☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

(Exact ~~name~~Name of ~~registrant~~Registrant as ~~specified~~Specified in its ~~charter)~~Charter)

Indicate by check mark whether the ~~Registrant~~registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the ~~Registrant~~registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate website, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the ~~Registrant~~registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

~~The number~~As of September 30, 2021, the registrant had 35,041,379shares ~~outstanding~~ of ~~the Registrant’s~~ common stock, $.01 par value ~~as of September 30, 2017, the most recent practicable date, was 140,734,391.~~per share, outstanding.

The accompanying notes are an integral part ofto these Condensed Consolidated Financial Statements.

~~Notes to Unaudited~~ Condensed Consolidated ~~Financial~~ Statements of Equity

3. Net Sales

The Company defers revenue when cash payments are received in advance of satisfying the related performance obligation. These amounts are recorded as customer advances in the Condensed Consolidated Balance Sheets. The table below shows the change in ~~accounting principle, certain amounts in~~ the ~~Company's Condensed Consolidated Financial Statements~~customer advances balance for the three and nine months ended September 30, ~~2016 were adjusted.~~2021 and 2020.


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Balance at beginning of period	$	21.0		$	15.8		$	25.5		$	25.8
Cash received in advance of satisfying performance obligations		33.9			26.9			93.7			71.7
Revenue recognized		(27.1	)		(19.8	)		(91.3	)		(73.9	)
Currency translation		(0.2	)		0.2			(0.3	)		(0.5	)
Balance at end of period	$	27.6		$	23.1		$	27.6		$	23.1

A summary of the adjustments on the impacted financial statement line items in the Condensed Consolidated Statements of Operations as revised and as previously presented in the September 30, 2016 Form 10-Q is as follows ($ in millions):

Three Months Ended September 30, 2016

Nine Months Ended September 30, 2016

As
previously
presented

Impact of
change to
FIFO

As revised

As
previously
presented

Impact of
change to
FIFO

As revised

Cost of sales

$
308.3

$
0.7

$
309.0

$
1,023.3

$
3.8

$
1,027.1

Operating loss

(133.5
)

(0.7
)

(134.2
)

(125.7
)

(3.8
)

(129.5
)
Loss from continuing operations before taxes
on income

(143.5
)

(0.7
)

(144.2
)

(229.7
)

(3.8
)

(233.5
)
Provision (benefit) for taxes on income

(5.3
)

—

(5.3
)

116.9

(13.8
)

103.1

Income (loss) from continuing operations

(138.2
)

(0.7
)

(138.9
)

(346.6
)

10.0

(336.6
)
Discontinued operations:

Loss from discontinued operations, net of income
taxes

(1.8
)

—

(1.8
)

(5.8
)

—

(5.8
)
Net income (loss)

$
(140.0
)

$
(0.7
)

$
(140.7
)

$
(352.4
)

$
10.0

$
(342.4
)

Income (loss) per common share - basic and diluted

Income (loss) from continuing operations

$
(1.00
)

$
(0.01
)

$
(1.01
)

$
(2.52
)

$
0.07

$
(2.45
)
Loss from discontinued operations

(0.01
)

—

(0.01
)

(0.04
)

—

(0.04
)
Income (loss) per common share

$
(1.01
)

$
(0.01
)

$
(1.02
)

$
(2.56
)

$
0.07

$
(2.49
)

~~2. Discontinued Operations~~

On March 4, 2016, Manitowoc completed the Spin-Off of MFS. The financial results of MFS are presented as loss from discontinued operations, net of income taxes in the Condensed Consolidated Statements of Operations. The following table presents the financial results of MFS through the date of the Spin-Off for the indicated period and does not include corporate overhead allocations:

~~Major classes of line items constituting earnings from discontinued operations before income taxes related to MFS~~

($ in millions)

Three Months Ended
September 30, 2016

Nine Months Ended
September 30, 2016

Net sales

$
—

$
219.6

Cost of sales

—

141.5

Engineering, selling and administrative expenses

—

48.4

Amortization expense

—

5.2

Restructuring expense

—

0.3

Separation expense

—

27.7

Total operating costs and expenses

—

223.1

Loss from operations

—

(3.5
)
Other expense

—

(1.8
)
Loss from discontinued operations before income
taxes

—

(5.3
)
Provision for taxes on earnings

1.8

0.5

Loss from discontinued operations, net of income
taxes

$
(1.8
)

$
(5.8
)

Net losses recorded by the Company related to discontinued operations from various businesses disposed in prior periods were $0.1 million and $0.3 million for the three and nine months ended September 30, 2017, respectively.

Manitowoc and MFS entered into agreements in connection with the Spin-Off, including a transition services agreement (“TSA”), separation and distribution agreement, tax matters agreement, intellectual property matters agreement and an employee matters agreement.

Pursuant to the TSA, Manitowoc, MFS and their respective subsidiaries provided various services to each other on an interim, transitional basis. Services provided by Manitowoc included, among others, finance, information technology and certain other administrative services. The services generally commenced on March 4, 2016, and all have terminated, generally within 12 months of that date. Billings by Manitowoc under the TSA were recorded as a reduction of the costs to provide the respective service in the applicable expense category.

Separation costs recorded by the Company during the three and nine months ended September 30, 2017, and three months ended September 30, 2016, related to the Spin-Off were negligible. During the nine months ended September 30, 2016, the Company recorded $27.7 million of separation costs related to the Spin-Off. Separation costs consisted primarily of professional and consulting fees and were included in the results of discontinued operations.

~~3. Inventories~~

~~The components of inventories as of September 30, 2017 and December 31, 2016 are summarized as follows:~~

($ in millions)

September 30,
2017

December 31,
2016

Inventories:

Raw materials

$
133.2

$
109.3

Work-in-process

125.9

88.4

Finished goods

272.4

270.9

Total inventories

531.5

468.6

Excess and obsolete inventory reserve

(49.3
)

(39.6
)
Inventories — net

$
482.2

$
429.0

~~In the fourth quarter of 2016, the Company changed its method of inventory costing from LIFO to FIFO for certain of its inventory. See footnote 1 for further information.~~

~~4. Notes Receivable~~

Notes receivable balances as of September 30, 2017 and December 31, 2016, consisted primarily of amounts due to the Company's captive finance company in China and the remaining balance on the note from the 2014 sale of Manitowoc Dong Yue. In the third quarter of 2017, the Company renegotiated the terms of the note with Manitowoc Dong Yue to provide extended payment terms, which resulted in a reclassification of $9.8 million from current notes receivable to long-term notes receivable. As of September 30, 2017, the Company had current and long-term notes receivable in the amount of $35.6 million and $25.7 million, respectively. As of December 31, 2016, the Company had current and long-term notes receivable in the amount of $62.4 million and $21.1 million, respectively. Long-term notes receivable are included within other long-term assets on the Condensed Consolidated Balance Sheet.

~~5. Goodwill and Other Intangible Assets~~

~~The changes in the carrying amount of goodwill for the year ended December 31, 2016 and the nine months ended September 30, 2017 are as follows:~~

($ in millions)

Total

Balance as of January 1, 2016

$
306.5

Foreign currency impact

(6.9
)
Balance as of December 31, 2016

299.6

Foreign currency impact

18.1

Balance as of September 30, 2017

$
317.7

~~The Company accounts for goodwill and other intangible assets under the guidance of ASC Topic 350, “Intangibles — Goodwill and Other” for its single reporting unit, Cranes.~~

The Company performs an annual impairment review during the fourth quarter of every year, or more frequently if events or changes in circumstances indicate that the asset might be impaired. There have been no impairment indicators since the fourth quarter of 2016; therefore, no impairment review has occurred. The Company performs the impairment review for goodwill and indefinite-lived intangible assets using a fair-value method based on the present value of future cash flows, which involves management’s judgments and assumptions about the amounts of those cash flows and the discount rates used. The estimated fair value is then compared with the carrying amount of the reporting unit, including recorded goodwill, or indefinite-lived intangible asset. The intangible asset is then subject to risk of write-down to the extent that the carrying amount exceeds the estimated fair value.

A considerable amount of management judgment and assumptions are required in performing the impairment test, principally in determining the fair value of the reporting unit. While the Company believes the judgments and assumptions are reasonable, different assumptions could change the estimated fair value and, therefore, impairment charges could be required. Weakening industry or economic trends, disruptions to the Company's business, unexpected significant changes or planned changes in the use of the assets or in entity structure may adversely impact the assumptions used in the valuations. The Company continually monitors market conditions and determines if any additional interim reviews of goodwill, other intangibles or long-lived assets are warranted. In the event the Company determines that assets are impaired in the future, the Company would recognize a non-cash impairment charge, which could have a material adverse effect on the Company’s Condensed Consolidated Balance Sheets and Results of Operations.

~~The gross carrying amount, accumulated amortization and net book value~~Disaggregation of the Company’s ~~intangible assets other than goodwill at September 30, 2017 and December 31, 2016~~revenue sources are ~~as follows:~~

September 30, 2017

December 31, 2016

($ in millions)

Gross
Carrying
Amount

Accumulated
Amortization

Net
Book
Value

Gross
Carrying
Amount

Accumulated
Amortization

Net
Book
Value

Trademarks and tradenames

$
98.6

$
—

$
98.6

$
92.4

$
—

$
92.4

Customer relationships

10.5

(8.5
)

2.0

10.3

(7.8
)

2.5

Patents

30.4

(29.4
)

1.0

28.5

(27.4
)

1.1

Engineering drawings

10.7

(10.6
)

0.1

10.0

(9.9
)

0.1

Distribution network

19.3

(0.1
)

19.2

18.0

—

18.0

Other intangibles

0.3

(0.3
)

—

0.2

(0.2
)

—

Total

$
169.8

$
(48.9
)

$
120.9

$
159.4

$
(45.3
)

$
114.1

Amortization expense for the three months ended September 30, 2017 and 2016 was $0.0 million and $0.7 million, respectively. Amortization expense for the nine months ended September 30, 2017 and 2016 was $0.7 million and $2.2 million, respectively.

~~The Company also reviews long-lived assets for impairment whenever events or changes~~disclosed in circumstances indicate that the asset's carrying amount may not be recoverable. The Company conducts its long-lived asset impairment analyses in accordance with ASC Topic 360-10-5, “Property, Plant and Equipment.” ASC Topic 360-10-5 requires the Company to group assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities and to evaluate the asset group against the sum of the undiscounted future cash flows. Property, plant and equipment are depreciated over the estimated useful lives of the assets using the straight-line depreciation method for financial reporting and on accelerated methods for income tax purposes.

~~6. Accounts Payable and Accrued Expenses~~

~~Accounts payable and accrued expenses at September 30, 2017 and December 31, 2016 are summarized as follows:~~

($ in millions)

September 30, 2017

December 31, 2016

Trade accounts payable

$
210.4

$
157.7

Employee-related expenses

33.6

28.1

Accrued vacation

21.9

21.8

Miscellaneous accrued expenses

94.4

113.6

Total

$
360.3

$
321.2

~~7. Debt~~

~~Outstanding debt at September 30, 2017 and December 31, 2016 is summarized as follows:~~

($ in millions)

September 30, 2017

December 31, 2016

Revolving credit facility

$
10.0

$
—

Senior secured second lien notes due 2021

251.4

249.8

Other

29.5

35.7

Deferred financing costs

(3.3
)

(4.0
)
Total debt

287.6

281.5

Short-term borrowings and current portion of long-term
debt

(10.2
)

(12.4
)
Long-term debt

$
277.4

$
269.1

The balance sheet values of the 12.750% senior secured lien notes due 2021 (the "2021 Notes") as of September 30, 2017 and December 31, 2016 are not equal to the face value of the 2021 Notes, $260.0 million, because of original issue discounts included in the applicable balance sheet values.

As of September 30, 2017, the Company had outstanding $29.5 million of other indebtedness that has a weighted-average interest rate of approximately 5.44%. This debt includes balances on local credit lines and capital lease obligations.

On March 3, 2016, the Company entered into a $225.0 million Asset Based Revolving Credit Facility (as amended, the “ABL Revolving Credit Facility”) with Wells Fargo Bank, N.A. as administrative agent, and JP Morgan Chase Bank, N.A. and Goldman Sachs Bank USA as joint lead arrangers. The ABL Revolving Credit Facility capacity calculation is defined in the related credit agreement and is dependent on the fair value of inventory and fixed assets of the loan parties, which secure the borrowings. The ABL Revolving Credit Facility has a term of 5 years and includes a $75.0 million letter of credit sublimit, $10.0 million of which can be applied to the German borrower.

In October 2016, the ABL Revolving Credit Facility was amended to accommodate certain previously restricted activities related to the relocation of the Company’s manufacturing operations from Manitowoc, Wisconsin to Shady Grove, Pennsylvania. Among other things, the amendment allows the Company to transfer, sell and/or impair fixed assets located at the Wisconsin facility with limited impact on the availability under the facility.

In April 2017, the ABL Revolving Credit Facility was amended to modify several definitions regarding eligible equipment and inventory as it relates to a key financing partner of the Company. The amendment has had, and is expected to continue to have, a minimal impact on the Company’s daily operations and borrowing limits.

As of September 30, 2017, the Company's outstanding balance on the ABL Revolving Credit Facility was $10.0 million. The Company had no borrowings on the ABL Revolving Credit Facility at December 31, 2016. During the quarter ended September 30, 2017, the highest daily borrowing was $59.5 million and the average borrowing was $30.9 million, while the average annual interest rate was 3.11%. The interest rate of the ABL Revolving Credit Facility fluctuates based on excess availability. As of September 30, 2017, the spreads for LIBOR and Prime borrowings were 1.50% and 0.50%, respectively, with excess availability of approximately $136.7 million, which represents revolver borrowing capacity of $161.1 million less borrowings of $10.0 million and U.S. letters of credit outstanding of $14.4 million.

The ABL Revolving Credit Facility replaced the Company’s prior $1,050.0 million Third Amended and Restated Credit Agreement (the “Prior Senior Credit Facility”). The Prior Senior Credit Facility included three different loan facilities: a $500.0 million revolving facility and two term loans in the aggregate amount of $550.0 million.

In the first quarter of 2016, the Company terminated the Prior Senior Credit Facility along with $175.0 million notional amount of float-to-fixed interest rate swaps related to one of its prior term loans, resulting in a loss of $5.9 million for the write-off of deferred financing expenses and $4.3 million for the termination of interest rate swaps.

