mainly from entering the quarter with a lower shippable backlog, coupled with the aforementioned pandemic related shipment delays in Europe.
Net sales were unfavorably impacted by approximately 1% from changes in foreign currency exchange rates.
Our gross profit decreased $47 million year over year, primarily driven by lower volume of crane shipments across all segments and plant closures. During April gross profit percentage decreased to 15% from 19% in the same period of 2019.
Second quarter engineering, selling and administrative expenses, a $50 million decreased by approximately $1 million year over year.
The decrease was primarily due to lower short term incentive compensation costs and reduced discretionary spending.
This was partially offset by a 9 million dollar benefit recorded in 2019 related to the settlement of a legal matter.
As a result second quarter, adjusted EBITDA amounted to $8 million or 2% of net sales, which exceeded our expectations our flow through on the year over year sales decline was approximately 26%, reflecting good performance in managing our costs.
Our GAAP diluted earnings per share in the quarter was a loss of 37 cents versus income of $1.29 cents in the prior year.
On an adjusted basis diluted earnings per share were a loss of 47 cents compared to income of 94 cents in the comparable period. The primary driver of the lower adjusted diluted earnings per share was the reduced year over year sales volume.
Second quarter operating cash flows was the use of $20 million our use of cash in the quarter was primarily driven by second quarter net loss, while we were able to reduce inventory by approximately $15 million loony quarter inventory levels remain at seasonally elevated levels. We are managing our working capital current demand levels and expect the significant reduction by year end.
Second quarter total liquidity was effectively unchanged compared to the prior quarter at $375 million as of June Thirtyth.
And about $35 million versus a year ago.
As Aaron mentioned, our liquidity remains sufficient to meet our obligations for the foreseeable future. Additionally, we do not have any significant debt maturities until 2026 and as stated in previous calls our 2019 debt agreement simplified and east Covenant compliance affording us greater flexibility to access our liquidity.
While we did borrow $50 million on our ABL facility in the quarter as a preemptive action to preserve liquidity and future cash flows we anticipate repaying that by the end of the third quarter with that I'll now turn the call back to air.
Thank you very much Dave.
Last quarter as many of you know we reported that Manitowoc filed a trade expansion act petition to urge the U.S department of Commerce to investigate the trade dynamics of the domestic crane market. This process continues without definitive actions to report on the next step is from Manitowoc to submit our final comments on August 10th.
While we are proud of the results this quarter the current market conditions remain challenging.
For the second half of 2020, our first priority remains the health and safety of our employees throughout the world.
Our second priority is to further strengthen our balance sheet and maintain our liquidity.
While we have limited visibility to our demand, we certainly have plenty of opportunity to reduce our inventory to generate cash.
We do however, one to maintain flexibility to react to the eventual rebound the in crane demand without further reducing production capacity, it's about striking the right balance of reducing inventory, keeping our supply chain intact and maintaining our skilled workforce.
Our third priority as positioning the company for long term growth.
New products over the life, a lot of our business and we continue to invest and innovation.
While we are prudently managing our costs in the current environment. We are also ensuring that we have the ability to grow the business when the economy stabilizes and the crane market begins to accelerate.
We also want to be prepared for inorganic growth opportunities.
In closing as we manage through cobot environment I'm extremely proud of the dedication and commitment from our team and overcoming these challenges while better positioning the company for the long term.
I believe the future is right for Manitowoc and I am excited about the opportunity to drive the company for.
With that operator, please open the line for questions.
Thank you if you would like to ask a question. Please look at all by pressing star one on your telephone keypad.
If you are using any speakerphone. Please make sure your mute function is turned off to layer signal to reach our equipment.
Again, Please press star one to ask a question.
And we'll take our first question from an dedman with JP Morgan.
Hi, good morning.
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I wanted to focus on the back half the year and.
The comments you made on orders weakening in the back half just seasonally answer no. Other means and can you talk about.
Ben could the backlog gaps in the back half.
And then how much cash do you need to run the business on quarterly basis given.
And on top of that how did you lower inventories. If there is no end market demand and so sorry for all those questions, but if you could just help us think true.
How you do committed at this downturn, if things get weaker before they get better.
Yes, so with respect to adjusting our inventory as a matter of adjusting our build schedules. So we did have significant drop there basically overnight with the pandemic. So it's a matter of.
Adjusting our build schedules for the back half of the year and quite frankly, we've waited until we've gotten into July and August, particularly in Europe, where we have our normal shutdowns to make it is manageable.
