Q2 2023 The Manitowoc Company Inc Earnings Call
Good morning, and welcome to the Manitowoc second quarter 2023 earnings call. My name is Regina and I will be your conference. Operator today all lines have been placed on mute to prevent any background noise I will now turn the call over to Mr. Ion Warner Senior Vice President of marketing and Investor Relations. Please.
Proceed.
Good morning, and welcome to the Manitowoc Conference call to review the company's second quarter 2023 financial performance and business update as outlined in last evening's press release.
Today, I'm joined by Aaron Ravenscroft, President and Chief Executive Officer, and Brian Regan Executive Vice President and Chief Financial Officer.
Our call 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 ask 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.
Let's move to slide two onto 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 1095 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 the result of new information future events or other circumstances and with that I will now turn the call over to Eric.
Thank you Ian and good morning, everyone. Please turn to slide three.
Like to start today's call by thanking the Manitowoc team for their outstanding performance during the quarter, our second quarter results capped an excellent first half of the year net sales were $603 million for the quarter and our adjusted EBITDA was $60 million or 10% margin. In addition to our new machine sales for the quarter increased 8% year over year.
Please turn to slide four.
Our claims plus 50 strategy is our top priority during the quarter I had the opportunity to visit several <unk> locations and I was continuously struck by our local teams enthusiasm to service our customers and to grow their businesses.
For example, at our New branch in Kansas City. The team recently rented their very first proton self erecting tower crane.
And you won't find a more passionate group of crawler crane folks than our team in Belle Chasse, Louisiana. When I visited the team was rebuilding an MLC 300 crawler crane on old Manitowoc 4600 on an old barge crane that must have been older than me.
Frankly, what's been most impressive is how these acquisitions enabled manitowoc to better serve our customers through a broad range of service and re manufacturing solutions.
I'd like to extend my appreciation to Keith path General manager of MTX, and Mark Kaufmann General manager of Aspen for their hard work and leadership, it's been a lot of fun to watch these organizations evolve over the last two years. Please.
Please turn to slide five.
It's amazing how time flies when you're having fun in the seven years since we launched the Manitowoc way, we've continued to mature our lean mentality across our businesses.
Each time I visit our factories I'm amazed by how far we've come and I am extremely proud of how the organization has embraced the philosophy of continuous improvement, making small improvements step by step each day.
During the quarter I visited our tower crane facilities in Europe in Portugal, we held our annual global Kaizen lean leaders. The ballpark facility is nothing short of World class and you won't find a more motivated team.
In addition to sharing best practices, the global team identified great opportunities to improve cycle times, and the facility's pivot our vacation processes.
Although endovascular Roche, our director of operations and the bulk of our team.
And move on France, I saw great progress our energy Kaizen were born a dislocation last year and they are already producing significant savings at this site.
Our digitalization efforts are also gaining traction with digitalized, our visual pre delivery inspections, and we continue to find ways to optimize our easy planning tool for work sequencing throughout the factory.
My next stop with Shar Your France. This was the worst performing plant among our European facilities, when I moved to France in 2017.
I always were torn up there were no signs of five essar TPM. The paint system was new but totally dysfunctional we had an electrical department that I wanted to close.
Installed one used robots and I think we had one machining center.
Other than me.
You walk into a completely different facility.
Team is in the process of integrating a state of the art robot for welding Iot mass and they recently commissioned a brand new horizontal machining center for milling large parts, reducing the cycle time on every major part by at least 50%.
In addition, they had a very special surprise for me for years, we dreamed of re manufacturing masks elements with the new machining center. The team ran its first trial part this could be a major breakthrough for our <unk> strategy.
Elsewhere in the plant the electrical Department is now a work of art and a five S Haven as for the paint system. The team was running the sandblast their paint booth a novel non two shifts six months ago.
Today the team completes the same amount of work in one chip thanks to ingenuity Digitization and sequencing. This will have a significant financial benefit as well as improve our environmental sustainability and big Merci Beaucoup to our director of operations Jean Luc pivotal in the entire saia team for a job well done.
Please move to slide six lastly.
Lastly, I visited our China facility, a few weeks ago, and I came away astonished with where we've come in the last three and a half years led by John <unk>, Our general manager and the team is completely streamline the plant layout I'll, let the pictures do the talking and.
In summary, I am very proud of how our organization has embraced the Manitowoc way, we've come a long way and we are still finding new opportunities for improvement a huge thank you to the organization.
Please move to slide seven.