~~On February~~Note 18, 2016, the Company entered into an indenture with Wells Fargo Bank, N.A., as trust and collateral agent, and sold $260.0 million aggregate principal amount of its 2021 Notes. Interest on the 2021 Notes is payable semi-annually in February and August of each year. The 2021 Notes were sold pursuant to exemptions from registration under the Securities Act of 1933.“Segments.”

Both the ABL Revolving Credit Facility and 2021 Notes include customary covenants and events of default which include, without limitation, restrictions on indebtedness, capital expenditures, restricted payments, disposals, investments and acquisitions.

Additionally, the ABL Revolving Credit Facility contains a Fixed Charge Coverage springing financial covenant, which measures the ratio of (i) consolidated earnings before interest, taxes, depreciation, amortization and other adjustments as defined in the related credit agreement, to (ii) fixed charges, as defined in the credit agreement. The financial covenant is triggered only if the Company fails to maintain minimum levels of availability under the facility. If triggered, the Company must maintain a Minimum Fixed Charge Coverage Ratio of 1.00 to 1.

On March 3, 2016, the Company redeemed its former 8.50% Senior Notes due 2020 (the “Prior 2020 Notes”) and 5.875% Senior Notes due 2022 (the “Prior 2022 Notes”) for $625.5 million and $330.5 million, or 104.250% and 110.167% expressed as a percentage of the principal amount, respectively.

The redemption of the Prior 2020 Notes resulted in a loss on debt extinguishment of $31.5 million during the first quarter of 2016 and consisted of $24.6 million related to redemption premium and $6.9 million related to write-off of deferred financing fees. Previously monetized derivative assets related to fixed-to-float interest rate swaps were treated as an increase to the debt balance of the Prior 2020 Notes and were being amortized to interest expense over the life of the original swap. As a result of the redemption, the remaining monetization balance of $11.8 million as of March 3, 2016 was amortized as a reduction to interest expense during the first quarter of 2016.

The redemption of the Prior 2022 Notes resulted in a loss on debt extinguishment of $34.6 million during the first quarter of 2016 and consisted of $31.2 million related to redemption premium and $3.4 million related to write-off of deferred financing

fees. Previously, derivative liabilities related to termination of fixed-to-float swaps were treated as a decrease to the debt balance of the Prior 2022 Notes and were being amortized to interest expense over the life of the original swap. As a result of the redemption, the remaining balance of $0.7 million as of March 3, 2016 was amortized as an increase to interest expense during the first quarter of 2016.

Outstanding balances under the Company's Prior 2020 and Prior 2022 Notes, as well as the Prior Senior Credit Facility, were repaid with proceeds from the 2021 Notes and a cash dividend from MFS in conjunction with the Spin-Off.

As of September 30, 2017, the Company was in compliance with all affirmative and negative covenants in its debt instruments, inclusive of the financial covenants pertaining to the ABL Revolving Credit Facility and 2021 Notes.

~~8. Accounts Receivable Securitization~~

The Company maintains an accounts receivable securitization program with a commitment size of $75.0 million, whereby transactions under the program are accounted for as sales in accordance with ASC Topic 860, “Transfers and Servicing.”

On March 3, 2016, the Company entered into a Receivables Purchase Agreement (“RPA”) among Manitowoc Funding, LLC (“MTW Funding”), as Seller, The Manitowoc Company, Inc., as Servicer, and Wells Fargo Bank, N.A., as Purchaser and as Agent, to replace its prior facility.

Under the RPA (and related Purchase and Sale Agreements), the Company’s domestic trade accounts receivable are sold to MTW Funding which, in turn, sells, conveys, transfers and assigns to a third-party financial institution (“Purchaser”), all of MTW Funding's rights, title and interest in a pool of receivables to the Purchaser.

The Purchaser receives ownership of the pool of receivables in each instance. New receivables are purchased by MTW Funding and sold to the Purchaser as cash collections reduce previously sold investments. The Company acts as the servicer (in such capacity, the “Servicer”) of the receivables and, as such, administers, collects and otherwise enforces the receivables. The Servicer is compensated for doing so on terms that are generally consistent with what would be charged by an unrelated servicer. The Servicer initially receives payments made by obligors on the receivables but is required to remit those payments to the Purchaser in accordance with the RPA. The Purchaser has no recourse for uncollectible receivables.

Trade accounts receivable sold to the Purchaser totaled $211.3 million and $145.3 million for the three months ended September 30, 2017 and 2016, respectively. Cash proceeds received from customers related to the receivables previously sold for the three months ended September 30, 2017 and 2016 were $179.7 million and $172.5 million, respectively.

Sales of trade receivables under the program reflected as a reduction of accounts receivable in the accompanying Condensed Consolidated Balance Sheets were $38.8 million and $19.5 million as of September 30, 2017 and December 31, 2016, respectively. The proceeds received, including collections on the deferred purchase price notes, are included in cash flows from operating activities in the accompanying Condensed Consolidated Statements of Cash Flows. The Company deems the interest rate risk related to the deferred purchase price notes to be de minimis, primarily because the average collection cycle of the related receivables is less than 60 days; and as such, the fair value of the Company’s deferred purchase price notes approximates book value. The fair value of the deferred purchase price notes recorded as of September 30, 2017 and December 31, 2016 was $66.5 million and $30.6 million, respectively, and is included in accounts receivable in the accompanying Condensed Consolidated Balance Sheets.

The securitization program contains customary affirmative and negative covenants. Among other restrictions, these covenants require the Company to meet specified financial tests, which include a minimum fixed charge coverage ratio which is the same as the covenant ratio required per the ABL Revolving Credit Facility. As of September 30, 2017, the Company was in compliance with all affirmative and negative covenants pertaining to the RPA, as amended.

~~9. Income Taxes~~

For the three months ended September 30, 2017 and 2016, the Company recorded income tax benefits of $13.1 million and $5.3 million, respectively. For the nine months ended September 30, 2017 and 2016, the Company recorded an income tax benefit of $9.3 million and income tax expense of $103.1 million, respectively. During the three months ended September 30, 2017, a discrete tax benefit of $13.7 million was recorded, with the primary driver being a resolution on a matter involving the Internal Revenue Service related to tax years 2012 through 2014. The decrease in the Company’s tax expense for the nine months ended September 30, 2017 relative to the prior year relates primarily to a non-cash charge in 2016 of $106.4 million for a one-time increase in the valuation allowance associated with the Company’s domestic federal and state deferred tax assets

and attributes in connection with the Spin-Off. In addition to the above, the Company’s effective tax rate varies from the U.S. federal statutory rate of 35% due to results of foreign operations that are subject to income taxes at different statutory rates.

The Company will continue to evaluate its valuation allowance requirements on an ongoing basis in light of changing facts and circumstances and may adjust its deferred tax asset valuation allowances accordingly, and it is a reasonable possibility that the Company will either add to or reverse a portion of its existing deferred tax asset valuation allowances in the future. Such changes in the deferred tax asset valuation allowances will be reflected in the current operations through the Company’s income tax provision and could have a material effect on operating results.

~~The Company’s unrecognized tax benefits, excluding interest and penalties, were $14.9 million as of September 30, 2017 and $15.8 million as of December 31, 2016.~~

The Company regularly assesses the likelihood of an adverse outcome resulting from examinations to determine the adequacy of its tax reserves. As of September 30, 2017, the Company believes that it is more likely than not that the tax positions it has taken will be sustained upon the resolution of its audits, resulting in no material impact on its consolidated financial position and the results of operations and cash flows. However, the final determination with respect to any tax audits and any related litigation could be materially different from the Company’s estimates and/or from its historical income tax provisions and accruals and could have a material effect on operating results and/or cash flows in the periods for which that determination is made. In addition, future period earnings may be adversely impacted by litigation costs, settlements, penalties and/or interest assessments.

~~10. Earnings Per Share~~

Basic earnings (loss) per share is computed as net earnings (loss) divided by the basic weighted average common shares outstanding of 140.5 million and 140.4 million shares for the three and nine months ended September 30, 2017, respectively, and 138.4 million and 137.4 million shares for the three and nine months ended September 30, 2016, respectively. The calculation of diluted earnings (loss) per share includes the effect of any dilutive equity incentive instruments. The Company uses the treasury stock method to calculate the effect of outstanding dilutive equity incentive instruments, which requires the Company to compute total proceeds as the sum of the amount the employee must pay upon exercise of the award and the amount of unearned stock-based compensation costs attributable to future services.

Equity incentive instruments for which the total employee proceeds from exercise exceed the average fair value of the same equity incentive instrument over the period have an anti-dilutive effect on earnings per share during periods with net earnings, and accordingly, the Company excludes them from the calculation. Anti-dilutive equity instruments of 0.3 million common shares were excluded from the computation of diluted net earnings per share for the three months ended September 30, 2017. Due to the net loss incurred during the nine months ended September 30, 2017 and the three and nine months ended September 30, 2016, the assumed exercise of all equity incentive instruments was anti-dilutive and, therefore, not included in the diluted loss per share calculation for those periods.

~~The following is a reconciliation of the average shares outstanding used to compute basic and diluted earnings per share:~~

Three Months Ended
September 30,

Nine Months Ended
September 30,

2017

2016

2017

2016

Basic weighted average common shares outstanding

140,531,426

138,422,953

140,351,927

137,390,809

Effect of dilutive securities

2,805,751

—

—

—

Diluted weighted average common shares outstanding

143,337,177

138,422,953

140,351,927

137,390,809

~~No cash dividends were paid during any of the three and nine months ended September 30, 2017 and September 30, 2016.~~

~~11. Stockholders’ Equity~~

~~The following is a roll forward of retained earnings for the nine months ended September 30, 2017 and 2016:~~

($ in millions)

Retained Earnings

Balance at December 31, 2016

$
247.3

Net loss

(25.9
)
Balance at September 30, 2017

$
221.4

($ in millions)

Retained Earnings

Balance at December 31, 2015

$
562.3

Net loss

(342.4
)
Distribution of MFS

51.2

Balance at September 30, 2016

$
271.1

~~Authorized capital consists of 300 million shares of $0.01 par value common stock and 3.5 million shares of $0.01 par value preferred stock. None of the preferred shares have been issued.~~

Currently, the Company has authorization to purchase up to 2.4 million shares of common stock at management’s discretion; however, the Company has certain restrictions from repurchasing shares of its capital stock or other equity interests under various covenants of its debt agreements. Further, the Company has not purchased any shares of its common stock under this authorization since 2006.

~~A reconciliation for the changes in accumulated other comprehensive loss, net of tax, by component for the nine months ended September 30, 2017 and September 30, 2016 is as follows:~~

($ in millions)

Gains and Losses on
Cash Flow Hedges

Pension &
Postretirement

Foreign Currency
Translation

Total

Balance at December 31, 2016

$
(0.3
)

$
(51.8
)

$
(110.8
)

$
(162.9
)
Other comprehensive income before
   reclassifications

0.3

—

10.1

10.4

Amounts reclassified from accumulated other
   comprehensive loss

0.2

0.6

—

0.8

Net other comprehensive income

0.5

0.6

10.1

11.2

Balance at March 31, 2017

0.2

(51.2
)

(100.7
)

(151.7
)
Other comprehensive income before
   reclassifications

—

—

23.1

23.1

Amounts reclassified from accumulated other
   comprehensive loss

0.1

0.5

—

0.6

Net other comprehensive income

0.1

0.5

23.1

23.7

Balance at June 30, 2017

0.3

(50.7
)

(77.6
)

(128.0
)
Other comprehensive income before
   reclassifications

—

8.0

14.2

22.2

Amounts reclassified from accumulated other
   comprehensive loss

—

(2.3
)

—

(2.3
)
Net other comprehensive income

—

5.7

14.2

19.9

Balance at September 30, 2017

$
0.3

$
(45.0
)

$
(63.4
)

$
(108.1
)

($ in millions)

Gains and Losses on
Cash Flow Hedges

Pension &
Postretirement

Foreign Currency
Translation

Total

Balance at December 31, 2015

$
(3.8
)

$
(82.6
)

$
(121.4
)

$
(207.8
)
Other comprehensive income (loss) before
   reclassifications

(2.7
)

—

20.3

17.6

Amounts reclassified from accumulated
   other comprehensive loss

4.3

1.2

—

5.5

Net other comprehensive income

1.6

1.2

20.3

23.1

Distribution of MFS

2.1

44.5

31.0

77.6

Balance at March 31, 2016

(0.1
)

(36.9
)

(70.1
)

(107.1
)
Other comprehensive loss before
   reclassifications

—

—

(17.4
)

(17.4
)
Amounts reclassified from accumulated other
   comprehensive loss

(0.1
)

1.2

—

1.1

Net other comprehensive income (loss)

(0.1
)

1.2

(17.4
)

(16.3
)
Balance at June 30, 2016

(0.2
)

(35.7
)

(87.5
)

(123.4
)
Other comprehensive income before
   reclassifications

—

—

5.7

5.7

Amounts reclassified from accumulated other
   comprehensive loss

0.2

1.1

—

1.3

Net other comprehensive income

0.2

1.1

5.7

7.0

Balance at September 30, 2016

$
—

$
(34.6
)

$
(81.8
)

$
(116.4
)

~~The following is a reconciliation of the reclassifications out of accumulated other comprehensive income (loss), net of tax, for the three and nine months ended September 30, 2017:~~

Three Months Ended
September 30, 2017

Nine Months Ended
September 30, 2017

($ in millions)

Amount Reclassified
from Accumulated
Other Comprehensive
Income (Loss)

Amount Reclassified
from Accumulated
Other Comprehensive
Income (Loss)

Recognized
Location
Gains and losses on cash flow hedges

Commodity contracts

$
—

$
(0.3
)

Cost of sales

—

(0.3
)

Total before tax

—

—

Tax expense

$
—

$
(0.3
)

Net of tax
Amortization of pension and
postretirement items

Actuarial losses

$
(1.3
)

$
(3.9
)
(a)

Prior service cost

0.3

1.0

(1.0
)

(2.9
)

Total before tax

3.3

4.1

Tax expense

$
2.3

$
1.2

Net of tax

Total reclassifications for the period

$
2.3

$
0.9

Net of tax

~~(a)~~

~~These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension cost (see Note 16, “Employee Benefit Plans,” for further details).~~

~~The following is a reconciliation of the reclassifications out of accumulated other comprehensive income (loss), net of tax, for the three and nine months ended September 30, 2016:~~

Three Months Ended
September 30, 2016

Nine Months Ended
September 30, 2016

($ in millions)

Amount Reclassified
from Accumulated
Other Comprehensive
Income (Loss)

Amount Reclassified
from Accumulated
Other Comprehensive
Income (Loss)

Recognized
Location
Gains and losses on cash flow hedges

Commodity contracts

$
(0.2
)

$
(1.2
)

Cost of sales
Interest rate swap contracts:
Float-to-fixed

—

(4.3
)

Interest Expense

(0.2
)

(5.5
)

Total before tax

—

1.1

Tax expense

$
(0.2
)

$
(4.4
)

Net of tax
Amortization of pension and postretirement
items

Actuarial losses

$
(1.1
)

$
(3.5
)
(a)

(1.1
)

(3.5
)

Total before tax

—

—

Tax expense

$
(1.1
)

$
(3.5
)

Net of Tax

Total reclassifications for the period

$
(1.3
)

$
(7.9
)

Net of Tax

~~(a)~~

~~These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension cost (see Note 16, “Employee Benefit Plans,” for further details).~~

~~12. Stock-Based Compensation~~

The Company’s 2013 Omnibus Incentive Plan (the “2013 Plan”) was approved by shareholders on May 7, 2013 and replaced several of the Company's incentive plans (collectively referred to as the “Prior Plans”). No new awards may be granted under the Prior Plans; however, outstanding awards under the Prior Plans will continue in force and effect pursuant to their terms. The 2013 Plan provides for both short-term and long-term incentive awards for employees and non-employee directors. Stock-based awards may take the form of stock options, stock appreciation rights, restricted stock (“RSAs”), restricted stock units (“RSUs”) and performance shares or performance unit awards. The total number of shares of the Company’s common stock originally available for awards under the 2013 Plan was 8.0 million shares, subject to adjustment for stock splits, stock dividends and certain other transactions or events. On March 20, 2016, in accordance with the 2013 Plan's adjustment provisions, the Board of Directors approved an amendment to the 2013 Plan to reflect the effect of the Spin-Off, as a result, the number of shares of common stock reserved for future awards under the 2013 Plan was increased by 22.1 million shares.

