Good day, everyone and welcome to the Manitowoc Company Fourth Quarter 2020 Earnings Call. Today’s call is being recorded. And at this time, for opening remarks and introductions, I would like to turn the call over to Ion Warner, Vice President, Marketing and Investor Relations. Please go ahead, sir..

Good morning, everyone and welcome to the Manitowoc conference call to review the company’s fourth quarter 2020 financial performance and business update as outlined in last evening’s press release.

Participating on the call are Aaron Ravenscroft, President and Chief Executive Officer and Dave Antoniuk, Executive 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 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. Please turn to Slide 2. 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 any implied or action 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 statements, whether as a result of new information, future events or other circumstances. And with that, I will now turn the call over to Aaron..

one, ensure the health and safety of our team; two, maintain the strength of our balance sheet; and three, position the company for long-term growth. I am very proud of how the team managed through these unprecedented times and how well we executed on these three priorities.

First, with regards to safety, we continue to see low incidence of COVID cases throughout our operations. In addition, we achieved the lowest recordable injury rate in the history of the company. The recordable rate was 1.34. Secondly, we ended the year with a strong balance sheet. We have $120 million of cash and over $400 million of liquidity.

And thirdly, we strengthened our foundation for future growth. In the face of the pandemic, we continued to develop the future leaders of our organization. During the year, approximately 200 frontline supervisors completed a 12-month leadership program that covered safety, leadership skills and lean.

We also kicked off a mentoring program for our key female leaders, which has already resulted in a few promotions. Our lean journey continued in 2020 with almost 900 entries in our global Manitowoc Way Lessons Learned competition. There were many deserving submissions, but our Wilhelmshaven Germany facility took home the price.

The team is in the middle of a multiyear initiative to improve production flow on the campus. During 2020, the team developed a robotic measuring device that proved to be a major breakthrough in our boom assembly process and cleared the path for us to make further progress on several other elements of its initiatives.

In addition, this year, we rolled out the Manitowoc Way CEO Award, to recognize a team member who exemplified not just lean thinking, but lean action. I would like to recognize Saleem Ahmed [ph], Test Field Supervisor in Wilhelmshaven.

Saleem self-engineered a system to convert manual boom cable drum alignment on the test field to an electronic process during assembly. Thank you and congratulations, Saleem. This type of behavior embodies our values and culture within the Manitowoc Way business system.

Turning to the financials, our performance during the fourth quarter exceeded our expectations. Taking a closer look, it’s really a tale of two stories. Our profitability for the fourth quarter was significantly better than our forecast, primarily due to a favorable product mix.

We had higher than anticipated book and ship demand for our tower cranes in Europe. This also has the added benefit of higher factory absorption in those related sites. However, while our orders and backlog exceeded our forecast, they were heavily influenced by a couple of sizable crawler orders and favorable exchange rates.

In terms of our balance sheet, we reached our second half target to reduce inventory by $80 million on a currency-neutral basis. With that, I will pass it to Dave to provide more color on the financial results and after which time, I will conclude with some comments on our outlook..

Thanks, Aaron and good morning, everyone. Let’s move to Slide 4. Our fourth quarter orders totaled $509 million, an increase of 8% compared to $472 million of orders last year. On a currency-neutral basis, Q4 orders were up $22 million or 5%.

As Aaron previously mentioned, the increase in orders was primarily driven by a couple of large crawler orders in the U.S. Our 2020 ending backlog of $543 million was up 14% over the prior year and up 10% on a currency-neutral basis. The increase in backlog was mainly due to the increased crawler crane orders and the timing of shipments in Q4.

Net sales in the fourth quarter of $430 million were in line with our expectations and decreased $33 million or 7% from a year ago. A decline in the Americas segment was partly offset by stronger results in the EURAF and MEAP segments. Net sales were favorably impacted by approximately 4% from changes in foreign currency exchange rates.