As possible.
In terms of cash.
We typically on our user of cash in the first half and we generate cash throughout the second half. So things have probably covers your second question that you want to handle the first question relative to backlog in orders, yes, I'll end with regard to the backlog and orders.
Right now we have we do forecast, what we anticipate as orders and we do risk adjust that based upon.
The current the current environment and what the downturn may be as Aaron mentioned in his prepared remarks, you know this year is a presidential election year in orders in the Americas are typically down. So we are closely watching that and that we couple that with our with our build schedule. We don't typically give guidance as to where our backlog is anticipated in unfortunately, we can't we can't comment on that.
But.
It's sufficient to say that we are currently watching our current order intake marrying that up with our production cycle and also looking at generating cash through inventory reductions mainly in the second half of the year.
Okay and at this point given everything that you're seeing out there are you still comfortable you can generate cash this second half I mean, they're very unusual years. So.
How confident are you that you can generate cash in the back half 90, but thank you.
Yes, we are we're fairly confident that we're going to generate cash in the last half of the year.
Okay. Thank you I leave with our patient ups.
And we'll take our next question from Jerry Rentech with Goldman Sachs.
Well you will find good morning, Jay.
Good morning, guys.
Yes, I'm wondering if you folks can just long in Europe, we most significant.
Already.
Over the next year any payments in the strategies, specifically I know you've touched on a year opening remarks, I'm wondering if you just expand and.
Talk about your to the top couple of initiatives all around.
So it will look different from here.
Yes, yes, I really go back to what we said in the prepared remarks number one is we're very focused on health and safety and number two we're very focused on managing our cash and liquidity as we work through the Tobin situation in terms of the third bullet point I'm only on day two of the job. So if you won't mind give me a couple of months to get my feet under me and will provide.
A little more color, but we definitely want to pivot from.
Not to say, we won't do additional cost cutting that we really want to pivot from cost cutting to moving into more of a growth mode.
Okay.
Ended terms of.
Growth outlook for the business from here.
Are there some Jeff elections, as you alluded to but on the flip side.
We're backing out of a pandemic next quarter that was as bad as what we saw in April essentially so should we look for the business from the topline standpoint to go back towards normal seasonality of revenue.
Which normally your down 5% sequentially in the third quarter versus the second quarter is up a type of cadence that we're on track for.
Yes, so from my point of view, our regular seasonality you probably won't apply as it would I mean right now of course, we handled we lost a lot of production during the second quarter.
Because of the shutdowns in the corn teams in the third quarter, we're adjusting our build schedules and then I think were too far out yet from the fourth quarter to see really how that plays out.
That's right you asked me in terms of confidence by region.
I would say that.
We feel more confident about Europe, and math than the Americas. The Americas is our biggest concern and I think to be perfectly honest, it's tough to give you a good view in the back half of the year sitting here in July because July and August our such quiet month for us and I feel good about the July we had but we are lumpy business and with see how August plays out but.
How we come back alive as we given the septembers.
The big question.
And then you touched on equal than values.
Talk about utilization rates by region should go from at the moment ago, Demeaning Europe low utilization rates or.
Pretty solid can you just expand and talked about what you're seeing by region.
Yes, I mean in Europe, I am really speaking.
Specifically about the tower Crane business. So once we came out of the Quarantines, Germany continued to go but we had to open up enough, France, which is.
Really heavily shutdown.
Look at the big construction companies in France, they've actually pushed dolls shorter holidays in August so all of those major players are trying to recover.
Shortened season so.
Utilization rates in a room are really strong.
Mobile business I'd say is okay.
Biggest question marks are back in the United States, where between the pandemic in the what has happened then in the oil industry, we've definitely seen utilization.
Come down some.
Okay, perfect I'll leave it there Eric congratulations thanks, everyone.
Thank you very much.
And we'll take our next question from Chris Ransom with ran some research.
Good morning, Thanks, Good morning, Sir.
First of all congratulations and question you're on the Hawk.
This is to longest succession plan I think I've ever seen 20 years.
And it's not not today.
A question or on the hub because you've got to continue to do well so that I can continue to take credit.
Hum.
Hi, I'm going to assume that you will only enhance the manitowoc way.
Luckily you enhance first.
Hi, maybe by way of an answer you could talk on how well penetrated lean thinking is.
In areas nonmanufacturing areas like new product development our AR.
HR.
And do you have any plans to do anything that hoeschen, contrary I have one follow up.