Turning to the market order intake during the quarter was $551 million, which.
Ceded expectations, our backlog remained above $1 billion and our mix continues to shift towards the Americas Crane demand in the U S continues to be strong in spite of inflation and higher interest rates Crane utilization is strong among major crane houses in business activity has been good this quarter, we heard the first hints of the infrastructure Bill coming to fruition and then.
Orthesis.
While I remain cautious on the U S market due to the economic headwinds, it's encouraging to hear that money is starting to flow from this major government investment program.
As for dealer inventory I would describe it is well balanced at the end of June .
Nevertheless, we have a lot of cranes to ship scheduled to our dealers in the second half, which always leaves me a bit cautious.
Even the slightest slowdown in retail activity could create a headwind by year end.
Although that might be a little bumpy in the medium term, we remain very optimistic about the north American market long term as infrastructure and chips bills gained momentum.
Unlike the U S marketplace. However, the European economy has been impacted by the increase in interest rates.
We are seeing construction activity slow across the continent for several quarters. Thus far this is mostly impacted our tower crane business, which saw orders decline in the second quarter by almost 30% year over year.
Although we are clearly in a cyclical downturn in the tower Crane market, we see some positive building on the horizon.
The U K and French governments are pushing hard for large scale offshore wind farms and nuclear energy projects and there are still significant housing shortages and every major European country.
The European mobile business has the same underlying economic dynamics, but the story is a little different thanks to some self help in recent years.
I would certainly not describe the market as robust, but the large crane rental houses have been modestly refreshing their fleets, while the smaller rental houses have pulled back.
Fortunately with the help of several successful new product launches over the last two years, we've seen our market share tick up which is helping to offset the market softness.
<unk> business levels in Europe remained stable.
Moving to the Middle East during my trip to rehab last month I saw two things first how quickly Saudi vision 2030 is coming to life and second the strong presence of our biggest tower crane dealer NSP known locally as Arabian towers, a big Thank you to the mill does allow a who has been our partner since 1975 is <unk>.
And the Kingdom dates back to the 19 eighties.
On my trip I had the opportunity to visit King Salmon Park, one of the Kingdom Mega projects.
When completed the park will be five times the size of New York City's Central Park and the first major construction project is the Royal Art complex, where there are 30 proton tower cranes in operation.
I also visited the Avenue Mall project, which will be one of the largest malls in the world where another 38 per ton cranes are working in addition to these projects and FTE is heavily engaged in every major project in Saudi although the middle East is one of our smaller regions is growing rapidly with orders for the quarter up 40% versus the prior year.
Lastly, Asia Pacific remains a mixed bag the Indian Crane market has been very strong this year, although China remains extremely muted.
In South Korea, the semiconductor market has slowed as we wait for the next big project to begin although the shipbuilding and petrochemical are beginning to pick up.
And Australia continues to be a good market, although it's become very difficult to get vessels out of Europe . In fact, we recently chartered our own ship to get machines delivered.
With that I'll turn the call over to Brian .
Thanks, Erin and good morning, everyone. Please move to slide eight.
Let's start with orders during the quarter, we had orders of $551 million, an increase of 27% from a year ago.
Seeding our expectations the year over year increase was driven by higher orders in all our segments looking more closely at the European market mobile Crane orders more than offset the towers decline foreign currency favorably impacted orders by $4 million.
Our June 30 backlog was slightly down sequentially at $1 $25 million and increased 8% year over year. The makeup of our backlog is consistent with the first quarter, it's predominantly in the Americas region.
Net sales in the second quarter were $603 million and increased 21% from a year ago. The year over year increase was driven by pricing in response to inflationary pressures higher crane shipments and higher non new machine sales as a result of executing on our cranes plus 50 strategy.
Non new machine sales increased 8% year over year to $150 million.
Net sales were favorably impacted by $3 million from changes in foreign currency exchange rates.
SG&A expenses were $18 million higher year over year at $88 million during the quarter SG&A expenses included an $11 million charge related to a legal matter with the EPA. After adjusting for this SG&A expenses were $7 million higher primarily due to inflation.
SG&A expenses as a percentage of sales were 13% a decrease of 120 basis points year over year.
Our adjusted EBITDA for the quarter was $60 million, an increase of $24 million or 66% year over year. Adjusted EBITDA margin was 10% an increase of 270 basis points over the prior year, a great accomplishment during the quarter and reflective of the team's hard work flow.
Flow through on a year over year incremental sales was 23%.