Stock-based compensation expense was $1.5 million and $1.0 million for the three months ended September 30, 2017 and 2016, respectively. Stock-based compensation expense was $4.7 million and $3.8 million for the nine months ended September 30, 2017 and 2016, respectively. The Company recognizes stock-based compensation expense over the awards' vesting period.

The Company did not grant any options to acquire shares of common stock to employees during the three months ended September 30, 2017 and 2016. Options to acquire 1.1 million and 1.8 million shares of common stock were granted to employees during the nine months ended September 30, 2017 and 2016, respectively. The options granted in 2017 become exercisable in three annual increments over a three-year period beginning on the first anniversary of the grant date and expire 10 years subsequent to the grant date, and the options granted in 2016 and prior years become exercisable in four annual increments over a four-year period beginning on the first anniversary of the grant date and also expire 10 years subsequent to the grant date.

The Company did not issue any RSUs to employees during the three months ended September 30, 2017 and 2016. A total of 0.5 million and 0.6 million RSUs were issued by the Company to employees and directors during the nine months ended September 30, 2017 and 2016, respectively. The RSUs granted to employees generally vest on the first or third anniversary of the grant date, depending on the grant. The RSUs granted to directors vest on the second anniversary of the grant date.

The Company did not issue any performance shares to employees during the three months ended September 30, 2017 and 2016. A total of 0.5 million and 0.8 million performance shares were issued during the nine months ended September 30, 2017 and 2016, respectively. Performance shares are earned based on the extent to which performance goals are met over the applicable performance period. The performance goals and the applicable performance period vary for each grant year. The performance goals for the performance shares granted in 2017 are based on 50% on total shareholder return ("TSR") relative to peers during the three-year performance period and 50% on Adjusted EBITDA percentage from continuing operations in 2019. The performance goals for the performance shares granted in 2016 are based 50% on TSR relative to peers and 50% on the weighted average return on invested capital (ROIC) over the three-year performance period. Depending on the foregoing factors, the number of shares earned could range from zero to 0.9 million and zero to 1.2 million for the 2017 and 2016 performance share grants, respectively.

~~13.~~4. Fair Value of Financial Instruments

The following ~~tables set~~table sets forth the Company’s financial assets and liabilities related to foreign currency exchange contracts (“FX Forward Contracts”) that were accounted for at fair value as of September 30, ~~2017~~2021 and December 31, ~~2016 by level within the fair value hierarchy. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.~~2020.

Fair Value as of September 30, 2017

($ in millions)

Level 1

Level 2

Level 3

Total

Current Liabilities:

Foreign currency exchange contracts

$
—

$
0.2

$
—

$
0.2

Total current liabilities at fair value

$
—

$
0.2

$
—

$
0.2


	Fair Value as of September 30, 2021
	Level 1		Level 2		Level 3		Total		Recognized Location
FX Forward Contracts	$	—	$	0.1	$	—	$	0.1	Other current assets
FX Forward Contracts		—		1.1		—		1.1	Accounts payable and accrued expenses

Fair Value as of December 31, 2020

Level 1

Level 2

Level 3

Total

Recognized Location

FX Forward Contracts

—

Other current assets

FX Forward Contracts

—

Accounts payable and
accrued expenses

Fair Value as of December 31, 2016

($ in millions)

Level 1

Level 2

Level 3

Total

Current Assets:

Foreign currency exchange contracts

$
—

$
0.2

$
—

$
0.2

Commodity contracts

—

0.2

—

0.2

Total current assets at fair value

$
—

$
0.4

$
—

$
0.4

Current Liabilities:

Foreign currency exchange contracts

$
—

$
1.0

$
—

$
1.0

Total current liabilities at fair value

$
—

$
1.0

$
—

$
1.0

The fair value of the ~~Company's 2021 Notes~~senior secured second lien notes due on April 1, 2026, with an annual coupon rate of 9.000% (the “2026 Notes”), was approximately ~~$298.6 million and $282.2~~$321.6 million as of September 30, ~~2017 and December 31, 2016, respectively.~~2021. See Note 7,12, “Debt,” for a description of the ~~debt instruments~~2026 Notes and ~~their~~the related carrying ~~values.~~value.

ASC Topic 820-10, “Fair Value Measurement,” defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820-10 classifies the inputs used to measure fair value into the following hierarchy:


~~Level 1~~		~~Unadjusted quoted prices in active markets for identical assets or liabilities~~

~~Level 2~~		~~Unadjusted quoted prices in active markets for similar assets or liabilities, or~~

		~~Unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or~~

		~~Inputs other than quoted prices that are observable for the asset or liability~~

~~Level 3~~		~~Unobservable inputs for the asset or liability~~

The Company endeavors to utilize the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company estimates the fair value of its ~~2021~~2026 Notes based on quoted market ~~prices;~~prices of the instruments; because these markets are typically ~~thinly~~actively traded, the ~~assets and/or~~ liabilities are classified as Level 21 within the valuation hierarchy. The carrying values of cash and cash equivalents, accounts receivable, accounts payable ~~deferred purchase price notes on receivables sold (see Note 8, “Accounts Receivable Securitization”)~~ and short-term variable debt, including any amounts outstanding under the ~~ABL Revolving Credit Facility,~~Company's revolving credit facility, approximate fair value, without being discounted as of September 30, ~~2017~~2021 and December 31, ~~2016,~~2020, due to the short-term nature of these instruments.

As a result of its global operating and financing activities, the Company is exposed to market risks from changes in interest rates, foreign currency exchange rates and commodity prices, which may adversely affect the Company’s operating results and financial position. When deemed appropriate, the Company attempts to minimize these risks through the use of derivative financial instruments. Derivative financial instruments are used to manage risk and are not used for trading or other speculative purposes, and the Company does not use leveraged derivative financial instruments. Foreign currency exchange, commodity and interest rate contractsFX Forward Contracts are valued through an independent valuation source ~~that~~which uses an industry standard data provider, with resulting valuations periodically validated through third-party or counterparty quotes. As such, these derivative instruments are classified within Level 2. See Note 5, “Derivative Financial Instruments” for additional information.

5. Derivative Financial Instruments

~~14. Commitments~~The Company’s risk management objective is to ensure that business exposures to risks are minimized using the most effective and ~~Contingencies~~efficient methods to eliminate, reduce, or transfer such exposures. Operating decisions consider these associated risks and, whenever possible, transactions are structured to avoid or mitigate these risks.

From time to time, the Company enters into FX Forward Contracts to manage the currency risks associated with forecasted transactions and assets/liabilities denominated in currencies other than the functional currency of certain subsidiaries. Certain of these FX Forward Contracts are designated as cash flow hedges. To the extent these derivatives are effective in offsetting the variability of the hedged cash flows, changes in the derivatives’ fair value are not included in current earnings but are included in accumulated other comprehensive income (loss). These changes in fair value are reclassified into earnings as a component of cost of sales, as applicable, when the forecasted transaction impacts earnings. In addition, if the forecasted transaction is no longer probable, the cumulative change in the derivatives’ fair value is recorded as a component of other income (expense) – net in the period in which the transaction is no longer considered probable of occurring. No amounts were recorded related to forecasted transactions no longer being probable during the three and nine months ended September 30, 2021 and 2020, respectively.

The Company had FX Forward Contracts with an aggregate notional amount of $66.8 million and $9.3 million in U.S. dollar equivalent outstanding as of September 30, 2021 and December 31, 2020, respectively. The aggregate notional amount outstanding as of September 30, 2021 is scheduled to mature within one year. The FX Forward Contracts purchased are denominated in various foreign currencies. As of September 30, ~~2017~~2021 and December 31, ~~2016,~~2020, the net fair value of these contracts was a net short-term liability of $1.0 million and a net 0 balance, respectively. There was $(0.5) million and 0 unrealized gains (losses), net of income tax, recorded in accumulated other comprehensive loss as of September 30, 2021 and December 31, 2020, respectively.

The net gains (losses) recorded in the Condensed Consolidated Statement of Operations for FX Forward Contracts for the three and nine months ended September 30, 2021 and September 30, 2020 are summarized as follows:


		Three Months Ended September 30,					Nine Months Ended September 30,
	Recognized Location	2021			2020		2021			2020
Designated	Cost of sales	$	(0.3	)	$	—	$	(0.2	)	$	(0.3	)
Non-designated	Other income (expense) - net	$	—		$	0.1	$	(0.4	)	$	0.5

6. Inventories

The components of inventories as of September 30, 2021 and December 31, 2020 are summarized as follows:


	September 30, 2021			December 31, 2020
Raw materials	$	170.3		$	114.9
Work-in-process		152.8			105.5
Finished goods		299.0			305.8
Total inventories		622.1			526.2
Excess and obsolete inventory reserve		(54.9	)		(53.1	)
Inventories — net	$	567.2		$	473.1

7. Notes Receivable

The Company's notes receivable balances are classified as current or long-term based on the timing of amounts due. Long-term notes receivable is included within other non-current assets on the Condensed Consolidated Balance Sheets. Current and long-term notes receivable balances primarily relate to the Company’s captive finance entity in China and entity in Mexico. The Company had a long-term note receivable balance related to the 2014 sale of Manitowoc Dong Yue. During the second quarter of 2021, the Company recorded $3.6 million of expense in engineering, selling and administrative expenses in the Condensed Consolidated Statement of Operations to fully reserve for the remaining net value of the note with Manitowoc Dong Yue. As of September 30, 2021, the Company had ~~reserved $32.3~~current and long-term notes receivable in the amount of $17.6 million and ~~$28.6~~$6.2 million, respectively. As of December 31, 2020, the Company had current and long-term notes receivable in the amount of $13.6 million and $12.7 million, respectively.

8. Property, Plant and Equipment

The components of property, plant and equipment as of September 30, 2021 and December 31, 2020 are summarized as follows:


	September 30, 2021			December 31, 2020
Land	$	19.6		$	20.3
Building and improvements		200.4			203.7
Machinery, equipment and tooling		293.6			292.6
Furniture and fixtures		15.1			21.0
Computer hardware and software		125.7			119.3
Rental cranes		94.4			90.2
Construction in progress		13.8			9.0
Total cost		762.6			756.1
Less accumulated depreciation		(460.8	)		(461.8	)
Property, plant and equipment — net	$	301.8		$	294.3

Property, plant and equipment are depreciated over the asset’s estimated useful life using the straight-line depreciation method for financial reporting and accelerated methods for income tax purposes.

Assets Held for Sale

As of September 30, 2021 and December 31, 2020, the Company had $3.1 million and $3.3 million, respectively, classified as other current assets in the Condensed Consolidated Balance Sheets. These amounts relate to a building and land in Fanzeres, Portugal that are held for sale.

Asset Impairment

During the three months ended September 30, 2021, the Company recorded an asset impairment of $1.9 million to write-down one of the Company's Brazilian entities to its expected sale price.

9. Business Combinations

On September 1, 2021, the Company completed the acquisition of substantially all of the assets of Aspen Equipment Company ("Aspen"), a diversified crane dealer and a leading final stage purpose built work truck upfitter for a purchase price of approximately $50.9 million. The purchase price is subject to adjustments based on the final calculation of working capital and the net book value of the rental fleet as of the date of the acquisition. The acquisition of Aspen was funded from existing cash resources and is expected to expand Manitowoc's direct-to-customer footprint in Iowa, Nebraska and Minnesota with new sales, used sales, parts, service and rentals to a variety of end markets.

The acquisition of Aspen was accounted for as a business combination in accordance with Accounting Standards Codification (“ASC”) 805, “Business Combinations,” which requires allocation of the purchase price to the estimated fair values of assets acquired and liabilities assumed in the transaction. Included in the purchase price was $14.1 million of net working capital, $4.7 million of property, plant and equipment, $19.5 million of rental fleet, $5.5 million of goodwill and $7.1 million of intangible assets. Refer to Note 10, "Goodwill and Other Intangible Assets," for additional information on the class of intangibles acquired and goodwill recorded. Given the timing of the closing of the acquisition and the time necessary to complete the allocation of the purchase price to the identified assets, the initial accounting for the business combination was not complete at the time the third-quarter financial statements were issued. The total purchase price of approximately $50.9 million is provisional and is based upon estimates and assumptions that are subject to change upon completion of acquisition accounting.

The financial results of Aspen as of September 1, 2021 are included in the Company's condensed consolidated financial statements and are reported in the Americas segment. The amount of revenue and income from operations associated with the acquisition from the acquisition date to September 30, 2021 did not have a material impact on the consolidated financial statements. In addition, assuming the acquisition had occurred on January 1, 2021, the consolidated pro forma results would not have been materially different from the reported results.