Okay. So the speaking with respect to Hoeschen conry, we've been doing priority deployment for the last five years. So I'd say that we've moved beyond the trying to do the science and we I think have a good control in terms of the aren't aspects of that.
In terms of lean I mean, as designing and game we have started to accelerate in the last two years, what I would say is much more mature.
Application of the of not only the tools that really how we handle that culturally and doing it on a more daily basis, we'll toolbox toxin.
So yes, we will continue I think right now we're really started against the speed in terms of things. We can do with some of our capital investments and our you'll have to come out to some of our facilities. After the pandemic. So we can show off a couple of things we've got going on but I feel very good about where we are in tons of the Manitowoc way.
No.
There is implemented just a few different places and I've been by assigned to do it and I'd say.
At this time, we've gone faster than the last couple of times as you do with any of these types of things and the team on a whole is really engaged on lean. So I. It will remain the cornerstone of the business and we'll continue to.
To push forward with it.
A follow up in some.
And on certain days, so the second half quick cash notwithstanding.
No set yourself up pretty well flight.
Environment is likely to produce acquisition opportunities when do you think you'll be ready managerially to look at something meaningful.
Yes, so I mean from my perspective, if you asked us about acquisitions technically speaking with the amount of liquidity. We have we we could do one and I feel comfortable that managerial we can handle one we we were ramping up.
To be more aggressive on that front now it's just a question of getting more certainty around our order order book.
Okay. Thank you very much congrats.
Thank you very much clip.
And we'll take our next question from Jamie Cook with Credit Suisse.
Hi, Jamie.
Hi, Good morning says Colton Zimmer on on for Jamie first off congratulations and welcome iron.
Our question is just containing continuing the discussion on growth.
Are there any particular end markets and geography that you're maybe focus on growing products or looking at M&A.
And then my second question is just on decremental margin performance in the quarter was pretty good considering the sales decline. So side just wondering if maybe that changes expectations for the back half of the it. Thank you.
Yes, so in terms of the inorganic growth I think it's a little bit too early to the common on.
In any significant way, we definitely want to findings that have higher EBITDA percentage margins and have more closeness to our customers and those sorts of things. So I'll leave it at that and we can follow up on that in the next caller too.
With respect to decremental margins than we normally say that are decrementals around 25% to 30% I would say, though in the second half we are going to have various plant shutdowns as well as a little bit less favorable mix.
Okay, great. Thank you.
And our next question comes from Mig Dobre with Baird.
Morning make good morning, everyone.
Hello, Aaron welcome.
I guess.
I want to go back to the margin discussion, maybe put a finer point on it.
I appreciate your comment on the Decrementals, but.
I'm trying to understand.
Production year is.
Expected to decline sequentially versus where youre in the second quarter in order to obtain that.
Inventory destock that you talked about earlier, so is it going to be lower sequentially. I mean, obviously as can be lower year over year.
Yes, so it's a big complicated because of US shutdowns, we always have in Europe, I mean third quarter is always our most challenging and I think we're in good shape relative to those to to optimize them relative will begin doing build schedules the bigger challenge when I compare to the second quarter to the third quarter is really in the Americas.
Where we we didnt have so many shutdowns in the second quarter.
Our supply chain was impact through the entire quarantine. So we continued to move along there and now were I would say trying to optimize how we roll those shutdowns that you've been to shady Grove now being to facility is so trying to do that and a very managed way given the size of of the facility.
Right, because you know, even though you're not providing guidance just the way.
Corporate in your comments here, if we're seeing pressure sequentially in the backpacks, and we're kind of maybe even breaking with seasonality who knows in the fourth quarter.
Then I get the question is are you going to be able to be EBITDA margin positive.
In Q3 in Q4, given what's happening with production as far as you note today.
Yes.
I think we'll move that he will be EBITDA positive in the third in the fourth quarter.
Got it and then.
Perhaps my last question.
Are you able to give us a fun for what you're doing with the cost structure in 2020.
To be able to stay positive from an EBITDA standpoint.
Whether it.
Prairie our cost action.
So to put maybe a framework around that and then Aaron I know your predecessor, and the team has done a lot to take structural cost out of the business.
Yes.
I'm wondering how you're thinking about any other opportunities down the line or Ford climbing to the point, where we simply need volume in order to be able to kind of get incremental margin lift.
Thats It for me and it's great.
Great question, so over the last five years, we've taken out well over $100 million in cost. So we're reaching that long diminishing returns in terms of taking out big chunks.