Our adjusted EBITDA for the fourth quarter was $34 million, an increase of approximately 11% year-over-year. A favorable product mix, along with reduced discretionary spending, allowed us to exceed the prior year and our expectations for the quarter.

As a percentage of sales, adjusted EBITDA margin improved to 7.9%, an improvement of 120 basis points over the prior year. During the fourth quarter, we incurred approximately $1 million of restructuring expenses predominantly related to severance costs in India and Europe. Our GAAP diluted earnings per share in the quarter was $0.05.

On an adjusted basis, diluted earnings per share declined $0.16 from the prior year to $0.19 per diluted share.

Higher income tax expense due to our jurisdictional mix and the impact from net foreign currency losses were the main contributors to the year-over-year decrease in adjusted diluted earnings per share partly offset by improved operating income. Moving to liquidity, we generated $36 million of cash from operating activities in the quarter.

On a currency-neutral basis, we achieved our inventory reduction target of $80 million in the second half of the year. Most of this improvement occurred in Q4, which was the main source of our cash flow generation in the quarter. Year-over-year, our cash flow from operating activities declined due to the timing of collections on accounts receivable.

We ended the year with a cash balance of $129 million, a decline of approximately $70 million year-over-year. However, our total liquidity remained strong at $412 million with no borrowings outstanding on our ABL. Now, I will recap the financial results for the full year. Orders totaled roughly $1.5 billion, down $127 million or 8% from the prior year.

Foreign currency exchange rates benefited 2020 orders by approximately 1%. Lower orders in the Americas and EURAF segments were partly offset by gains in the MEAP segment.

Our net sales for the year totaled approximately $1.4 billion, a 21% decrease from 2019 and were positively impacted by $12 million or 1% due to favorable changes in foreign currency exchange rates.

The year-over-year decrease was primarily attributable to entering the year with a lower shippable backlog, coupled with a reduction in demand related to the COVID-19 pandemic. Our adjusted EBITDA declined $74 million or 47% from the prior year, resulting in a 19% decremental margin on nearly $400 million of less revenue.

This better-than-expected flow-through result is a testament to the efforts of our team members throughout the world during these unprecedented times. We were able to limit our discretionary spending while continuing to invest in our new product development and growth strategies. Congratulations to the team for a job well done.

Our full year 2020 adjusted net loss was $12 million compared to net income of $67 million in 2019. Adjusted diluted net loss per share of $0.35 was impacted by approximately $0.01 from our first quarter share repurchases.

As mentioned previously, we suspended our share repurchase program during Q1 and we do not anticipate repurchasing additional shares in 2021. Full year cash flows from operating activities were a use of $35 million, primarily driven by the timing of accounts receivable collections and the net loss recorded in the year.

As I previously mentioned, we ended the year with ample liquidity and a strong balance sheet. With that, I will now turn the call back to Aaron..

Thank you, Dave. Let’s please move to Slide 5. Turning our focus to 2021, I see this as a year of transition, one step forward one step back. Overall, while we believe that we are beyond the economic trough brought on by the COVID-19 pandemic, we expect the recovery to be choppy.

The recently enacted stimulus packages by many countries and the rollout of the COVID-19 vaccines are all favorable developments. However, there is still a long way to go to get back to normal. And unfortunately, some of these actions will have unintended consequences.

First and foremost, while economic stimulus packages are essential to the recovery, fiscal spending has a tendency to create inflation and we are already seeing this in steel pricing. Moreover, the heavy debt burden that this has created in the United States has resulted in a weaker dollar.

Given the speed at which both these variables are changing, I am concerned that we will see a dislocation in the market, which will create a short-term cost challenge for us. Secondly, Manitowoc benefited from substantial cost containment actions during 2020 that will not repeat in 2021.

Between our discretionary spending restrictions, bonus program costs, social claim benefits and increases in insurance costs, we will easily see more than a $15 million cost headwind.