10. Goodwill and Other Intangible Assets

The Company performs its annual goodwill and indefinite lived assets impairment testing during the fourth quarter, or more frequently if events or changes in circumstances indicate that the asset might be impaired. There have been 0 impairment indicators since the fourth quarter of 2020; therefore, 0 impairment review has occurred as of September 30, 2021.

The changes in the carrying amount of goodwill as of September 30, 2021 and December 31, 2020 are summarized as follows:


	Americas		MEAP			Consolidated
Balance as of January 1, 2020	$	166.5	$	66.0		$	232.5
Foreign currency impact		—		2.6			2.6
Balance as of December 31, 2020		166.5		68.6			235.1
Foreign currency impact		—		(0.9	)		(0.9	)
Acquisition of business		5.5		—			5.5
Balance as of September 30, 2021	$	172.0	$	67.7		$	239.7

During the three months ended September 30, 2021, the Company recorded goodwill of approximately $5.5 million from the acquisition of Aspen. Goodwill related to the Aspen acquisition is subject to change as part of completion of acquisition accounting. The total goodwill related to this acquisition is deductible for tax purposes. Refer to Note 9, “Business Combinations,” for additional information.

The gross carrying amount, accumulated amortization and net book value of the Company’s intangible assets other than goodwill as of September 30, 2021 and December 31, 2020 are summarized as follows:


	September 30, 2021							December 31, 2020
	Gross Carrying Amount		Accumulated Amortization			Net Book Value		Gross Carrying Amount		Accumulated Amortization			Net Book Value
Definite lived intangible assets:
Customer relationships	$	12.2	$	(8.7	)	$	3.5	$	9.9	$	(8.6	)	$	1.3
Patents		30.0		(29.4	)		0.6		31.0		(30.3	)		0.7
Other intangibles		2.5		(0.5	)		2.0		—		—			—
Total		44.7		(38.6	)		6.1		40.9		(38.9	)		2.0
Indefinite lived intangible assets:
Trademarks and tradenames		99.1		—			99.1		100.0		—			100.0
Distribution network		19.0		—			19.0		19.6		—			19.6
Total		118.1		—			118.1		119.6		—			119.6
Total other intangible assets	$	162.8	$	(38.6	)	$	124.2	$	160.5	$	(38.9	)	$	121.6

Other intangible assets with definite lives are amortized over their estimated useful lives. Amortization expense for the three months ended September 30, 2021 and 2020 was $0.5 million and 0, respectively. Amortization expense for the nine months ended September 30, 2021 and 2020 was $0.7 and $0.2 million, respectively.

As a result of the acquisition of Aspen during the three months ended September 30, 2021, intangible assets of approximately $7.1 million related to customer relationships, backlog, trade names and noncompete agreements were acquired. The fair value of identifiable intangible assets has been determined using the income approach which involves significant unobservable inputs (Level 3 inputs). The allocation of purchase price to intangible assets is subject to change upon completion of acquisition accounting.

Definite lived intangible assets and long-lived assets are subject to impairment testing whenever events or circumstances indicate that the carrying value of the assets may not be recoverable. The Company determined there was not a triggering event as of September 30, 2021.

11. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses as of September 30, 2021 and December 31, 2020 are summarized as follows:


	September 30, 2021		December 31, 2020
Trade accounts payable	$	250.2	$	178.1
Employee-related expenses		54.1		38.5
Accrued vacation		23.1		22.4
Miscellaneous accrued expenses		96.8		90.4
Total accounts payable and accrued expenses	$	424.2	$	329.4

12. Debt

Outstanding debt as of September 30, 2021 and December 31, 2020 are summarized as follows:


	September 30, 2021			December 31, 2020
Borrowings under senior secured asset based revolving credit facility	$	100.0		$	—
Senior secured second lien notes due 2026		300.0			300.0
Other		11.6			14.7
Deferred financing costs		(3.3	)		(3.8	)
Total debt		408.3			310.9
Short-term borrowings and current portion of long-term debt		(8.4	)		(10.5	)
Long-term debt	$	399.9		$	300.4

On March 25, 2019,the Company and certain subsidiaries of the Company (the “Loan Parties”) entered into a credit agreement (the “ABL Credit Agreement”) with JP Morgan Chase Bank, N.A as administrative and collateral agent, and certain financial institutions party thereto as lenders, providing for a senior secured asset-based revolving credit facility (the “ABL Revolving Credit Facility”) of up to $275.0 million. The borrowing capacity under the ABL Revolving Credit Facility is based on the value of inventory, accounts receivable and fixed assets of the Loan Parties. The Loan Parties’ obligations under the ABL Revolving Credit Facility are secured on a first-priority basis, subject to certain exceptions and permitted liens, by substantially all of the personal property and fee-owned real property of the Loan Parties. The liens securing the ABL Revolving Credit Facility are senior in priority to the second-priority liens securing the obligations under the 2026 Notes and the related guarantees. The ABL Revolving Credit Facility has a term of five years and includes a $75.0 million letter of credit sub-facility, $10.0 million of which is available to the Company’s German subsidiary that is a borrower under the ABL Revolving Credit Facility.

On June 17, 2021, the Company amended its ABL Credit Agreement to adjust certain negative covenants reducing restrictions on the Company’s ability to expand its rental business.

Borrowings under the ABL Revolving Credit Facility bear interest at a variable rate using either the Alternative Base Rate or the Eurodollar and Overnight London Interbank Offered Rate (“LIBOR”). The variable interest rate is based upon the average availability as of the most recent determination date as follows:


Average quarterly availability	Alternative base rate spread	Eurodollar and overnight LIBOR spread
≥ 50% of Aggregate Commitment	0.25%	1.25%
< 50% of Aggregate Commitment	0.50%	1.50%

As of September 30, 2021, the Company had other indebtedness outstanding of $11.6 million that had a weighted-average interest rate of approximately 3.5%. This debt includes balances on local credit lines and other financing arrangements.

As of September 30, 2021, the Company had $100.0 million of borrowings outstanding under the ABL Revolving Credit Facility and 0 borrowings outstanding as of December 31, 2020 As of September 30, 2021, the spreads for LIBOR and prime rate borrowings were 1.25% and 0.25%, respectively, with excess availability of approximately $123.6 million, which represents revolver borrowing capacity of $226.6 million less U.S. letters of credit outstanding of $3.0 million and $100.0 million in borrowings.

Additionally, on March 25, 2019, the Company and certain of its subsidiaries entered into an indenture with U.S. Bank National Association as trustee and notes collateral agent, pursuant to which the Company issued $300.0 million aggregate principal amount of the 2026 Notes with an annual coupon rate of 9.000%. Interest on the 2026 Notes is payable in cash semi-annually in arrears on April 1 and October 1 of each year. The 2026 Notes are fully and unconditionally guaranteed on a senior secured second lien basis, jointly and severally, by each of the Company’s existing and future domestic subsidiaries that is either a guarantor or a borrower under the ABL Revolving Credit Facility or that guarantees certain other debt of the Company or a guarantor. The 2026 Notes and the related guarantees are secured on a second-priority basis, subject to certain exceptions and permitted liens, by pledges of capital stock and other equity interests and other security interests in substantially all of the personal property and fee-owned real property of the Company and of the guarantors that secure obligations under the ABL Revolving Credit Facility.

Both the ABL Revolving Credit Facility and the 2026 Notes include customary covenants which include, without limitation, restrictions on, the Company’s ability and the ability of the Company’s restricted subsidiaries to incur, assume or guarantee additional debt or issue certain preferred shares, pay dividends on or make other distributions in respect of the Company’s capital stock or make other restricted payments, make certain investments, sell or transfer certain assets, create liens on certain assets to secure debt, consolidate, merge, sell, or otherwise dispose of all or substantially all of the Company’s assets, enter into certain transactions with affiliates and designate the Company’s subsidiaries as unrestricted. Both the ABL Revolving Credit Facility and the 2026 Notes also include customary events of default. The ABL Revolving Credit Facility has customary representations and warranties including, as a condition to borrowing, that all such representations and warranties are true and correct, in all material respects, on the date of the borrowing, including representations as to no material adverse change in the Company’s business or financial condition since December 31, 2018.

Additionally, the ABL Revolving Credit Facility contains a covenant requiring the Company to maintain a minimum fixed charge coverage ratio under certain circumstances set forth in the ABL Credit Agreement.

As of September 30, 2021, the Company was in compliance with all affirmative and negative covenants in its debt instruments, inclusive of the financial covenants pertaining to the ABL Revolving Credit Facility and 2026 Notes. Based upon management’s current plans and outlook, the Company believes it will be able to comply with these covenants during the subsequent twelve months.

13. Accounts Receivable Factoring

The Company has two non-U.S. accounts receivable financing programs with maximum availability of €55.0 million and one U.S. accounts receivable financing program with maximum availability of $35.0 million. Under these financing programs, the Company has the ability to sell eligible receivables up to the maximum limit and can sell additional receivables as previously sold receivables are collected. During the three months ended September 30, 2021, the Company sold $48.1 million of receivables and received cash of $48.1 million. During the nine months ended September 30, 2021, the Company sold $159.1 million of receivables and received cash of $159.1 million. Transactions under the U.S. and non-U.S. programs were accounted for as sales in accordance with ASC 860, “Transfers and Servicing.”

14. Income Taxes

For the three months ended September 30, 2021 and 2020, the Company recorded an income tax benefit of $0.9 million and expense of $7.0 million, respectively. For the nine months ended September 30, 2021 and 2020, the Company recorded a provision for income taxes of $7.3 million and $9.6 million, respectively. The year-over-year decrease in the Company’s provision for income taxes for the three and nine months ended September 30, 2021 primarily relates to a change in the jurisdictional mix of pre-tax income compared to the previous year and a discrete tax benefit recorded in 2021 related to refund of French income taxes as a result of a Mutually Agreed upon Procedure for 2006 with Italian and French tax authorities.

The Company will continue to evaluate its valuation allowance requirements on an ongoing basis considering changing facts and circumstances and may adjust its deferred tax asset valuation allowances accordingly. It is reasonably possible that the Company will either add to or reverse a portion of its existing deferred tax asset valuation allowances in the future. Such changes will be reflected in the Company’s income tax provision and could have a material effect on financial results.

The Company’s unrecognized tax benefits, excluding interest and penalties, were $20.0 million and $20.1 million as of September 30, 2021 and December 31, 2020, respectively.

15. Net Income (Loss) Per Share

The following is a reconciliation of the weighted average common shares outstanding used to compute basic and diluted net income (loss) per common share:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Basic weighted average common shares outstanding		35,029,175		34,538,814		34,914,989		34,730,623
Effect of dilutive securities - stock awards		0		0		640,088		0
Diluted weighted average common shares outstanding		35,029,175		34,538,814		35,555,077		34,730,623

Equity incentive instruments for which total employee proceeds from exercise exceed the average fair value of the same equity incentive instrument over the period have an anti-dilutive effect on earnings per share during periods with net income, and accordingly, are excluded from diluted weighted average common shares outstanding. Anti-dilutive equity instruments of 386,178 common shares were excluded from the diluted weighted average common shares outstanding for the nine months ended September 30, 2021. Due to the net loss incurred during the three months ended September 30, 2021 and 2020 and the nine months ended September 30, 2020, the assumed exercise of all equity instruments was anti-dilutive and, therefore, not included in the net diluted income (loss) per share calculations for those periods.

No cash dividends were declared or paid during the three and nine months ended September 30, 2021 and 2020.

16. Equity

Authorized capital consists of 75.0 million shares of $0.01 par value common stock and 3.5 million shares of $0.01 par value preferred stock. NaN of the preferred shares have been issued.

As of September 30, 2021, the Company had authorization from the Board of Directors to purchase up to $30.0 million of the Company’s common stock at management’s discretion. As of September 30, 2021, the Company had $10.6 million remaining under this authorization.

A reconciliation of the changes in accumulated other comprehensive loss, net of income tax, by component for the three months ended September 30, 2021 and 2020 are summarized as follows:


	Gains and Losses on Cash Flow Hedges			Pension & Postretirement			Foreign Currency Translation			Total
Balance as of June 30, 2020	$	0.1		$	(38.1	)	$	(86.1	)	$	(124.1	)
Other comprehensive income (loss) before reclassifications		—			(1.1	)		15.5			14.4
Amounts reclassified from accumulated other comprehensive income		—			0.6			—			0.6
Net other comprehensive income (loss)		—			(0.5	)		15.5			15.0
Balance as of September 30, 2020	$	0.1		$	(38.6	)	$	(70.6	)	$	(109.1	)

Balance as of June 30, 2021	$	(0.2	)	$	(49.7	)	$	(59.6	)	$	(109.5	)
Other comprehensive loss before reclassifications		(0.8	)		(0.8	)		(8.3	)		(9.9	)
Amounts reclassified from accumulated other comprehensive income		0.3			0.5			—			0.8
Net other comprehensive loss		(0.5	)		(0.3	)		(8.3	)		(9.1	)
Balance as of September 30, 2021	$	(0.7	)	$	(50.0	)	$	(67.9	)	$	(118.6	)

A reconciliation of the changes in accumulated other comprehensive loss, net of income tax, by component for the nine months ended September 30, 2021 and 2020 are summarized as follows:


	Gains and Losses on Cash Flow Hedges			Pension & Postretirement			Foreign Currency Translation			Total
Balance as of December 31, 2019	$	—		$	(39.9	)	$	(81.1	)	$	(121.0	)
Other comprehensive income (loss) before reclassifications		(0.2	)		(0.1	)		10.5			10.2
Amounts reclassified from accumulated other comprehensive income		0.3			1.4			—			1.7
Net other comprehensive income		0.1			1.3			10.5			11.9
Balance as of September 30, 2020	$	0.1		$	(38.6	)	$	(70.6	)	$	(109.1	)

Balance as of December 31, 2020	$	—		$	(47.9	)	$	(49.6	)	$	(97.5	)
Other comprehensive loss before reclassifications		(0.9	)		(3.6	)		(18.3	)		(22.8	)
Amounts reclassified from accumulated other comprehensive income		0.2			1.5			—			1.7
Net other comprehensive loss		(0.7	)		(2.1	)		(18.3	)		(21.1	)
Balance as of September 30, 2021	$	(0.7	)	$	(50.0	)	$	(67.9	)	$	(118.6	)

A reconciliation of the reclassifications from accumulated other comprehensive loss, net of income tax, for the three and nine months ended September 30, 2021 and 2020 are summarized as follows:


	Amount Reclassified from Accumulated Other Comprehensive Loss
	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020				Recognized Location
Losses on cash flow hedges
FX Forward Contracts	$	(0.3	)	$	—		$	(0.2	)	$	(0.3	)		Cost of sales
Total before income taxes		(0.3	)		—			(0.2	)		(0.3	)
Provision for income taxes		—			—			—			—
Total, net of income taxes	$	(0.3	)	$	—		$	(0.2	)	$	(0.3	)
Amortization of pension and postretirement items
Actuarial losses	$	(1.2	)	$	(1.2	)	$	(3.6	)	$	(3.4	)	(a)	Other income (expense) - net
Amortization of prior service cost		0.7			0.6			2.1			2.0		(a)	Other income (expense) - net
Total before income taxes		(0.5	)		(0.6	)		(1.5	)		(1.4	)
Provision for income taxes		—			—			—			—
Total, net of income taxes	$	(0.5	)	$	(0.6	)	$	(1.5	)	$	(1.4	)

Total reclassifications for the period, net of income taxes	$	(0.8	)	$	(0.6	)	$	(1.7	)	$	(1.7	)

(a)

These accumulated other comprehensive loss components are components of net periodic pension cost (see Note 22, “Employee Benefit Plans,” for further details).