I do think that we'll have the look surgically speaking in terms of removing more cost and there are some more levers we have the pool.
If we need to in terms of managing temporary shutdowns and get a little more cost out that.
I think the in terms of the big chunks, we've done all the heavy lifting and.
I think time to move to the next phases as we get to this code situation.
And the temporary start for this year can you size that at all.
No I would prefer not to get into it gets again it gets really complicated we start to compare how would the labor rules are in the United States versus what we do in Europe.
Okay. We've been do on a variety of things will continue to do at its not that don't have niches. That's a really big question.
Thank you.
Thanks.
And our next question will come from Stanley Elliott with Stifel.
Hey are enrolled.
Dave Nice to hear your voice.
Thanks, I'll talk about a little more on the on the tariff situation I mean, if this August 10, just a final date.
Hello, typically before you will hear something from from the government back either in favor or in Florida and the other side.
Okay. So I am on to dance they two of the job and we have a couple of days last before we have to submit our final comments.
But I would say after my initial initial reviews I believe the tariffs may not be the best solution and while we believe strongly unfair trade, we certainly don't want to burden our customers with additional costs, particularly in this environment. So.
We've got some more work to do between now and August 10th and in terms of responses I think that really varies.
Relative to what the US department of Commerce wants to do because it it is driven by the end of the data driven by the president on states and his team. So we can it can move very quickly or can follow the more regimented process of the 270 days since we filed a petition okay and then secondly.
In the past you'll have done well some large size of orders from the U.S. government military et cetera.
Are you all have or in any discussions.
Okay for opportunities like that or that's it's kind of.
Those sorts of discussions are tracking with with what's happening with the general economy.
Yes, so I mean, it every year, where it is a process because of the way that they allocate the resources and we are in currently we're in some conversations with the government, but it's always the same game of in terms of them getting the appropriations down to.
National places, where they can spend the money and how they want to spend the money, but I feel pretty good where our team is on that subject.
And.
Im hopeful that we can.
Plan a few next year.
If you think that would be more of a 2021 event as opposed to back half of 2020.
Yes.
Okay, great. Thanks, guys best of luck.
Thank you. Thank you.
And we'll take our next question from Seth Weber with RBC capital markets.
Hey, guys. Good morning represent very little hope everyone is doing well.
Dave just on the on the inventory question.
You know how much how much of the reduction is expected to come from selling I guess are you sit on used cranes I'm just trying to tie together the comment of used crane pricing being soft and.
Is that part of your inventory reduction that's coming out in the second half. Thanks.
Yes, so we always have some use cranes and inventory I would not I'd say, it's not a material part of our overall overall inventory.
So that's not the big Big chunk of the inventory reduction at this point in time, but from where we ended the.
At quarter end June here, we'd expect in excess of $80 million and inventory reductions through the rest of the year.
8 million total filler.
And you're right okay. Thank you.
You know air and maybe if you did just give us even in the crane space for while can you just give us your view.
What you think it normalize crane market.
Looks like from a revenue perspective for Manitowoc.
You know obviously, we're not there anytime soon but can you just do you have a number in mind for where you think a kind of a mid cycle revenue run rate would be for the company.
Boy, that's a tough one.
Let's just say I hope that the high is a lot higher than what I saw in the last five years, but if you look at the the cycles you would think that.
We should be about 2 billion at some point now how high goes I think it always depends on how low the trough was before that which is what we saw back in early two thousands.
But.
We're eager to get back to that 1.8 range to say that midpoint.
Okay. Thanks, and then just lastly.
Can you comment on what you're are you seeing an equal you guys are obviously.
The way things were pulling in production here.
Any comments as to what.
Your competitors are dangerous do you see discipline across the space or are your.
Competitors following suit about a little early continued into April gauge and build inventory. Thanks.
Yeah, I think everyone is doing pretty much the same thing.
Okay I appreciate guys. Thank you.
Thank you.
And we'll take our next question from Steven Fisher with you be yes.
Thanks, David boarding morning, graduations on the new role Aaron.
I know, it's only day, one here and you want more time to sort out your plans, but new leaders often have new metrics. So I'm. Just curious if you have any new metrics you think you'll be focused on.
I know for the company EBITDA margins and velocity have been.
Important metrics over the last few years, Ed, but curious if you have any preliminary thoughts on on what so right metrics should be to look at going forward.
Yeah. So obviously I worked under various due to lets her almost 20 years. So I think many of the metrics will be the same I will say one other things, it's really profit up in the last two or three years for us it's really important internally as a number of slams, we do which is our safety risk assessments. So we are strongly tracking that.