Thirdly, with the increase in crawlers, our mix is shifting towards lower margin products and we continue to suffer from low production levels at our German factory, where we manufacture all-terrain cranes. Please move to Slide 6. We continue to invest in our future.

We have earmarked $15 million of CapEx to further expand our European tower crane rental fleet in 2021. We continue to scale up our Chinese tower crane business that serves the belt and road regions.

We are accelerating our product development programs and our all-terrain product line, which we will showcase at Bauma in 2022 and we continue to pursue acquisitions.

These growth initiatives require more investment than we have made over the last couple of years, but we are confident that these strategic initiatives will fuel our future growth as the train industry rebounds. In closing, the current economic environment is extremely dynamic in terms of demand and costs.

And therefore, we will not provide specific financial guidance for 2021. Directionally, we believe that our revenue will be up modestly, but there are some clear indicators that we will see margin pressure from cost headwinds and product mix while we are investing in the future. 2021 will be a year of transition.

With that, operator, please open the line for questions..

Thank you. [Operator Instructions] We will take our first question from Ann Duignan with JPMorgan..

Good morning.

Could you walk us through any further detail or any quantification of each of the headwinds that you are facing all things being equal, if material costs of steel prices stay where they are at today, how much would that cost you incremental dollars? What – how is this weakening dollar going to impact you quantitatively and then the less favorable product mix? If you could just walk through in more detail where you are thinking those will be?.

Thanks, Ann. I think the real complex part here is we are dealing with several variables and trying to project where they go in the future when they have moved so much in the last 4 weeks. So – and we are not in a good position to really quantify it.

In terms of the steel pricing situation, right now, obviously, there is some dislocation as demand is outpacing supply. Our hope is that supply comes back on and pricing starts to plateau a lot like what we saw in 2017.

So, it’s tough for us to give you a good number on where we think that since having only been off as strong as it’s been for 4, 5 weeks. Some of those other items, I think it’s the same case scenario.

Dave, you want to just provide a little color on the issues of foreign currency?.

Yes. So Ann, while we do benefit from the translation of currency, it also increases the cost of our products imported from Europe and sold into the U.S. And unfortunately, there is always a lag in pricing in catching up to the currency fluctuations, particularly in extremely competitive products like our all-terrain business.

So from a short-term perspective, currency does become a headwind for us relative to those products that we bring into the U.S..

Okay. And I was going to ask about pricing, but I think you addressed it there. So my follow-up would be as I look at your growth initiatives, can you explain your thinking on the scale-up of your China tower crane business and how do you determine whether that’s a good return on invested capital? I mean, it’s a hugely competitive market.

At the end of the day, there is very little differentiation, one crane specialty steel in a row as the Chinese would say.

So, how do you differentiate yourself in China and why should investors believe that that’s a good investment?.

Yes. So, firstly, the tower crane market in China is the largest tower crane market in the world. They make 30,000 or 40,000 tower cranes a year, so huge market opportunity, but also that’s a platform of how we really compete in places like the Middle East, Asia-Pac, South America. So, it’s well beyond just China.

In terms of return on investment, I mean, Potain is a well-known brand locally. We found that the rental houses are all very interested for us to get into a competitive position.

The real issue we have long-term, strategically speaking, if we look through our history here is that we historically had moved old legacy product lines to China and basically say they will make the old legacy stuff in China reduce the cost.

Basically, over the last 2 years, we have reinvigorated our engineering locally and we have been producing, what I’d call our Asian specified cranes for those local markets so we can be competitive.

So, there is this ongoing game of not only we have to be price competitive, but we are also getting our, call it, value engineering initiatives in line with making sure that our specs are where they need to be to be competitive. So for us, it’s a great opportunity for growth and we see good margins in the business.

So, I think it’s just a great opportunity for us..

Okay. I will leave it there in the interest of time and get back in queue. Thank you..

Thanks, Ann..

We will take our next question from Stephen Volkmann with Jefferies. Please go ahead..

Hi, good morning..

Good morning, Steve..