17. Stock-Based Compensation

Equity compensation awards may be granted to certain eligible employees or non-employee directors. A detailed description of the awards granted prior to 2021 is included in the Company’s 2020 Annual Report on Form 10-K.The total number of shares of the Company’s common stock available for awards under the Company’s 2013 Omnibus Incentive Plan (“2013 Plan”) is 7,477,395 shares. The total number of shares of the Company’s common stock still available for award issuance as of September 30, 2021 is 4,247,700 shares.

During the three months ended September 30, 2021, the Company recorded stock-based compensation expense of $1.6 million. In 2021, the Company recorded stock-based compensation in engineering, selling and administrative expense in the Condensed Consolidated Statement of Operations. During the nine months ended September 30, 2021, the Company recorded stock-based compensation of $6.4 million. The Company recognizes stock-based compensation expense over the award’s vesting period, subject to retirement, death or disability provisions of the 2013 Omnibus Incentive Plan.

During the three months ended September 30, 2020, the Company recorded stock-based compensation income of $(0.5) million. Of the $(0.5) million recorded in 2020, $2.0 million of expense was recorded in engineering, selling, and administrative expense and $(2.5) million of income was recorded in restructuring expense in the Condensed Consolidated Statement of Operations. During the nine months ended September 30, 2020, the Company recorded stock-based compensation expense of $5.4 million. Of the $5.4 million recorded in 2020, $7.9 million of expense was recorded in engineering, selling, and administrative expense and $(2.5) million of income was recorded in restructuring expense in the Condensed Consolidated Statement of Operations. Income recorded in restructuring expense in 2020 was primarily related to the forfeiture of grants associated with employee separation agreements.

NaN options to acquire shares of common stock were granted to employees during the three months ended September 30, 2021 and 2020. Options to acquire 0 and 250,432 shares of common stock were granted to employees during the nine months ended September 30, 2021 and 2020, respectively. The options granted become exercisable in three annual increments over a three-year period beginning on the grant date and expire 10 years subsequent to the grant date.

During the three months ended September 30, 2021 and 2020, 22,581 and 0 restricted stock units were granted to employees, respectively. A total of 340,305 and 305,519 restricted stock units, respectively, were granted to employees during the nine months ended September 30, 2021 and 2020. The restricted stock units granted to employees vest in three annual increments over a three-year period beginning on the grant date.

During the three months ended September 30, 2021 and 2020, 0 performance shares were granted to employees. During the nine months ended September 30, 2021 and 2020, 203,697 and 328,310 performance shares were granted to employees, respectively. Performance shares vest after three years and are earned based on the extent to which performance goals are met over the applicable performance period. The performance goals and the applicable performance period vary for each grant year. The performance goals for the performance share granted in 2021 are weighted 60% on the 3-year average of the Company’s adjusted EBITDA percentage from 2021 to 2023 and 40% on non-new machines sales as of the year ended December 31, 2023. The 2021 performance share include a +/-20% modifier weighted on total shareholder return relative to a defined peer group of companies during the three-year performance period, not to exceed 200% of target shares granted. The performance goals for the performance shares granted in 2020 are based 100% on the 3-year average of the Company’s adjusted EBITDA percentage from continuing operations from 2020 to 2022 with a +/-20% modifier based on total shareholder return relative to a defined peer group of companies during the three-year performance period, not to exceed 200% of target shares granted.

NaN equity compensation awards were granted to non-employee directors during the three months ended September 30, 2021 and 2020. A total of 56,672 and 77,608 equity compensation awards were granted to non-employee directors during the nine months ended September 30, 2021 and 2020, respectively. The 2021 and 2020 equity compensation awards vested immediately upon issuance at the grant date.

18. Segments

The Company reports segment information based on the “management” approach. The management approach designates the internal reporting used by the Chief Executive Officer, who is also the Company’s Chief Operating Decision Maker (“CODM”), for making decisions about the allocation of resources and assessing performance as the source of the Company’s reportable operating segments.

The Company has 3 reportable segments: Americas, EURAF, and MEAP. The Americas operating segment includes the North America and South America continents. The EURAF operating segment includes Europe and Africa continents, excluding the Middle East region. The MEAP operating segment includes the Asia and Australia continents and the Middle East region. The results of the acquired Aspen business are included in the Americas segment.

The CODM evaluates the performance of its reportable segments based on net sales and operating income. Segment net sales are recognized in the geographic region the product is sold. Operating income for each segment includes net sales to third parties, cost of sales directly attributable to the segment, and operating expenses directly attributable to the segment. Manufacturing variances generated within each operating segment are maintained in each segment’s operating income. Operating income for each segment excludes other income and expense and certain expenses managed outside the operating segments. Costs excluded from segment operating income include various corporate expenses such as stock-based compensation expenses, income taxes, nonrecurring charges and other separately managed general and administrative costs. The Company does not include intercompany sales between segments for management reporting purposes. The Company’s operating segments were identified as its reportable segments.

The following table shows information by reportable segment for the three and nine months ended September 30, 2021 and 2020:


	Three Months Ended September 30,					Nine Months Ended September 30,
	2021			2020		2021		2020
Net Sales
Americas	$	190.6		$	150.7	$	516.0	$	456.5
EURAF		150.0			154.7		485.3		413.1
MEAP		63.9			50.2		221.1		143.5
Total	$	404.5		$	355.6	$	1,222.4	$	1,013.1
Segment Operating Income (loss)
Americas	$	15.3		$	7.5	$	44.2	$	21.4
EURAF		(5.4	)		7.3		6.6		2.5
MEAP		6.5			7.8		23.1		20.7
Total	$	16.4		$	22.6	$	73.9	$	44.6
Depreciation
Americas	$	3.6		$	3.8	$	10.9	$	11.8
EURAF		4.9			4.1		14.8		11.8
MEAP		0.6			0.5		1.6		1.5
Corporate		0.7			0.8		2.2		2.2
Total	$	9.8		$	9.2	$	29.5	$	27.3
Capital Expenditures
Americas	$	2.9		$	0.9	$	5.8	$	2.4
EURAF		3.7			5.6		15.4		12.0
MEAP		0.3			0.8		1.0		0.9
Corporate		—			—		0.1		—
Total	$	6.9		$	7.3	$	22.3	$	15.3

A reconciliation of the Company’s segment operating income to operating income in the Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2021 and 2020 are summarized as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Segment operating income	$	16.4		$	22.6		$	73.9		$	44.6
Unallocated corporate expenses		(9.1	)		(7.2	)		(29.2	)		(25.1	)
Unallocated restructuring expense		—			(3.7	)		—			(3.7	)
Total operating income	$	7.3		$	11.7		$	44.7		$	15.8

Net sales by geographic area for the three and nine months ended September 30, 2021 and 2020 are summarized as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
United States	$	158.7	$	135.2	$	445.2	$	411.4
Europe		147.4		150.8		472.3		403.8
Other		98.4		69.6		304.9		197.9
Total net sales	$	404.5	$	355.6	$	1,222.4	$	1,013.1

Net sales by product for the three and nine months ended September 30, 2021 and 2020 are summarized as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
New equipment sales	$	304.2	$	260.2	$	898.6	$	737.9
Used equipment sales, aftermarket parts and other sales*		100.3		95.4		323.8		275.2
Total net sales	$	404.5	$	355.6	$	1,222.4	$	1,013.1

*Other sales consist of miscellaneous services such as training and field service work.

19. Commitments and Contingencies

The Company is subject to various legal proceedings and claims that have arisen in the ordinary course of business which have not been fully resolved. The outcome of any litigation is inherently uncertain. When a loss related to a legal proceeding or claim is probable and reasonably estimable, the Company accrues its best estimate for the ultimate resolution of the matter.

As of September 30, 2021, various product-related lawsuits were pending. To the extent permitted under applicable law, all of these lawsuits are insured with self-insurance retention levels. The Company’s self-insurance retention levels vary by business and have fluctuated over the last 10 years. As of September 30, 2021, the largest self-insured retention level for new occurrences currently maintained by the Company is $3.0 million per occurrence and applies to product liability claims for cranes manufactured in the United States.

Product liability reserves, including asbestos related claims, recorded within other liabilities in the Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020 were $10.2 million and $9.2 million, respectively. These reserves were estimated using a combination of actual case reserves and actuarial methods. Based on the Company’s experience in defending product liability claims, management believes the current reserves are adequate for estimated case resolutions on aggregate self-insured claims and insured claims. Any recoveries from insurance carriers are dependent upon the legal sufficiency of claims and solvency of insurance carriers.

As of September 30, 2021 and December 31, 2020, the Company had reserves of $57.1 million and $63.2 million, respectively, for warranty and other related claims included in product warranties ~~as well as~~and other non-current liabilities in the Condensed Consolidated Balance Sheets. Certain of these warranty and other related claims involve legal matters in dispute that ultimately are resolved by negotiation, arbitration, or litigation. See Note 20, “Guarantees,” for further information.

It is reasonably possible that the estimates for warranty costs, product liability, asbestos-related claims and other various legal matters may change based upon new information that may arise or matters that are beyond the scope of the Company’s historical experience. Presently, there are no reliable methods to estimate the amount of any such potential changes. The ultimate resolution of these matters, individually and in the aggregate, is not expected to have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

The Company is engaged in confidential discussions with the United States government concerning the Company’s participation in the Environmental Protection Agency’s Transition Program for Equipment Manufacturers (the “TPEM” program) and related matters. It is too early in the process to reasonably estimate the fines or penalties to which the Company may be subject to as a result of this matter. Resolution of this matter may have a material impact on the Company’s financial condition, results of operations or cash flows.

The Company is subject to risks and uncertainties as a result of a cybersecurity incident that occurred in June 2021. Due to the cybersecurity incident, the Company experienced delays and disruptions to its business during the quarter ended June 30, 2021. The Company has insurance for this matter with a self-insured retention of $100,000. Because the Company is unable at this time to reasonably estimate any insurance recoveries, all associated costs are being expensed as incurred.

20. Guarantees

The Company periodically enters into transactions with customers that provide for buyback commitments. The Company evaluates each agreement at inception to determine if the customer has a significant economic incentive to exercise the buyback option. If it is determined that the customer has a significant economic incentive to exercise that right, the revenue is deferred and the agreement is accounted for as a lease in accordance with ASC Topic 842 – “Leases” (“Topic 842”). If it is determined that the customer does not have a significant economic incentive to exercise that right, then revenue is recognized when control of the product is transferred to the customer. The revenue deferred related to buyback obligations accounted for under Topic 842 included in other current and non-current liabilities as of September 30, 2021 was $33.6 million. The revenue deferred related to buyback obligations accounted for under Topic 842 included in other current and non-current liabilities as of December 31, 2020 was $35.9 million. The total amount of buyback commitments outstanding as of September 30, 2021 and December 31, 2020 was $35.2 million and $31.7 million, respectively. These amounts are not reduced for amounts the Company would recover from the repossession and subsequent resale of the cranes. The buyback commitments expire at various times through 2031. The Company also has various loss guarantees with maximum liabilities of $15.7 million and $31.8 million as of September 30, 2021 and December 31, 2020, respectively. These amounts are not reduced for amounts the Company would recover from the repossession and subsequent resale of the cranes securing the related guarantees.

In the normal course of business, the Company provides its customers a warranty covering workmanship, and in some cases materials, on products manufactured by the Company. Such ~~warranty~~warranties generally ~~provides~~provide that products will be free from defects for periods ranging from 12 monthsto 60 ~~months.~~months. If a product fails to comply with the Company’s warranty, the Company may be obligated, at its expense, to correct any defect by repairing or replacing such defective products. The Company provides for an estimate of costs that may be incurred under its standard warranty period at the time product revenue is recognized. These costs primarily include labor and materials, as necessary, associated with repair or replacement. The primary factors that affect the Company’s warranty liability include the number of units shipped and historical and anticipated warranty claims. As these factors are impacted by actual experience and future expectations, the Company assesses the adequacy of its recorded warranty liability and adjusts the amounts as necessary. ~~Below is a table summarizing the~~The revenue deferred related to extended warranty ~~activity for the nine months ended September 30, 2017 and the year ended December 31, 2016:~~

($ in millions)

Nine Months Ended
September 30, 2017

Year Ended December 31, 2016

Balance at beginning of period

$
28.6

$
32.4

Accruals for warranties issued during the period

24.6

20.4

Settlements made (in cash or in kind) during the
period

(22.5
)

(23.7
)
Currency translation

1.6

(0.5
)
Balance at end of period

$
32.3

$
28.6

Product liability reserves in the Condensed Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016 were $22.8 million and $21.7 million, respectively, and were estimated using a combination of actual case reserves and actuarial methods. Based on the Company’s experience in defending product liability claims, management believes the current reserves are adequate for estimated case resolutions on aggregate self-insured claims and insured claims. Any recoveries from insurance carriers are dependent upon the legal sufficiency of claims and solvency of insurance carriers.

As of September 30, 2017, various product-related lawsuits were pending. To the extent permitted under applicable law, all of these are insured with self-insurance retention levels and/or coverage with outside insurers. The Company’s self-insurance retention levels vary by business and have fluctuated over the last 10 years. As of September 30, 2017, the largest self-insured retention level for new occurrences currently maintained by the Company is $2.0 million per occurrence and applies to product liability claims for cranes manufactured in the United States.