And picking up good steam and our record because it has gotten a lot better in terms of financial performance. Its many of the same ones. Yes, I know we've been very focused on EBITDA margin as a percentage, but let's face. It I think EBITDA dollars is equally important in terms of how we drive our shareholder value.
Okay fair enough and it sounds like you want to be in growth mode. Because I'm curious how you see the industry structure shaping up and the competitive dynamics over the next several years and whether the structure of the industry enables that grid is friendly to growth over time or.
Is it really just going to be they whatever the cycles going to be.
And so we don't want to ride the cycle that's for sure. So when we look at acquisitions, we're looking at things that will help us.
Dampen.
The ups and downs of the business in terms of structural changes.
[music].
From my point of view.
The market is it hasn't changed a whole lot. Obviously, there is that one larger one large merger between two big players in the industry and I don't think there'll be significantly more.
But I think in all the Crane business is a competitive business and we've got to be very very focused on how we continuously get more competitive and closer with our customers and continue to launches new products and services customers.
Fair enough. Thanks, a lot.
Good.
And as a reminder, if you would like to ask a question how does for one on your telephone keypad and our next question will come from Chris Ransom with ransom researching.
Thank you very much.
I'm coming up I guess since I think by 48 here looking at the lifting business and the great dilemma.
For every company has been.
How not to overspend at the top and not to over caught at the bottom.
Can you talk about how you're trying to manage that process.
And whether any particular learnings from say that curious what would that be the 2016 next day at such a can apply today.
I have a follow that is a great.
Thats a great question Cliff I mean, I think that really hits for now and ahead in terms of what we're trying to do I mean, if I look at our inventory I think we could take it down further than what we've put out there.
Frankly, we've built some plans to take it down further but weve internally then adding that same conversation, we got to manage our orders in our backlog and see where those that.
But we don't want to do I think I think in 2017 numbers some opportunities we missed because we went really deep at the end of 2016 for very good reasons quite frankly.
But right now we're trying to do more level loading across the second to third to fourth in the first quarter. So we're trying to look at them is a continuous game rather than on some of the normal seasonality to have that creates a bit of.
In flexibility I would say when we get into first quarter.
That might be the best thing I've heard all day.
And I just wanted to comment because that's up pet peeve of mine.
I would like to compliment show our commend you on year.
Accretion focus in the last two ishares on safety.
How do you how do you handle the metric of employee engagement.
So we measure the number if we call. It plans stop look assess and managing those are basically risk assessments. So a couple of years back we engaged Dupont safety folks as a consulting entity. They came in they audited all of our facilities. They gave US good feedback there were probably eight or nine takeaways in my opinion they are.
World Class and they told us to really focus on our slams and I think our goal is got to be something like 30000 per year. That's our and go we haven't gotten there. So in order to get that many risk assessments every single day, we have to be doing the risk assessment. So it's it's literally like five esource cliff.
Our team managers and advisory managers are reviewing the slams that are done by the employees everyday and that gets up to their businesses and when I visit the factories were reviewing all the claims that they do so this is a metric that I see on a regular basis and have regular conversations with and it's in our priority deployment discussions.
Anything to do well on this.
Thanks, except that and I know thats a good idea I.
I was really asking about how do you measure employee engagement at Manitowoc today, and do you think that will change over time.
You are you asking to play engagement relative to safety or just overall no overall, sorry, I didn't make that offline I'm sorry.
Yeah, I mean, obviously with a number of direct employees, we have and shop for related folks. The safety I think is a good sign.
I would just say it's under priority deployment, it's pretty hard for anyone hide anywhere I mean, we're having pretty.
Wide man there is no. Good why would I would say that I don't have a good way of measuring it and give you a hard fast answers the question.
I would say come to the facilities and the and and ask the focus throughout the business.
Permit I feel very confident in very good about the level of employee engagement. We have thats frankly, that's why you see is what we're doing the second quarter because the goal.
Bubbling agent we have.
Thank you Aaron.
Thanks.
And there are currently no questions in the queue at this time I would now like to turn the conference back over time Warner for additional or closing remarks.
Before we conclude today's call. Please note that a replay of our second quarter 2020 conference call will be available later this morning by accessing the Investor Relations section of our website at Www Dot Manitowoc dotcom.
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 please be safe.
And that does conclude today's conference. Thank you for your participation you may now disconnect.
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