First quarter, depreciation and amortization of $15 million decreased $1 million compared to the prior year.
Other expense for the quarter was $10 million, an increase of $8 million year over year included in other expense during the quarter was a $9 million noncash charge related to the curtailment of operations in Russia.
Our benefit for income taxes in the quarter was $5 million driven by a $14 million reversal of a valuation allowance adjusting for this our provision for income taxes in the quarter was $9 million. As a reminder, we have tax valuation allowances established with certain countries and therefore losses in those countries are not available to offset income tax.
Expense in profitable jurisdictions.
Our adjusted diluted net income per share in the quarter was <unk> 75, an.
An increase of 54 from the prior year. Please.
Please move to slide nine our.
Our net working capital increased year over year $77 million. This increase is from a combination of inventory and accounts receivable and driven by inflation and supply chain and logistics constraints, along with our normal seasonality.
As a percentage of trailing 12 months sales net working capital was 22% flat year over year as it relates to inventory, we are targeting a $75 million reduction by the end of the year.
Moving to cash flows we had a usage of $17 million of cash from operating activities in the quarter, primarily due to the growth in our working capital capital expenditures were $27 million of which $20 million was for the rental fleet. This.
This included $17 million for rental fleet growth and $3 million for replacement.
As a result, our free cash flows in the quarter were a use of $44 million.
We ended the quarter with a cash balance of $26 million.
Which was a decrease of $31 million sequentially.
Total outstanding borrowings under our ABL increased $12 million, resulting in an $82 million outstanding at quarter end. Additionally.
Additionally, during the quarter, we repurchased $2 million of our common stock.
Total liquidity decreased $41 million sequentially to $255 million due to our strong adjusted EBITDA net leverage ratio remained at two times at the end of the quarter well under the targeted three times.
Please turn to slide 10.
We are updating our full year guidance as follows.
Net sales $2 1 billion to $2 2 billion adjusted EBITDA of $150 million to $180 million.
Depreciation and amortization $58 million to $62 million interest expense $33 million to $35 million.
Provision for income taxes, excluding discrete items 16 million to $20 million and adjusted diluted earnings per share of $1 10 to $1 70. As a reminder, the third quarter is historically, our lowest quarter due to summer shutdowns in Europe .
<unk>, we expect a slowdown in the European tower Crane business to be a $30 million adjusted EBITDA headwind in the second half versus the first half with that I will now turn the call back to Aaron.
Thank you Brian Please turn to slide 11.
At the start of the year I said that our results will rely on two major factors how quickly our production of mobile cranes would rebound from the shortages and how badly the European tower Crane market with trail off the.
The good news is that the mobile shipments have accelerated faster than I anticipated. The bad news is that the European tower Crane market has slumped further than I expected Fortunately as we reflected in our updated guidance. The good news exceeds the bad news.
While the first half was a great performance in terms of EBITDA, we will be laser focused on working capital in the second half strategically we continue to drive our claims for safety strategy investing in organic growth initiatives, while searching for our next acquisition opportunity.
As from a medium term view of the crane market, although infrastructure projects are beginning to move through the halls of government spending hasn't begun to ramp up yet.
I could see a lull in demand as we work through our dealer inventory in the U S election cycle heats up Nevertheless, I remain extremely optimistic about the long term nature of the Crane business. Saudi vision 2030 is in motion the U S infrastructure and semiconductor bills will eventually begin to led and the large offshore wind and nuclear projects coming down the <unk>.
Pike in Europe will be a big boost to the crane market.
Concurrently most rental fleets are 10 to 15 years old on average these broad trends will provide the confidence and fuel to refresh aging fleets.
<unk> is well positioned to benefit from this cranes Renaissance.
With that operator, please open the line for questions.
At this time I would like to ask a question simply press star followed by the number one on your telephone keypad to withdraw your question Press Star one again.
First question comes from the line of Jamie Cook with Credit Suisse. Please go ahead good.
Good morning, Jamie Jamie Hi, good morning, and congrats on a nice quarter.
I guess Erin understanding the puts and takes to the back half of the year in terms of what youre, saying with EBITDA margins that relates to the second quarter, even with carrier claims it sounds like it's softer than you expected what drove the outperformance on the EBITDA relative.
As to your expectations and then my second question is can you sort of talk to how you see orders trending over the next few quarters and how.
How your dealers are approaching inventory as they're thinking about 2024 and the potential for Iga exact are kicking in thank you.