The Company is involved in numerous lawsuits involving asbestos-related claims in which the Company is one of numerous defendants. After taking into consideration legal counsel’s evaluation of such actions, the current political environment with respect to asbestos-related claims and the liabilities accrued with respect to such matters, in the opinion of management, ultimate resolution is not expected to have a material adverse effect on the financial condition, results of operations or cash flows of the Company.

The Company is also involved in various legal actions arising out of the normal course of business, which, taking into account the liabilities accrued and legal counsel’s evaluation of such actions, in the opinion of management, the ultimate resolution, individually and in the aggregate, is not expected to have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

It is reasonably possible that the estimates for warranty costs, product liability, environmental remediation, asbestos-related claims and other various legal matters may change based upon new information that may arise or matters that are beyond the

~~scope of the Company’s historical experience. Presently, there are no reliable methods to estimate the amount of any such potential changes.~~

~~15. Guarantees~~

The Company periodically enters into transactions with customers that provide for residual value guarantees and buyback commitments. These initial transactions are recorded as deferred revenue and are amortized to income on a straight-line basis over a period equal to that of the customer’s third-party financing agreement. The deferred revenueperiods included in other current and non-current liabilities as of September 30, ~~2017~~2021 was $7.0 million. The revenue deferred related to extended warranty periods included in other current and non-current liabilities as of December 31, ~~2016~~2020 was ~~$29.3 million~~$6.2 million. Below is a table summarizing the warranty activity for the three and ~~$30.4 million, respectively. The total amount of residual value guarantees~~nine months ended September 30, 2021 and ~~buyback commitments given by~~2020:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Balance at beginning of period	$	59.5		$	60.1		$	63.2		$	60.6
Accruals for warranties issued during the period		5.9			8.2			19.3			24.3
Settlements made (in cash or in kind) during the period		(7.9	)		(9.6	)		(24.1	)		(26.2	)
Currency translation		(0.4	)		1.1			(1.3	)		1.1
Balance at end of period	$	57.1		$	59.8		$	57.1		$	59.8

Included in the ~~Company and outstanding~~warranty balance as of September 30, ~~2017~~2021 and December 31, ~~2016 was $28.4~~2020 is $11.7 million and ~~$32.8~~$13.0 million, ~~respectively. These amounts are not reduced for amounts~~respectively, of long-term warranty which is recorded in other noncurrent liabilities on the Condensed Consolidated Balance Sheets.

21. Restructuring

During the three months ended September 30, 2021 and 2020, the Company ~~would recover from~~recorded $(0.4) million and $3.9 million of restructuring (income) expense, respectively. During the ~~repossession~~nine months ended September 30, 2021 and ~~subsequent resale~~2020, the Company recorded $(0.5) million of restructuring income and $5.6 million of restructuring expense, respectively. Restructuring income for the three months ended September 30, 2021 primarily related to the sale of Brazilian tax credits. Restructuring income for the nine months ended September 30, 2021 primarily related to adjustments of previously recorded costs associated with headcount reductions in Europe and the sale of Brazilian tax credits. Restructuring expenses for the three months ended September 30, 2020 related primarily to costs associated with headcount reductions in North America. Restructuring expenses for the nine months ended September 30, 2020 related primarily to costs associated with headcount reductions in Europe and North America.

The following is a rollforward of the ~~units. The residual value guarantees~~Company's restructuring accrual, which is included within accounts payable and ~~buyback commitments expire at various times through 2021.~~ accrued expenses in the Condensed Consolidated Balance Sheets, for the three and nine months ended September 30, 2021 and 2020:

~~16.~~


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Balance at beginning of period	$	3.1		$	1.9		$	5.3		$	2.0
Restructuring (income) expenses*		(0.4	)		6.4			(0.5	)		8.1
Use of reserve		(0.3	)		(2.1	)		(2.6	)		(3.9	)
Currency translation		—			0			0.2			—
Balance at end of period	$	2.4		$	6.2		$	2.4		$	6.2

*Restructuring expense within the 2020 rollforward excludes income recorded related to the forfeiture of equity compensation awards associated with employee separation agreements which was recorded directly to restructuring expense in the Condensed Consolidated Statement of Operations and, therefore, did not impact the restructuring accrual.

22. Employee Benefit Plans

The Company provides certain pension, health care and death benefits to eligible retirees and their dependents. The funding mechanism for such benefits varies based on the country where the ~~retiree resides~~plan is located and ~~receives benefits.~~the related plan. Eligibility for pension coverage is based on retirement qualifications. Healthcare benefits may be subject to deductibles, co-payments and other limitations. The Company reserves the right to modify benefits unless ~~a government agency in a certain country prohibits it from doing so.~~prohibited by local laws or regulations.

~~As part of the Spin-Off, and in accordance with the employee matters agreement referred to in Note 2, “Discontinued Operations,” certain combined plans were split between MTW and MFS. Accordingly,~~In March 2021, the Company transferred to MFS pension obligations associated with active, retired and other former employees of MFS for those impacted MFS-related defined benefit pension plans. The allocation of plan assets was determined in accordance with applicable Employee Retirement Income Securityapplied provisions from the American Rescue Plan Act of ~~1974, Internal Revenue Service and other jurisdictional requirements.~~

~~Effective July 1, 2017,~~2021 (the “Act”) that changed the interest rates used to calculate the U.S. pension plans funded status. The ~~Manitowoc~~ Company ~~Inc. Post-65 Retiree Health Plan (“~~elected to apply the ~~Plan”) was amended. Eligible retirees and their spouses were provided access~~new interest rates in the Act retroactively to ~~a Retiree Health Exchange where they may purchase Medicare Supplement Plans, including Medicare Advantage and Medigap~~2020, which has resulted in no required minimum contributions to the U.S. pension plan ~~prescription drug coverage. The enrollment and payment~~ for this coverage is facilitated by an outside third-party, and these plans have no affiliation with the Company. To assist retirees with premium and out-of-pocket expenses they incur, the Company funds a Health Reimbursement Account (“HRA”) for each enrolled retiree. The value of the HRA is based on the plan type and premium cost for each specific retiree before the Plan was amended.2021.

The components of periodic benefit ~~costs~~cost for the three and nine months ended September 30, ~~2017~~2021 and ~~September 30, 2016~~2020 are summarized as follows:

	Three Months Ended September 30, 2017									Nine Months Ended September 30, 2017
							Postretirement									Postretirement			Three Months Ended September 30, 2021									Three Months Ended September 30, 2020
	U.S.			Non-U.S.			Health and			U.S.			Non-U.S.			Health and									Postretirement									Postretirement
	Pension			Pension			Other			Pension			Pension			Other			U.S.			Non-U.S.			Health and			U.S.			Non-U.S.			Health and
($ in millions)	Plans			Plans			Plans			Plans			Plans			Plans
																			Pension			Pension			Other			Pension			Pension			Other
																			Plans			Plans			Plans			Plans			Plans			Plans
Service cost - benefits earned during the period	$	—		$	0.4		$	0.1		$	—		$	1.3		$	0.2		$	0		$	0.5		$	0		$	0		$	0.5		$	0
Interest cost of projected benefit obligations		1.3			0.6			0.2			4.0			1.6			0.7			0.8			0.4			0			1.0			0.4			0.1
Expected return on plan assets		(1.2	)		(0.4	)		—			(3.7	)		(1.1	)		—			(1.2	)		(0.3	)		0			(1.3	)		(0.3	)		0
Amortization of prior service cost		—			—			(0.3	)		—			—			(1.0	)		0			0			(0.7	)		0			0			(0.6	)
Amortization of actuarial net loss		0.8			0.4			0.1			2.4			1.2			0.3			0.8			0.4			0			0.8			0.4			0
Net periodic benefit costs	$	0.9		$	1.0		$	0.1		$	2.7		$	3.0		$	0.2
Net periodic benefit cost																			$	0.4		$	1.0		$	(0.7	)	$	0.5		$	1.0		$	(0.5	)


	Nine Months Ended September 30, 2021									Nine Months Ended September 30, 2020
							Postretirement									Postretirement
	U.S.			Non-U.S.			Health and			U.S.			Non-U.S.			Health and
	Pension			Pension			Other			Pension			Pension			Other
	Plans			Plans			Plans			Plans			Plans			Plans
Service cost - benefits earned during the period	$	0		$	1.7		$	0.1		$	0		$	1.5		$	0.1
Interest cost of projected benefit obligations		2.2			1.0			0.1			3.0			1.2			0.3
Expected return on plan assets		(3.6	)		(0.8	)		0			(3.9	)		(0.7	)		0
Amortization of prior service cost		0			0			(2.1	)		0			0			(2.0	)
Amortization of actuarial net loss		2.4			1.4			(0.2	)		2.2			1.2			0
Net periodic benefit cost	$	1.0		$	3.3		$	(2.1	)	$	1.3		$	3.2		$	(1.6	)

The components of net periodic benefit cost other than the service cost component are included in other income (expense) - net in the Condensed Consolidated Statement of Operations.

Three Months Ended September 30, 2016

Nine Months Ended September 30, 2016

Postretirement

Postretirement

U.S.

Non-U.S.

Health and

U.S.

Non-U.S.

Health and

Pension

Pension

Other

Pension

Pension

Other

($ in millions)

Plans

Plans

Plans

Plans

Plans

Plans

Service cost - benefits earned during the period

$
—

$
0.5

$
0.1

$
—

$
1.4

$
0.2

Interest cost of projected benefit obligations

1.7

0.6

0.4

5.6

2.8

1.3

Expected return on plan assets

(1.4
)

(0.5
)

—

(4.6
)

(2.2
)

—

Amortization of actuarial net loss

0.9

0.2

—

3.0

0.9

—

Net periodic benefit costs

1.2

0.8

0.5

4.0

2.9

1.5

Net periodic benefit costs associated with MFS

—

—

—

0.4

0.4

0.1

Net periodic benefit costs included in continuing
operations

$
1.2

$
0.8

$
0.5

$
3.6

$
2.5

$
1.4

23. Subsequent Event

~~17. Restructuring~~

~~The Company is continuing its restructuring activities to right-size the business by balancing capacity with demand. During the three months ended September 30, 2017 and 2016,~~On October 1, 2021, the Company ~~incurred $3.7 million and $3.9 million~~completed the acquisition of restructuring expense, respectively. During the nine months ended September 30, 2017 and 2016, the Company incurred $21.3 million and $17.1 million of restructuring expense, respectively. The costs for the three and nine months ended September 30, 2017 related primarily to the closure of manufacturing operations in Manitowoc, WI and Passo Fundo, Brazil and severance costs associated with headcount reductions in North America. Costs for the three and nine months ended September 30, 2016, related to workforce reductions in twosubstantially all of the ~~Company's facilities in North America.~~

~~The closure~~assets and liabilities of the ~~manufacturing facility in Manitowoc~~crane business of H&E Equipment Services, Inc. (“H&E”) for a preliminary purchase price of $130.0 million. The purchase price is subject to customary adjustments for, among other things, finalization of net working capital and other transaction adjustments. The acquisition was ~~completed during~~funded from existing cash resources, including the ~~second quarter~~use of ~~2017 and~~ the ~~Company has incurred all material cash and non-cash charges related to this closure,~~ABL revolver of which ~~were in line with previously disclosed estimates,~~$100.0 million was outstanding as of September 30, ~~2017.~~

2021. The ~~following is a roll-forward of~~H&E's crane business will operate with eleven full-service branch locations under the Company's ~~restructuring activities for the nine months ended September 30, 2017 ($ in millions):~~

Restructuring Reserve
Balance as of
December 31, 2016

Restructuring
Expenses

Cash Use of Reserve

Non-Cash Use of Reserve

Restructuring Reserve
Balance as of September 30, 2017

Total

$
8.2

$
21.3

$
20.8

$
4.8

$
3.9

~~18. Recent Accounting Changes~~new wholly owned subsidiary, MGX Equipment Services, LLC ("MGX") and ~~Pronouncements~~

In August 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Updated (“ASU”) No. 2017-12 “Targeted Improvements to Accounting for Hedging Activities,” which amends ASC 815, “Derivatives and Hedging.” The purpose of this ASU is to better align a company’s risk management activities and financial reporting for hedging relationships, simplify the hedge accounting requirements, and improve the disclosures of hedging arrangements. The effective date is fiscal 2019, with early adoption permitted. The Company is evaluating the impact the adoption of this ASU will ~~have on its consolidated financial statements.~~

~~In May 2017, the FASB issued ASU No. 2017-09 “Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting,”~~expand Manitowoc’s ability to provide ~~clarity~~new sales, used sales, aftermarket parts, service, and ~~reduce both diversity in practice and cost complexity when applying the guidance in Topic 718~~crane financing options to a ~~change to the terms and conditions~~variety of a stock-based payment award. ASU 2017-09 also provides guidance about the types of changes to the terms or conditions of a share-based payment award that require an entity to apply modification accounting in accordance with Topic 718. The standard is effective for annual periods beginning after December 15, 2017, and for interim periods therein. Early adoption is permitted. The Company is evaluating the impact the adoption of this ASU will have on its consolidated financial statements.

In March 2017, the FASB issued ASU No. 2017-08 “Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities,” to shorten the amortization period for the premium to the earliest call date instead of the contractual life of the instrument. This new guidanceend market customers. MGX will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018 with early adoption permitted. Entities will be required to apply the new guidance using the modified retrospective method with a cumulative-effect adjustment to retained earnings upon the adoption date. The Company is evaluating the impact the adoption of this ASU will have on its consolidated financial statements.

In March 2017, the FASB issued ASU No. 2017-07 “Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” This ASU amends ASC 715, “Compensation – Retirement

Benefits,” to require employers that present a measure of operating income in their statement of income to include only the service cost component of net periodic pension cost and net periodic postretirement benefit cost in operating expenses (together with other employee compensation costs). The other components of net benefit cost, including amortization of prior service cost/credit and settlement and curtailment effects, are to be included in nonoperating expenses. This ASU also allows only the service cost component of net benefit cost to be capitalized (for example, as a cost of inventory). The amendments in this ASU should be applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit costreported in the income statement and prospectively, on and after the effective date, for the capitalization of the service cost component of net periodic pension cost and net periodic postretirement benefit in assets, and is effective for public companies for fiscal years beginning after December 15, 2017; early adoption is permitted. The Company is evaluating the impact the adoption of this ASU will have on its consolidated financial statements.Americas segment.