Can you give us anymore detail on these crawler crane orders? It sounds like they were meaningful, but maybe you are not expecting that to really be a harbinger of anything more to come? And I would have thought large crawlers are good for the margin mix.

So, I don’t know when they get shipped, but just anymore details there?.

Yes. So, the crawler crane business in the United States is as low as it’s been in 10 years. So, when we get a couple of these others and are big ticket items that numbers hit big ways. In terms of the margin, basically over the last 10 years, especially as the dollar has remained strong for most of that period, pricing has been relatively constant.

So, this is some of the big challenges that we face. As I say, it’s some – the strengthening euro has challenged for us in the short-term, but this is an area where it could be a big benefit to us in the long-term as pricing adjusts accordingly in our local market. So in terms of a trend, fourth quarter is fantastic.

I think we have seen one order so far this year. I mean it’s so lumpy that it’s tough to say that if it’s a full one trend, I do think that over the next 3 or 4 years, the market will start to trend back up, sort of low 20..

Okay. And then Aaron, what do you hear from the large rental guys in the U.S. specifically, because I assume you have lots of conversations with them.

What are you hearing relative to things like utilization and fleet age? We have seen some other rental type equipment where CapEx has bounced back, I think faster than people expected, just what’s the tone of those types of customers?.

Yes. So I would say that the smaller rental houses are more active in the current environment. I mean, the large rental houses, it’s really spotty when we talk about utilization. I have talked to a few large rental houses where the utilization rates have been a big challenge for them in the short-term.

And I mean if you look down in oil patch there is lot of cranes sitting right now. So, I think it depends on where you look around the country and what the utilization is, but I think on the whole, utilization is pretty soft.

That being said, the one thing that I always hear from our customers is that, while this year maybe tough and they may not be spending on CapEx, the fleets continue to get older and older and older. So, at some point, they are going to have to re-fleet..

Okay, I appreciate it. I will pass it on..

Thanks, Steve..

Our next question comes from Jamie Cook with Credit Suisse..

Good morning, Jamie..

Hi, good morning. I guess two questions. One following up on Steve’s question on the order strength tied to crawlers.

Is there anyway you could help us understand what the orders would have looked like sort of ex that and ex the crawler helped so, on a normalized basis and how you are thinking about the order trends in the remaining quarters? And then I guess my second question is I think you said you expect top line growth for 2021 to sort of be modestly positive.

Are there any sort of market outgrowth opportunities embedded in that forecast or is that more of what you think the industry should do? Thanks..

Yes. So for the crawlers piece just to give you a feel, I mean, we took a $50 million order with just a couple of days left in the year. I mean, they’re just extremely lumpy. That’s only a couple of cranes. So those could have easily shifted into the first quarter. If I look at our January orders, are sort of in line with where we expect it to be.

I mean a little bit down versus last year, but January is always a slow month. So it’s – I think at least in the short-term, we have seen we got lot of the crawler orders that we would have expected in the first or second quarter.

In terms of our overall outlook and our modest growth, I think some of that’s just that the second quarter was so slow last year that we had some easy comparisons. That will really help drive the growth, but I wouldn’t say there is any specific market that’s really driving that..

Okay.

So you don’t embed any market outgrowth in your forecast for 2021 that could be then?.

No, I mean a perfect example. Like David mentioned, the Middle East was pretty strong for us in the fourth quarter. I mean I wouldn’t call it systemic. I mean, the tower crane business is tough sledding. The mobile crane business has been really slow for the last 5 years.

There is nothing that’s systemic that’s driving and it’s just we’ve seen some large projects break free and we been able to land a couple of those orders, and we got a couple more coming. But I don’t – it’s something that I would say systemic that I could see sort of throughout the whole year and really call a turn.

Yes, I think Europe has got a tailwind, you got to wait and see what happens with the vaccine in Europe pretty really got a good feel because I think they are still way behind in terms of where they thought would be..