Yes, so I mean for the second quarter I think its lots of small things I mean, our pricing continues to get better I would say thats almost normalized now we had good mix FX was in our favor on a few things maybe a correction Jerry just Jeremy just the tower Crane business, we had decent backlog coming into the quarter. So really the softness is going.
In the second half not the second quarter.
Okay.
Okay and then my other questions just in terms of.
Hi.
Dealer inventory like how your dealers are approaching as you think about 2024 and <unk> in the second half.
Yes, it's always difficult to predict the order cadence because some of them. So chunky, but I mean, we're still in lots of dialogue with several of our large dealers, particularly in the U S. I think we will get some decent orders so.
I mean, we're just.
I am very.
Jamie I'm always conservative about how we view the future and looking at the way that.
The number of machines, we ship into our dealers. It's good to see that they are still actively looking at the 2024 build schedules but.
On July was a little bit lower than it was last year. Although it was still in that sort of $150 million range, which I think is a good sign the difficulty on commenting at this point as we're in the middle of the summer nurse, just very little activity.
And then.
Sorry, I think we lost Jamie go ahead Jamie.
The last question on dealer inventory.
So the question is just where dealer inventory is currently are where we're seeing it in the second half.
Yeah, Yeah, like how dealers are approaching how they're thinking about inventory exiting 2023 getting ready for 2024 wondering if they want to start to increase inventories given what they are seeing out there.
And based on the shipments that we have lined up I would say that they are increasing their inventory. So that's just a question of how high they plan on.
Increasing in the second half.
A lot of activity looking towards 2024 is more about just being on the build schedule given the long lead times at the moment.
Okay. Thank you.
Thanks, Jamie question.
Your next question comes from the line of Jerry Revich with Goldman Sachs. Please go ahead good.
Good morning, Jerry Hi, Jerry.
This is clay on for Jerry quick question here can you talk about the utilization trends for your U S fleet in this quarter compared to the same period last year.
We don't share that information our fleets.
Not that large etsy in total even when we talk to our customers. If you look more broadly utilization rates in the United States.
Very good.
Alright, Thanks, and then I guess as a quick follow up on the regarding the new non new equipment growth can you add some more color on what the key drivers were within that and then also.
On top of that can you break.
A breakdown of the price versus volume on the new non new equipment sales.
Yeah in terms of what drove the 8% increase I would say it was.
We continue to add service tax, which helps service and parts, but we use sales have been strong through and Thats, usually a big mover because it's a bigger number.
Yes.
When I look year over year, the big part of part of it is just those service tax being more and more utilized so most of it's on the on the service and parts side.
Thanks, I'll pass it on.
Your next question comes from the line of Middlebury with Baird. Please go ahead.
Hey, good morning, guys good morning.
Very very nice job this quarter.
Picking up where you just left commentary on used cranes I'm kind of curious as to what youre seeing on that side I know you're very active in that market, what's going on with used crane prices.
<unk>.
What is going on with the availability of used cranes on the market to can you comment on that.
Yes, I mean for sure there is a lot less availability I would say than there was say two years ago, but activity still remains good.
For us the big part of it is we didn't we never repurchase units that were out there. So I mean, we're actively looking to buy used machines.
And we're actively looking at trade ins for instance on <unk> in Europe , which we never really did that in the past. So that's some of the reasons.
Good for us in terms of used pricing I would say, it's okay. I mean, if you really look it's.
Bifurcated World I mean in the U S. Given that utilization is so strong there are much better in Europe . However, specifically on the tower Crane business I mean.
With the business being so soft I would say that.
Old machines, you've got a 15 year old cat.
Got the old legacy software systems, those those prices is going to be very low at this point.
But.
Im wondering if theres a dynamic here because we've kind of seen it in other categories of equipment used equipment prices have come a lot in.
Come up a lot of that to some degree supports the economics of a trade and for people that are looking to upgrade to new equipment.
Is that happening in the crane market or.
Maybe not given what you just kind of mentioned I think that Coty is you've got to look at every individual deal and if you've got cranes that are 15 years old.
Those are very productive.
It's difficult to move those machines I think if you had new machines over three years old prices would be great interest would be huge.
But if you've got machines that are 15 years old I mean, theres a lot of old fleets out there folks that are looking at the non machines or even 20% and 25 years old so.
And on those prices are challenging.
And that some of our strategy is to take some of the used cranes cranes and refurbish them and they will have them as more of like a.
Certified used from our perspective, but yes, I would say that that's more in its infancy, and we're trying to drive that.