In January 2017, the FASB issued ASU No. 2017-04 - “Intangibles – Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment.” This ASU simplifies the accounting for goodwill impairment. The guidance removes Step 2 of the goodwill impairment test, which required a hypothetical purchase price allocation. A goodwill impairment is now the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. ASU No. 2017-04 will be effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption was permitted for any impairment tests performed after January 1, 2017, and the Company early adopted this ASU effective in the first quarter of 2017.21

In November 2016, the FASB issued ASU No. 2016-18 - “Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force).” The amendments of this ASU address the diversity of presentation of restricted cash by requiring a statement of cash flows to explain the change during the period in the total cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. ASU 2016-18 will be effective for fiscal years beginning after December 15, 2017. The Company is evaluating the impact the adoption of this ASU will have on its consolidated financial statements.

In October 2016, the FASB issued ASU No. 2016-16 - “Income Taxes (Topic 740): Intra-Entity Transfer of Assets Other than Inventory,” which requires the recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. ASU 2016-16 will be effective for fiscal years beginning after December 15, 2017. The Company is currently evaluating the impact the adoption of this ASU will have on its consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15 - “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” This update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice and affects all entities required to present a statement of cash flows under Topic 230. This standard will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is evaluating the impact the adoption of this ASU will have on its consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09 - “Revenue from Contracts with Customers” (Topic 606), which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition. This was further clarified with technical corrections issued within ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-11, ASU 2016-12, ASU 2016-20, and ASU 2017-05. The new revenue recognition guidance was issued to provide a single, comprehensive revenue recognition model for all contracts with customer. Under the new guidance, an entity will recognize revenue to depict the transfer of promised goods or services to customer at an amount that the entity expects to be entitled to in exchange for those goods or services. A five-step model has been introduced for an entity to apply when recognizing revenue. The new guidance also includes enhanced disclosure requirements and is effective January 1, 2018. Entities have the option to apply the new guidance under a retrospective approach to each prior reporting period presented, or a modified retrospective approach with the cumulative effect of initially applying the new guidance recognized at the date of initial application within the Consolidated Statement of Changes in Stockholder's Equity. The Company plans to adopt the new guidance effective January 1, 2018, utilizing the modified retrospective approach. Based upon review of the Company's current revenue recognition practices, the Company has not identified any terms or conditions in the contracts reviewed that would suggest that adoption will result in a different pattern of revenue recognition than that recorded under current guidance. However, the Company will continue to evaluate its assessment as further reviews are performed, which include incremental contract reviews and the finalization of other documentation, which could identify necessary changes under ASU 2014-09.

In March 2016, the FASB issued ASU 2016-09 - “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” This update is part of the FASB's Simplification Initiative, and its objective is to identify, evaluate and improve areas of GAAP for which cost and complexity can be reduced while maintaining or improving usefulness of the information provided to users of financial statements. The update involves several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The effective date for this ASU is for annual periods beginning after December 15, 2016 and interim periods within those annual periods. The adoption of this ASU did not have a material impact on the Company's consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-06 - “Derivatives and Hedging: Contingent Put and Call Options in Debt Instruments.” The amendments clarify the steps required to assess whether a call or put option meets the criteria for bifurcation as an embedded derivative. The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. The adoption of this ASU did not have a material impact on the Company's consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02 - “Leases,” which is intended to improve financial reporting on leasing transactions. This standard requires a lessee to record on the balance sheet the assets and liabilities for the rights and obligations created by lease terms of more than 12 months. This standard will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is evaluating the impact the adoption of this ASU will have on its consolidated financial statements.

In January 2016, the FASB issued ASU 2016-01 - “Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities.” ASU 2016-01 amends various aspects of the recognition, measurement, presentation and disclosure for financial instruments. Most significantly, ASU 2016-01 requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of an investee) to be measured at fair value with changes in fair value recognized in net income (loss). ASU 2016-01 is effective for annual reporting periods and interim periods within those years beginning after December 15, 2017. The Company is evaluating the impact the adoption of this ASU will have on its consolidated financial statements.

In July 2015, the FASB issued ASU No. 2015-11 - “Inventory (Topic 330): Simplifying the Measurement of Inventory.” This update changes the guidance on accounting for inventory accounted for on a first-in first-out (FIFO) basis. Under the revised standard, an entity should measure FIFO inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Subsequent measurement is unchanged for inventory measured on a last-in, first-out (LIFO) basis. The amendments in this ASU are effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2016. The adoption of this ASU did not have a material impact on the Company's consolidated financial statements.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2020, including the financial statements, accompanying notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations therein, and the interim condensed consolidated financial statements and accompanying notes included in this Quarterly Report on Form 10-Q.

~~Results of Operations~~

~~Performance during the Quarter Ended September 30, 2017 Compared with the Quarter Ended September 30, 2016~~

~~Net Sales~~

Consolidated net sales for the three months ended September 30, 2017 increased 14.2% to $399.4 million from $349.8 million in the third quarter of 2016. This increase was attributable to higher crane shipments in the U.S. and Europe. Approximately 40% of unit revenue in the third quarter of 2017 came from new products introduced since becoming a stand-alone crane company. Consolidated net sales were favorably impacted by $8.6 million from changes in foreign currency exchange rates.

As of September 30, 2017, total backlog was $467.9 million, a 44.5% increase from the December 31, 2016 backlog of $323.8 million, and a 32.3% increase from the September 30, 2016 backlog of $353.6 million.

~~Gross Profit~~

Gross profit for the three months ended September 30, 2017 was $72.5 million, an increase of $31.7 million compared to $40.8 million for the three months ended September 30, 2016. This increase was mainly due to the increase in sales volume discussed above and reduced manufacturing costs. In addition, in the third quarter of 2016, the Company recognized charges related to inventory reserves, losses from declines in used crane values, and product improvement initiatives that did not recur in the third quarter of 2017.

~~Selling and Administrative Expenses~~

Engineering, selling and administrative expenses (“ES&A”) decreased 16.6% to $60.9 million for the three months ended September 30, 2017 compared to $73.0 million for the three months ended September 30, 2016. This decrease was primarily due to a decrease in wages and benefits related expenses as a result of headcount reductions, reduced professional and consulting fees and discretionary cost oversight. Furthermore, for the three months ended September 30, 2016 the Company recorded approximately $7 million of charges related to the decline in the fair market value of used cranes which did not reoccur in 2017. ES&A was also adversely affected by $1.4 million from changes in foreign currency exchange rates.

~~Restructuring Expense~~

For the three months ended September 30, 2017, the Company incurred $3.7 million of restructuring expense, which primarily related to the closure of manufacturing operations in Manitowoc, WI and Passo Fundo, Brazil and severance costs associated with headcount reductions in North America. The closure of the manufacturing facility in Manitowoc was completed during the second quarter of 2017 and the Company has incurred all material cash and non-cash charges as of September 30, 2017 related to these closures.

~~Operating Income (Loss)~~

Operating income increased $142.1 million to $7.9 million for the three months ended September 30, 2017, compared to an operating loss of $(134.2) million for the three months ended September 30, 2016. This increase was primarily due to increases in sales volumes, reduced manufacturing costs and charges, and reduced ES&A as discussed above, as well as the effects of a $96.9 million reduction in asset impairment expense from the prior year. The Company's operating income (loss) was favorably impacted by $0.8 million from changes in foreign currency exchange rates.

~~Interest Expense~~

Interest expense for the three months ended September 30, 2017 was $9.6 million versus $10.0 million for the three months ended September 30, 2016. The decrease was due primarily to lower outstanding debt balances.

~~Other Income (Expense)- Net~~

~~Other income (expense)- net is comprised primarily of net foreign currency translation gains and losses.~~

~~Provision (Benefit) for Taxes on Income~~

For the three months ended September 30, 2017 and 2016, the Company recorded income tax benefits of $13.1 million and $5.3 million, respectively. During the three months ended September 30, 2017, a discrete tax benefit of $13.7 million was recorded, with the primary driver being a resolution reached with the Internal Revenue Service related to tax years 2012 through 2014. The Company’s effective tax rate varies from the U.S. federal statutory rate of 35% due to results of foreign operations that are subject to income taxes at different statutory rates which are typically below the federal statutory rate. The Company has significant valuation allowances in the United States, France, and Germany. It is reasonably possible that sufficient positive evidence required to release all, or a portion, of certain valuation allowances in the company’s French businesses within the next 12 months may result in a reduction of deferred tax asset valuation allowances by up to €35.0 million.

~~Performance during the Nine Months Ended September 30, 2017 Compared with the Nine Months Ended~~

~~September 30, 2016~~

~~Net Sales~~

Consolidated net sales for the nine months ended September 30, 2017 decreased 10.9% to $1,099.8 million from $1,234.9 million for the same period in 2016. This decrease was primarily driven by a high level of large crawler crane shipments in the first nine months of 2016 in the Americas whose orders had been placed in earlier years that did not recur. Consolidated net sales were unfavorably impacted by $2.1 million from changes in foreign currency exchange rates.

~~Gross Profit~~

Gross profit for the nine months ended September 30, 2017 was $200.7 million, a decrease of $7.1 million compared to $207.8 million for the nine months ended September 30, 2016. This decrease was mainly due to the reduction in sales volumes discussed above, offset in part by reduced manufacturing costs and the non-recurrence of various charges recognized in the third quarter of 2016, as mentioned above.

~~Selling and Administrative Expenses~~

ES&A decreased 15.6% to $184.6 million for the nine months ended September 30, 2017 compared to $218.8 million for the nine months ended September 30, 2016. This decrease in ES&A was primarily due to a decrease in wages and benefits-related expenses because of headcount reductions, reduced professional and consulting fees and discretionary cost oversight.

~~Restructuring Expense~~

For the nine months ended September 30, 2017, the Company incurred $21.3 million of restructuring expense, which primarily related to the closure of manufacturing operations in Manitowoc, WI and Passo Fundo, Brazil and severance costs associated with headcount reductions in North America. The closure of the manufacturing facility in Manitowoc was completed during the second quarter of 2017 and the Company has incurred all material cash and non-cash charges as of September 30, 2017 related to these closures.

~~Operating Loss~~

Operating loss decreased $123.6 million to $(5.9) million for the nine months ended September 30, 2017, compared to $(129.5) million for the nine months ended September 30, 2016. This decrease was primarily due reduced manufacturing costs and charges and reduced ES&A costs discussed above, as well as a $96.9 million reduction in asset impairment expense. The Company's operating loss was unfavorably impacted by $1.0 million from changes in foreign currency exchange rates.

~~Interest Expense~~

Interest expense for the nine months ended September 30, 2017 was $29.4 million versus $29.6 million for the nine months ended September 30, 2016. The reduction in expense was caused by a lower average debt balance in 2017 as compared to the prior year, partly offset by a higher average interest rate. Additionally, in the first quarter of 2016, $11.1 million of net

derivative assets related to the termination of fixed-to-float swaps associated with the Prior 2020 and 2022 Notes were amortized as a net decrease to interest expense. See additional discussion of the fixed-to-float swaps associated with the Prior 2020 and 2022 Notes in Note 7, “Debt,” of the Condensed Consolidated Financial Statements.

There was no loss on debt extinguishment for the nine months ended September 30, 2017. The loss on debt extinguishment for the nine months ended September 30, 2016 was $76.3 million and consisted of $31.5 million related to the March 3, 2016 redemption of the Prior 2020 Notes, $34.6 million on the redemption of the Prior 2022 Notes, $5.9 million for the termination of the Prior Senior Credit Facility because of the write-off of deferred financing expense and $4.3 million loss on the termination of interest rate swaps.

~~Other Income (Expense)- Net~~

~~Other income (expense)- net is comprised primarily of net foreign currency translation gains and losses.~~

~~Provision (Benefit) for Taxes on Income~~

For the nine months ended September 30, 2017 and 2016, the Company recorded an income tax benefit of $9.3 million and an income tax provision of $103.1 million, respectively. The decrease in the Company’s tax expense for the nine months ended September 30, 2017 relative to the prior year related primarily to a non-cash charge in 2016 of $106.4 million as a result of a valuation allowance associated with the Company’s domestic federal and state deferred tax assets and attributes in connection with the Spin-Off. In addition to the non-cash charge related to the valuation allowance, the Company’s effective tax rate varies from the U.S. federal statutory rate of 35% due to results of foreign operations that are subject to income taxes at different statutory rates which are typically below the federal statutory rate. Furthermore, a discrete tax benefit of $13.7 million was recorded during the third quarter of 2017 as discussed above. The Company has significant valuation allowances in the United States, France, and Germany. It is reasonably possible that sufficient positive evidence required to release all, or a portion of certain valuation allowances in the company’s French businesses within the next 12 months may result in a reduction of deferred tax asset valuation allowances by up to €35.0 million.

~~Financial Condition~~

~~First Nine Months of 2017~~

Cash and cash equivalents balance as of September 30, 2017 totaled $29.3 million, a decrease of $40.6 million from the December 31, 2016 balance of $69.9 million. The decrease in cash balance for the nine months ended September 30, 2017 was primarily caused by working capital increases and capital expenditures, partially offset by proceeds from $10 million of borrowings under the revolving credit facility.

~~Cash flows used for operating activities of continuing operations for the first nine months of 2017 were $33.9 million~~ ~~and were primarily driven by increased inventories since December 31, 2016 combined with reduced sales volume.~~

Cash flows used for investing activities of continuing operations were $10.0 million for the first nine months of 2017 and consisted of capital expenditures of $17.0 million, with the majority related to equipment purchases in North America and Europe, partially offset by proceeds from sales of property, plant and equipment of $6.7 million.

Cash flows provided by financing activities of continuing operations were $2.6 million for the first nine months of 2017 and consisted of proceeds from the revolving credit facility of $10.0 million and $3.7 million of cash from exercises of stock options, offset by net cash paid on long-term debt and receivables financing costs.

~~First Nine Months of 2016~~

Cash and cash equivalents as of September 30, 2016 totaled $42.9 million, an increase of $11.5 million from the December 31, 2015 balance of $31.5 million. The increase in cash balance for the nine months ended September 30, 2016 was primarily due to proceeds from the offering of the 2021 Notes, partially offset by inventory and accounts receivable increases and capital expenditures.

Cash flows used for operating activities of continuing operations for the first nine months of 2016 were $180.2 million. During the first nine months of 2016, cash flows used for continuing operations were primarily driven by an increase in accounts payable and inventory combined with reduced sales volume. This was partially offset by a decrease in accounts receivable.