Okay, thank you. I appreciate it..

Thanks, Jamie..

We will take our next question from Jerry Revich with Goldman Sachs..

Good morning, Jerry..

Good morning, everyone. Hi, good morning..

Good morning, Jerry. .

Can talk about – can you hear me okay?.

Yes..

Can you – okay. Sorry about that. Good morning. I’m wondering if you could just talk about the pricing on a spot basis today. Dave, I appreciate the comments that what’s in backlog was obviously price – the move higher in steel. But I would imagine it’s a pretty transparent market.

So the cost headwind that we’re talking about I would presume you are pricing for those on new bids.

So maybe you could just expand on those prior comments, if you don’t mind?.

Yes. I’d say it looks almost identical to what we saw in 2017. We have got the charts that we track, whether it be long or coil and they are up, call it, 25%ish in the last couple of weeks. That’s all public data out there to find. I think what’s tricky for us also to nail down on how this all plays out as this game of what we purchased.

So typically, for instance, in the United States, we’ve purchased larger blocks and we have got more protection if we look out, say, let’s say, 6 months, where in Europe, we have sort of contracts..

And in terms of the pricing that you are quoting to customers, I would imagine it’s taking into account the move on the spot market, correct. Those are the comments that you talking earlier about that being a lot – just to be clear..

Yes. I wish we could change prices that fast. I mean that’s some of my remarks where I said, I think there’s a dislocation in the market because you are going to have these adjustments, same thing, for instance, in the United States.

Any product that’s coming in from Europe, eventually, it’s going to have to be adjusted relative to the strength of the euro but that doesn’t happen overnight. Plus, we have got what we have in our backlog. Those prices don’t often change, rarely change. And a lot of these projects in this environment were negotiated.

So I do expect that if this thing holds up, we’ve already started talking about price increases internally, but there is a bit of a process to get it out into the field..

So hopefully, if we follow the same trends that we saw in 2017, we’ll start to see steel come down and moderate and then it’s much more manageable..

Yes and in the quarter, really strong margin performance by the team. And in your prepared remarks, you spoke about a weak dollar and other factors that appear to be continuing. So can you just talk about why we shouldn’t expect you folks to be in a better cost position given your overweight U.S.

dollar exposure versus the competition? And I fully appreciate the comments on the European products.

But on a net basis, you are still at an advantage versus imports coming from outside of Europe for component segment products?.

Yes. So Jerry, I’ll take that. So I think, generally speaking, we did get the added benefit of really favorable product mix in Q4. And some of the products that generated, what I’ll say is the revenue that was in excess of our anticipations were products that generated really good margins.

And you couple that with still the – I will say restrictions or low level of ESG&A spending, couple those two together and that – those two really were the main drivers of our better than expected results in Q4. On the long run, I don’t think we will see those types of margins into 2021..

Yes. The thing I would add is there is a serious dislocation in the marketplace right now with respect to supply and demand every parts, whether it be steel. If you look at China freight, for instance, this is a perfect example of something that has popped up over the last couple of weeks.

If I look at what it costs us to ship a crane from China to Singapore, I don’t know, 6 or 8 weeks ago, it cost $25,000. And today, it’s $63,000. And that’s all because there’s a shortage for containers for export. So you see these sort of things sort of pop up and then they go away.

And then of course, there is this domino effect of how it plays in the supply chain or in the case of steel. So, there is plenty of headwinds for all of us out there to manage through this year as everyone starts to come back online..

Appreciate the color. Thanks..

We will take our next question from Mike Shlisky with Colliers Securities..

Good morning, Mike..

Hey, good morning, guys.

Can we maybe go back to one of your earlier answers and perhaps slide and dice some of the conditions based on end market? Can you tell us how things are going and maybe how your utilities for this infrastructure versus oil and gas? Are there any big standouts on a positive or negative side here?.