Then my follow up.
On the price cost dynamic.
You talked a little bit about pricing.
I heard the term normalizing I'm kind of curious as to the contribution how you think about the contribution from price that youre getting in the back half.
On a year over year basis relative to what you've seen in the front happen on the cost side.
Material costs.
Have they actually been.
Tailwind in Q2 and how.
How does that progress in the back half of the year. Thank you.
So I'd say from a price standpoint in the second half youre not going to see it because of the the headwinds associated with the tower demand. So I think when you look at the business that the demand is still strong and we're holding pricing and where.
That's going to contribute to the second half and partially offset that headwind associated with the with the towers, but.
When I think about other impacts to the second half we also have.
FX favorability that we saw in the first half we had some very favorable hedges our average hedge rate on European purchase products coming into the U S from our European manufacturers with less than was around one and the average rate was 108, and we're anticipating that the second half rate is a bit higher so.
Like I said youre not necessarily going to see the benefit of pricing in the second half just because of the headwind the other headwinds that we've got.
And material cost.
Okay.
I'd say, it's no change.
Everyone can see that steel prices have come down, but even in the United States are still high but the problem is we don't buy a lot of that is still a lot of our stills very specialized.
Those high strength steels, I mean, thats, a pretty niche market. So.
Wouldn't say, we've seen any dramatic changes yet between Q1, and Q2, but down compared to last year, we definitely saw price increases.
And relative to the to the labor market and how that got factored into.
Prices for.
For some of the products we buy.
Okay. Thank you good luck.
Thanks Megan.
Your next question comes from the line of Seth Weber with Wells Fargo Securities. Please go ahead.
Good morning, Seth.
Hey, good morning, guys how are you.
I guess just.
Just a clarification first on the $75 million inventory reduction comment is that from the second quarter or is that from <unk> 'twenty year and 'twenty two.
Can you just.
Go ahead, sorry, sorry.
And can you just your expectations for free cash flow for this year, yes.
Yes, so the $75 million from Q2 and really driven by.
Logistics and supply chain and some of that seasonality as well.
We're definitely continuing to look at what demand looks like going into 'twenty, four which which.
We'll adjust our inventory somewhat but we feel comfortable about the $75 million by the end of the year versus Q2.
The.
What was the other half of that question.
Alright, just free cash I think free cash flow previously you talked about kind of neutral is that still the case or is.
So I think I think we talked about $20 million to $40 million, we're thinking 30 to $30 million to $50 million with the increase in the in the EBITDA some of that flowing through the cash flow.
30% to $50 million.
We're targeting.
Got it thank you and then.
Just on this.
30 million EBITDA headwind for the second half European towers is that I'm, just trying to I think everybody is trying to understand kind of the composition of the backlog is at.
More tilted <unk> or <unk> versus <unk> or is it kind of <unk>.
Fred easily and just just.
Trying to think through how whether that.
2024 at all thanks.
Third quarter is your normal third quarter, because half the plant when all the plants in Europe are shut down for a month basically.
Naturally would wait a little bit more to the fourth but.
I think what's key there is we're really hand to mouth.
Don't have a whole heck of a lot of backlog and even when I look at July just to give you. An example, we had less than $5 million of machine orders. So.
It's tough times in the on the tower Crane business in Europe , and we got a lot of big challenges that being said, we are continuing to invest in NPD. So we are in the process of hiring between 15 and 20, New engineers between the Fringe engineering team in the China and engineering teams to support.
New product development for pursuing more aggressively on these jobs in the middle East as well as the.
What will eventually come in these big nuclear jobs in France, and the UK.
But it was Europe , where European towers, a big part of the first half margin strength that you saw this year I'm just trying to understand like how long is bleed business continue does this headwind continue to bleed into the first half of next year or it's kind of like.
Yes, I mean first half one wasn't great we havent.
Essentially no backlog so it's hard to say when that will start to turnarounds right. So I mean, basically it's typical use sort of fall off a cliff.
And good backlog and we are shipping given all the shortages we had everything we could in the first half to meet customer demands.
Now with the situation, where we don't have any backlog so.
Hopefully it turns vast I mean, theres a lot of things out there.
Could I think stimulated but.
Who knows where Ukraine is going and what the interest rate situation is that theres still lots of housing shortages in Europe .
Change some of their policies, maybe it comes back faster.
And then in terms of first half, let's say normal.
Same way its been contributing for the last.
However, many quarters six quarters yeah.
