Manitowoc Targets $1B Aftermarket Business as Crane Demand Builds

Key Points

• Manitowoc is shifting toward recurring aftermarket revenue to reduce exposure to volatile new-crane cycles. Aftermarket sales have grown to more than $700 million from roughly $375 million six years ago, with a long-term goal of reaching $1 billion and half of total revenue.
• Crane demand remains strong, supported by data-center, semiconductor, infrastructure, energy and industrial projects. Orders have been strong for three quarters, backlog exceeds $1 billion, and large crawler cranes are sold out for 2027.
• The company is expanding branches, field-service staffing and technology while targeting a 12% EBITDA margin. Non-new-machine sales have risen 84% since 2020 and carry gross margins of about 35%.

Manitowoc NYSE: MTW is continuing to shift its business toward aftermarket products, service and lifting solutions as it seeks to reduce its exposure to the historically volatile new-crane cycle, CEO and President Aaron Ravenscroft said during a company presentation.

Ravenscroft said the crane manufacturer has spent the past several years reducing costs, expanding service capabilities and pursuing a more recurring revenue mix. The company has removed $150 million of costs from the business since its transformation began, he said, while building an aftermarket operation that now generates more than $700 million in sales, up from about $375 million roughly six years ago.

“We spent 100 years focused on the most volatile, cyclical, lowest-margin portion of the crane industry,” Ravenscroft said. The company’s aftermarket and lifting-solutions operations, he added, represent a more stable part of the business.

Aftermarket strategy and service expansion

Manitowoc said it has sold more than 100,000 machines during the past 20 years, creating an opportunity to grow parts, maintenance, retrofits and field-service revenue. Ravenscroft said crane fleets globally are aging, with some machines 25 to 30 years old, potentially supporting demand for both maintenance and eventual fleet replacements.

The company has established a goal for aftermarket sales to account for half of total revenue over time. It previously set an aftermarket target of $750 million and later raised that target to $1 billion, according to Ravenscroft.

To support that effort, Manitowoc has expanded its branch network and staffing. The company has 47 branches and expects to reach 50 soon, Ravenscroft said. Recent additions include locations in Denver; Aiken, South Carolina; Kansas City; Baton Rouge; Peru; Chile; and Monterrey, Mexico, as well as sites in Madrid, Paris, Barnsley in the U.K., and Warsaw, Poland. The company is also expanding in Australia, including Brisbane and Melbourne.

Manitowoc has added more than 200 field-service technicians organically over the past five years, Ravenscroft said. The company is recruiting technicians with varying levels of experience and training employees from vocational schools and high schools, while using mobile training centers to bring instruction closer to employees, dealers and customers.

The company is also broadening its portfolio beyond traditional replacement parts. Ravenscroft cited upgrades such as modernized crane displays, wire rope and rigging products, tower-crane anchorage systems, hydraulic pinning systems and battery products designed to help tower cranes operate when grid access is limited or delayed.

Technology and product support

Manitowoc is implementing ServiceMax, a field-service management platform owned by PTC, to improve the tracking of cranes throughout their operating lives and make service information more accessible. Ravenscroft said the company historically relied heavily on spreadsheets to track machines and service histories.

The company expects artificial intelligence tools eventually to help technicians identify solutions based on service work performed on similar cranes in multiple countries and languages. Manitowoc is also testing remote-operation technology for tower cranes in China, which could allow operators to control cranes from a separate location in the future.

Demand trends and market outlook

Ravenscroft said Manitowoc’s orders have been strong for the past three quarters, and its backlog exceeds $1 billion. Demand for large crawler cranes has been supported by data-center construction, with the company sold out for 2027, although it has not opened its 2028 build schedule.

The company is attempting to limit its production schedules to roughly a 12-month window, Ravenscroft said, seeking to reduce exposure to dealer-driven order swings, inflation and tariffs. Crane manufacturers can experience significant volatility when dealers place orders to secure production capacity and later cancel or reduce orders as their inventories increase, he said.

Ravenscroft pointed to data centers, semiconductor projects, airports, stadiums, mining, oil and gas, power transmission and nuclear construction as potential sources of crane demand. He cited semiconductor investment in South Korea, including projects involving SK hynix and Samsung, as an important driver for tower-crane activity.

In Europe, Ravenscroft characterized the tower-crane market as being in a gradual recovery rather than a robust expansion, citing housing shortages and improving activity in Spain and some southern European markets. Mobile-crane demand has been flatter, particularly in Germany, although he said the company is monitoring the potential impact of German economic policies.

Capital allocation and financial targets

Manitowoc completed two dealer acquisitions in 2021 for $180 million. Ravenscroft said those businesses initially generated about $30 million in EBITDA and have produced more than $45 million in EBITDA over the last 12 months.

The company has also invested about $60 million in its rental fleet. Ravenscroft said rental and rent-to-purchase arrangements can support return on invested capital through depreciation and subsequent used-machine sales.

Management’s longer-term goal is to reach a 12% EBITDA margin, supported by higher-margin non-new-machine sales, potential market-volume recovery and greater utilization of its branch network. Ravenscroft said non-new-machine sales have increased 84% since 2020 and generate gross margins of about 35%.

About Manitowoc (NYSE:MTW)

The Manitowoc Company, Inc NYSE: MTW is a global manufacturer of heavy-lift cranes and lifting equipment. The company's product portfolio includes tower cranes marketed under the Potain brand, mobile hydraulic cranes sold under the Grove, Manitowoc and National Crane names, and engineered lifting solutions such as mast climbers and platform hoists. Manitowoc serves a wide range of industries, including construction, infrastructure, energy and industrial markets.

Headquartered in Milwaukee, Wisconsin, Manitowoc operates manufacturing facilities, sales offices and rental centers across North America, Europe, Asia, Latin America and the Middle East.

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