Yes. So the standout is the wind business. That’s really where we’re seeing the strength in the crawler cranes. Oil and gas, even though oil prices continue to inch up, we really haven’t seen any drastic change. And that will take some time because it’s – we got to get the rental houses think get their utilization before you really see some action.

So I would say utilities has been strong with the transmission work that’s out there. Utilities has been a nice robust. I think that pretty much covers the main markets in the United States..

Okay, great. And another question was a little about some of the fire up points on the cash flow for 2021.

Just quickly, can you maybe just tell us, is there a CapEx outlook that we should be looking at? And then secondly, are there any important goals you have got for 2021 for inventories or for broader working capital?.

Yes. So Mike, we are not providing guidance. However, I will say that we are targeting positive cash flow from operating activities at this point in time. And I think depending on where we end up, we can flex up our CapEx or flex down our CapEx. But right now, I can’t give you hard dollars just because of the uncertainty it exists.

But we – regardless, we are targeting positive CFOA..

And then on the inventory side?.

Okay..

Please ask….

Come on, Mike..

Mike will take the order. On the inventory side, there is a couple of pieces to really think about and work on it. One is FX. So it actually drove it up for our inventory a here by $20 million, just to put it into perspective.

So where that goes, will have an effect on where our inventory is I think that our inventory for use is a little bit higher than where we would like it. So we want to keep on working that down. So that’s an opportunity for us.

And then we have our normal seasonality that we will manage through where we normally increased inventory in the beginning of the year and then we will work it down in the second half of the year. So there is some puts and takes..

Got it. Sorry to rush you there. I will pass it along. Thank you..

No problem, Mike. Thank you..

[Operator Instructions] We will take the next question from Mig Dobre with Baird..

Good morning..

Hey, good morning everyone..

Good morning, Mig..

So yes, good morning. Going back to thinking through this yield cost dynamics, my recollection is that deal was – accounts for better than 20% of your COGS. I think that I got from very a couple of years back.

So correct me if I’m wrong on that, but then just structurally, as we’re thinking about margins for ‘21, it’s probably fair to say that your margins are going to be pressured in the back half of ‘21, probably lower year-over-year.

Is it a fair expectation for us to have that margin could be up year-over-year in the front half of the year? And I’m thinking about Q1 specifically because I would imagine that some of these inflationary items are not impacting Q1 as much as maybe you are going to see in Q2 and especially in the backlog?.

Yes. I think that’s a fair statement with respect to the first quarter. But I mean, we have our own little seasonality the way our margins move. I mean I think probably a better way. They want to answer that relative to the decremental margins that might be..

Yes. So I think make when we look at it. We’ve always kind of articulated and we did better this year that on the downside, we looked at 25% to 30% decrementals and on the upside, 20% to 25%. But from a seasonality typically, our Q1 is lower than our Q2 and we are going to do better in Q2, I believe as well.

The first half, we should be up slightly maybe in that regard to answer your question, but it’s a wait and see. I mean we do have reasonably good backlog coverage for the first half of the year, so..

Right.

And as far as steel as a percentage of COGS, do I remember that correctly, that it’s a little better than 20%?.

Yes. I mean, I – that’s a number that we have – provided.

We typically – it varies by product lines of course obviously, depending on there when we look at material costs, but obviously, there is a lot of steel in our products, right?.

Yes. And even in some of our parts, this is where it gets tricky is we are seeing – we already have suppliers who want to increase the prices that are on the– steel effect. So, this is where the domino effect kicks in..

Sure, sure. And then maybe my final question here, you talked about some timing issues around accounts receivable collection. I’d like maybe a little more detail on that.

And given the way you’re thinking about the business, the top line really for ‘21 should we expect you to continue to build inventory, either raw material or components ahead of some of these price increases or can both accounts receivable and inventory still be a source of cash for 2021? Thanks..

Yes. So thanks, Mig. So with regard to receivables, I’d say if we went back to year-end 2019, we had a perfect storm on collections everything kind of fell into place, I would say, better than normal. And I think that in 2020, at the end of the year, we were just pretty much average when it came to our collections.