I will say it was more or less.
I think the first half of 2023 was lower than last year, but still the first half of second half is that $30 million number that we talked about related just towers on line.
Got it Okay. That's helpful. I appreciate the color guys. Thank you.
Thanks Sam.
Your next question comes from the line of Tami Zakaria with Jpmorgan. Please go ahead.
Good morning, Jamie.
Good morning, Hi, This is <unk> on for Jeremy. Thank you for taking our question.
Eric you could talk a little bit more about which products are more demand from infrastructure projects that are coming to life.
Yes, so generally I would say that.
Infrastructure money Hasnt started to flow.
It will be broad base, given the nature of that project.
You look at the United States.
Okay.
Okay. So like electrification theres abroad, there's huge amount of applications. So I think it would be really good for boom trucks and of course, all the taxi work will come along with it.
And then in terms of semiconductor typically thats more crawlers in the United States.
Thank you.
A quick follow up.
Update us on how your market share trending thank you.
Jim.
I'm, sorry, we don't provide that level of detail.
Okay. Thank you.
Again for a question press Star one our next question is a follow up from the line of Mig Dover with Baird. Please go ahead.
Thanks for taking the follow up guys.
One the first one is on Ukraine would you just mentioned a moment ago and I'm kind of curious when you when you talk to your dealers.
And obviously the folks that run your business in Europe .
Is there a sense for how that conflict has impacted investment at all and I'm kind of curious I mean, we do see a resolution at a point in time, presumably there is a lot of reconstruction of that has to go on over there.
I would imagine that the European Union would be quite involved.
Do you get any sense that there is chatter in terms of what that might mean for demand going forward and how you might play into that.
Yes, I mean anytime you got more on your doorstep and you got interest rates going up I think that puts everybody in a pretty uncomfortable position in terms of Europe . So for sure. There is some sort of cloud.
Overhanging the population in terms of rebuilding Ukraine, everyone loves the top about grand ideas, but theres nothing out there thats concrete that suggests with actually is going to happen. So I think it's hard to comment on what is really going to happen.
So you are not hearing anything at this stage in terms of your dealers or anything like that talking about that just wishful thinking I think does that mean.
There's no there's been no bills passed there's no activity. So you don't really nobody has a clue, what's going to happen in terms of rebuilding.
Do you have specific exposure to that market through through dealers, maybe I should know this I apologize I just I just never really know for us the bigger issue has been Russia, Ukraine is.
It's not a huge market it's more of a used market. So I wouldn't say that we were doing a tremendous amount of business. There, Russia was a big hit for us.
And we stopped selling in Russia.
And we took a charge actually this quarter that I talked about in my prepared remarks.
Got it yes.
And then my last question Middle East Great to hear that orders are up.
Obviously, theres a lot going on in Saudi Arabia.
Yes.
Can you talk a little bit about competitive dynamics I know, that's a market that everyone is buying for the Japanese and Chinese competitors and others.
How are you hey.
Hey, uncompetitive relative to those folks and.
Get a sense that you will be able to for lack of a better term capture your fair share of that.
Of the pie that demand ramps up.
Yes, so I mean, given the fact that the Chinese market slowdown the time, so far down the Chinese are extremely aggressive in the region and I think for simpler claims they'll make some gains.
But these projects are so intensive in terms of the risk of what they are actually building that I think.
Still bodes well for us, especially in higher tonnage applications.
They just can't afford to take the risk when youre because youre looking at the line.
500 meter tall 200 meter wide I mean, that's a humongous structure to take the risk on some of these other cranes I think it would be.
Really scary so.
I think it will be super competitive it always is in the middle East.
But I.
I feel really good in terms of where we are in the tower cranes because of our partner there in ft.
<unk>.
On the mobile side, it's more challenging as I say, because the Chinese are more competitive but again, we've got a good partner there in <unk> and we're actively chasing everything so I think it's more about picking the winners.
And as Aaron mentioned, we're continuing to invest in larger tower cranes, and new product development there to to be competitive in the region.
Understood appreciate the color.
Thanks, Nick.
At this time I will turn the call back to Mr. Warner for closing comments.
Before we conclude today's call. Please note that a replay of our second quarter 2023 conference call will be available later this morning by accessing the Investor Relations section of our website at Manitowoc Com. Thank you everyone for joining us today and for your continuing interest in the Manitowoc Company. We look forward to speaking with you again next quarter.
That will conclude today's call. Thank you all for joining you may now disconnect.
Okay.