So it’s just a matter of – it is a pure matter of timing. It’s not a matter of uncertainty, which is the good news. So it’s just – we’ll collect most of that money in January.

With regard to what I will say is the inventory and the seasonality, as Aaron did mention, in the first half of the year, we do grow inventories as part of our seasonal trend for the construction season that takes place in the spring. So there will be an increase there. I’d say that receivables are going to be less impacted.

It’s more just an inventory. However, looking at 2021, I go back to say that we are targeting positive CFOA, which will be generated through mostly our working capital..

Alright. Thanks guys a lot..

Thank you..

Thank you..

We will take our next question from Cliff Ransom with Ransom Research..

Good morning..

Good morning, folks. A quick comment and then two quick questions.

One, congratulations and it just goes to show what happens when you bring in brilliant outside talent to help a facility?.

We appreciated your assistance..

Yes. Do you – when you think about the lessons learned, [indiscernible] how will you translate them to your other plants. They are not necessarily doing the same processes, but the thinking is important.

How will you spread that gospel?.

Yes. I mean, you raised a good point, especially in the COVID-19 world with the virtual. Obviously, we try to do as much as we can on teams, and we have regular reviews. So for instance, we have a person who runs the Manitowoc way program, he holds regular calls and reviews with respect to all of the Lessons Learned leaders at each individual plant.

So they are required to share Lessons Learned on a monthly basis with each other. That’s where about what you can do right now.

I mean, we’ve done some drone videos and share that across the organization, so people could see some of the changes we have made, but the real key is we get out of the virus situation, we can get back to traveling because the home loan comes and we are able to move people around the world and moving from factory to factory or participating in different kaizens, I am super excited what our team [indiscernible] done with TPM.

But right now, it’s tough to get anyone to see it because it can only send pictures to each other. So, I think the only way you really get your arms around something like that is for us to send some of our other folks in different facilities to physically see what they are doing..

Yes, nothing like going to the gemba [ph].

Dave, a question for you, when you talk about the collections experience contrasting 2019 and 2020, how much of that was happenstance and how much of that was applying lean thinking to back office carpet land transactional world?.

Yes. So that’s a great question, Cliff. I would say that when you look at how we’ve changed over the last number of years, our processes that we’ve implemented within the organization from a back office standpoint have become more streamlined. And what we’ve seen in ‘19 was a big benefit associated with that.

I’d say that in 2020, it was more of a factor of when the shipments occurred, and our ability to collect that and which is why we anticipate seeing that come in, in early 2021. But the efficiency that we operate now in collecting our receivables is probably the best that it’s ever been at any point in time right now..

What’s your next step to make it better?.

So, good question. So….

I am hanging you on the continuous improvement – priced on your continuous improvement to card..

Absolutely, absolutely. I will say that many of our sales are financed sales. And so in working with our finance partner, we’re working towards reducing the time from the sale occurrence to the funding of the sale.

And in that regard, we’ve made great strides over the last couple of years, and we have a a new agreement with them that just came into effect this past year, and we look forward to just continuous improvement as that’s – from an 80:20 standpoint, that’s 80% of our dollars versus the 20%, which is what I’ll say is normal routine collections.

But the good news is that you continually get calls from people to help you in collecting and particularly in delinquent accounts. And I’d say that we have a great relationship with our customers.

We stay on top of any issues with our customers, and that affords us the opportunity to make our collections within a reasonable time frame with agreed terms. So we are pretty happy with the way it’s been progressing..

Thank you..

You are welcome..

Thanks, Cliff..

And there are no further questions. I would like to turn the call back over to Ion Warner for any additional or closing remarks..

Before we conclude today’s call, please note that a replay of our fourth quarter 2020 conference call will be available later this morning by accessing the Investor Relations section of our website at www.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. Thank you..

And that does conclude today’s presentation. Thank you for your participation and you may now disconnect..