Cash flows used for investing activities of continuing operations of $32.8 million for the first nine months of 2016 consisted primarily of capital expenditures of $34.8 million, with the majority of the capital expenditures related to equipment purchases

~~and the since discontinued enterprise resource planning (“ERP”) system implementation, partially offset by proceeds from sales of property, plant and equipment of $2.3 million.~~

Cash flows provided by financing activities of continuing operations of $242.8 million for the first nine months of 2016 consisted primarily of proceeds from the offering of the 2021 Notes, partially offset by cash transferred to MFS in conjunction with the Spin-Off. Further, immediately prior to the Spin-Off, MFS issued long-term debt with the majority of the proceeds provided to the Company in the form of a cash dividend which the Company used to repay the then-outstanding Prior Senior Credit Facility, 2020 Notes and 2022 Notes.

~~Liquidity and Capital Resources~~

~~Outstanding debt as of September 30, 2017 and December 31, 2016 is summarized as follows:~~

($ in millions)

September 30, 2017

December 31, 2016

Revolving credit facility

$
10.0

$
—

Senior notes due 2021

251.4

249.8

Other

29.5

35.7

Deferred financing costs

(3.3
)

(4.0
)
Total debt

287.6

281.5

Less current portion and short-term borrowings

(10.2
)

(12.4
)
Long-term debt

$
277.4

$
269.1

~~See additional discussion of the credit facilities and Senior Notes in Note 7, “Debt,” of the Condensed Consolidated Financial Statements.~~

~~The Company’s liquidity position at September 30, 2017 and December 31, 2016 is summarized as follows:~~

(in millions)

September 30, 2017

December 31, 2016

Cash and cash equivalents

$
29.3

$
69.9

Revolver borrowing capacity

161.1

160.4

Less: Borrowings on revolver

(10.0
)

—

Less: Outstanding letters of credit

(14.4
)

(16.4
)
Total liquidity

$
166.0

$
213.9

The Company believes its liquidity and expected cash flows from operations should be sufficient to meet expected working capital, capital expenditure and other general ongoing operational needs in the foreseeable future.

The Company has not provided for additional U.S. income taxes on approximately $500.6 million of undistributed earnings of consolidated non-U.S. subsidiaries included in stockholders’ equity. Such earnings could become taxable upon sale or liquidation of these non-U.S. subsidiaries or upon dividend repatriation of cash balances. It is not practicable to estimate the amount of the unrecognized tax liability on such earnings. At September 30, 2017, approximately $15.4 million of the Company’s total cash and cash equivalents were held by its foreign subsidiaries. This cash is associated with earnings that the Company has asserted are permanently reinvested. The Company has no current plans to repatriate material amounts of cash or cash equivalents held by its foreign subsidiaries because it plans to reinvest such cash and cash equivalents to support its operations and continued growth plans outside the U.S. through the funding of capital expenditures, acquisitions, research, operating expenses or other similar cash needs of these operations. Further, although the Company has not generated cash from operations in the current period, the Company does not currently forecast a need for these funds in the U.S. because its future U.S. operations and debt service will be supported by the cash generated by its U.S. operations which are supported by the ABL Revolving Credit Facility as a source of liquidity during times of short term cash needs. As of September 30, 2017, total availability under the facility was $161.1 million, of which $137.2 million was dedicated to U.S. borrowers.

Both the ABL Revolving Credit Facility and 2021 Notes include customary covenants and events of default. Based upon management’s current plans and outlook, the Company believes it will be able to comply with these covenants during the subsequent twelve months.

See Note 8, “Accounts Receivable Securitization,” of the Condensed Consolidated Financial Statements for further details regarding the program. The securitization program contains customary affirmative and negative covenants.

~~Based on management’s current plans and outlook, the Company believes it will be able to comply with these covenants during the subsequent twelve months.~~

~~Non-GAAP Measures~~

The Company uses EBITDA, Adjusted EBITDA and Adjusted operating income, which are non-GAAP financial measures, as additional metrics to evaluate the Company’s performance. The Company defines EBITDA as net income (loss) before loss from discontinued operations, net of income taxes, interest, taxes, depreciation and amortization. The Company defines Adjusted EBITDA as EBITDA plus the addback of restructuring expenses, asset impairment charges and other (income) expense - net. The Company defines Adjusted operating income as Adjusted EBITDA excluding the addback of depreciation. The Company believes these non-GAAP measures provide important supplemental information to readers regarding business trends that can be used in evaluating its results of operations because these financial measures provide a consistent method of comparing financial performance and are commonly used by investors to assess performance. These non-GAAP financial measures should be considered together with, and are not substitutes for, the GAAP financial information provided herein.

The Company’s Adjusted EBITDA and Adjusted operating income for the three months ended September 30, 2017 was income of $20.8 million and $11.6 million, respectively. The Company’s Adjusted EBITDA and Adjusted operating income for the nine months ended September 30, 2017 was income of $45.2 million and $16.1 million, respectively. The Company’s Adjusted EBITDA and Adjusted operating loss for the three months ended September 30, 2016 was a loss of $20.9 million and $32.2 million, respectively. The Company’s Adjusted EBITDA and Adjusted operating loss for the nine months ended September 30, 2016 was income of $23.9 million and a loss of $11.0 million, respectively. The reconciliation of GAAP net income to EBITDA, further to Adjusted EBITDA and to Adjusted operating income (loss) for the three and nine months ended September 30, 2017 and 2016 is as follows ($ in millions):

Three Months Ended

Nine Months Ended

($ in millions)

September 30, 2017

September 30, 2016

September 30, 2017

September 30, 2016

Net income (loss)

$
9.6

$
(140.7
)

$
(25.9
)

$
(342.4
)
Loss from discontinued operations, net of income
taxes

0.1

1.8

0.3

5.8

Interest expense and amortization of deferred
financing fees

10.1

10.5

30.8

31.4

Provision (benefit) for income taxes

(13.1
)

(5.3
)

(9.3
)

103.1

Depreciation expense

9.2

11.3

29.1

34.9

Amortization of intangible assets

—

0.7

0.7

2.2

EBITDA

15.9

(121.7
)

25.7

(165.0
)
Restructuring expense

3.7

3.9

21.3

17.1

Asset impairment expense

—

96.9

—

96.9

Loss on debt extinguishment

—

—

—

76.3

Other (income) expense - net (1)

1.2

—

(1.8
)

(1.4
)
Adjusted EBITDA

20.8

(20.9
)

45.2

23.9

Depreciation expense

(9.2
)

(11.3
)

(29.1
)

(34.9
)
Non-GAAP adjusted operating income (loss)

11.6

(32.2
)

16.1

(11.0
)
Restructuring expense

(3.7
)

(3.9
)

(21.3
)

(17.1
)
Amortization of intangible assets

—

(0.7
)

(0.7
)

(2.2
)
Asset impairment expense

—

(96.9
)

—

(96.9
)
Other operating costs and expenses

—

(0.5
)

—

(2.3
)
GAAP operating income (loss)

$
7.9

$
(134.2
)

$
(5.9
)

$
(129.5
)

~~(1)~~

~~Other (income) expense - net includes foreign currency translation adjustments and other miscellaneous items.~~

Covenant compliant EBITDA as defined by the ABL Revolving Credit Facility was $64.3 million as of September 30, 2017 on a trailing 12-month basis. The calculation of covenant compliant EBITDA has certain limitations and restrictions on addbacks and has been included for informational purposes only.

~~Critical Accounting Policies~~

The Company's critical accounting policies have not materially changed since the 2016 Form 10-K was filed. Refer to the Critical Accounting Policies in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of

Operations” included in the Annual Report on Form 10-K for the year ended December 31, 2016 for information about the Company’s policies, methodology and assumptions related to critical accounting policies.

~~Goodwill, Other Intangible Assets and Other Long-Lived Assets~~ - The Company accounts for goodwill and other intangible assets under the guidance of ASC Topic 350-10, “Intangibles - Goodwill and Other.” Under ASC Topic 350-10, goodwill is not amortized; instead, the Company performs an annual impairment review. Historically, the annual impairment review was performed as of June 30. Effective in 2016, the date for the annual impairment review was changed to October 31, in order to align more closely to its internal forecasting cycle. Both of these tests resulted that no impairment was indicated. To perform its goodwill impairment review, the Company uses a fair-value method, primarily the income approach, based on the present value of future cash flows. To perform its indefinite lived intangible assets impairment test, the Company uses a fair-value method, based on a relief of royalty valuation approach. Management’s judgments and assumptions about the amounts of those cash flows and the discount rates are inputs to these analyses. The estimated fair value is then compared with the carrying amount of the reporting unit or indefinite lived intangible asset. Goodwill and other intangible assets are then subject to risk of write-down to the extent that the carrying amount exceeds the estimated fair value.

The decline in oil prices and resulting slowdown in upstream oil & gas activity, as well as uncertainty in global macroeconomic factors related to infrastructure and construction, has caused the Company's customers to defer or reduce capital spending. Similar to other cranes manufacturers, we no longer expect near-term growth in the markets that was previously anticipated, and within the analyses performed in 2016 have revised our financial projections to reflect current market conditions, including lower sales. Additionally, the valuation of goodwill is particularly sensitive to management's assumptions of margin improvement, and an unfavorable change in those assumptions could put goodwill at risk for impairment in future periods.

As of the October 31, 2016 valuation, the Company's valuation of its trademarks and tradenames related to its Grove and Potain India brands are particularly at risk, with cushion between the calculated fair value and the book value of the intangible assets of approximately 25% and approximately 10%, respectively. The impact of a 100 basis point increase in the discount rate results in a decrease to the estimated fair value of each asset by approximately 14%, while a reduction in the terminal year sales growth rate assumption by 100 basis points would decrease the estimated fair value by approximately 11%. These trademarks and tradenames are potentially at risk for impairments in future periods if there are further significant unfavorable developments in their markets.

Other intangible assets with definite lives continue to be amortized over their estimated useful lives. Definite lived intangible assets are also subject to impairment testing whenever events or circumstances indicate that the carrying value of the assets may not be recoverable. A considerable amount of management judgment and assumptions are required in performing the impairment tests, principally in determining the fair value of the assets. While the Company believes its judgments and assumptions were reasonable, different assumptions could change the estimated fair values and, therefore, impairment charges could be required.

The Company also reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the asset's carrying amount may not be recoverable. The Company conducts its long-lived asset impairment analyses in accordance with ASC Topic 360-10-5, “Property, Plant, and Equipment.” ASC Topic 360-10-5 requires the Company to group assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities and to evaluate the asset group against the sum of the undiscounted future cash flows. Property, plant and equipment are depreciated over the estimated useful lives of the assets using the straight-line depreciation method for financial reporting and on accelerated methods for income tax purposes.

The Company will continue to monitor market conditions and determine if any additional interim reviews of goodwill, other intangibles or long-lived assets are warranted. Deterioration in the market or actual results as compared with the Company’s projections may ultimately result in a future impairment. In the event the Company determines that assets are impaired in the future, the Company would need to recognize a non-cash impairment charge, which could have a material adverse effect on the Company’s Consolidated Balance Sheet and Results of Operations.

Cautionary Statements Regarding Forward-Looking Information

All of the statements in this Quarterly Report on Form 10-Q, other than historical facts, are forward-looking statements, including, without limitation, the statements made in the “Management's Discussion and Analysis of Financial Condition and Results of Operations.” As a general matter, forward-looking statements are those focused upon anticipated events or trends, expectations and beliefs relating to matters that are not historical in nature. The words “could,” “should,” “may,” “feel,” “anticipate,” “aim,” “preliminary,” “expect,” ~~“believer,~~“believe,” “estimate,” “intend,” “intent,” “plan,” “will,” “foresee,” “project,” “forecast,” or the negative thereof or variations thereon, and similar expressions identify forward-looking statements.

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for these forward-looking statements. In order to comply with the terms of the safe harbor, ~~The Manitowoc~~the Company ~~Inc. (the “Company” or “Manitowoc”)~~ notes that forward-looking statements are subject to known and unknown risks, uncertainties and other factors relating to the Company's operations and business environment, all of which are difficult to predict and many of which are beyond the control of the Company. These known and unknown risks, uncertainties and other factors could cause actual results to differ materially from those matters expressed in, anticipated by or implied by such forward-looking statements. These risks, uncertainties, and other factors include, but are not limited to:



The negative impacts COVID-19 has had and will continue to have on Manitowoc’s business, financial condition, cash flows, results of operations and supply chain, as well as customer demand (including future uncertain impacts);



actions of competitors;



changes in economic or industry conditions generally or in the markets served by Manitowoc;



unanticipated changes in customer demand, including changes in global demand for high-capacity lifting equipment, changes in demand for lifting equipment in emerging economies, and changes in demand for used lifting equipment;



changes in raw material and commodity prices;



geographic factors and political and economic conditions and risks;



the ability to complete and appropriately integrate acquisitions, divestitures, strategic alliances, join ventures or other significant transactions;



the ability to capitalize on key strategic opportunities and the ability to implement Manitowoc’s long-term initiatives;



government approval and funding of projects and the effect of government-related issues or developments;



unanticipated changes in the capital and financial markets;



unanticipated changes in revenues, margins ~~costs~~ and ~~capital expenditures;~~

costs;



the ability to increase operational efficiencies across Manitowoc and to capitalize on those efficiencies;



risks associated with data security and technological systems and protections;



the ability to significantly improve profitability;



~~potential delays or failures~~the ability to ~~implement specific initiatives within~~focus on customers, new technologies, and innovation;



uncertainties associated with new product introductions, the ~~restructuring program;~~

successful development and market acceptance of new and innovative products that drive growth;



issues relating to the ability to timely and effectively execute on manufacturing strategies, including issues relating to plant closings, new plant start-ups, and/or consolidations of existing facilities and operations, and ~~its~~the ability to achieve the expected benefits from such actions, as well as general efficiencies and capacity utilization of ~~our~~the Company’s facilities;



~~the ability to direct resources to those areas that will deliver the highest returns;~~

~~uncertainties associated with new product introductions, the successful development and market acceptance of new and innovative products that drive growth;~~

~~the ability to focus on customers, new technologies and innovation;~~

~~the ability to focus and capitalize on product quality and reliability;~~

~~the ability to increase operational efficiencies across Manitowoc’s businesses and to capitalize on those efficiencies;~~

~~the ability to capitalize on key strategic opportunities and the ability to implement Manitowoc’s long-term initiatives;~~

~~the ability to generate cash and manage working capital consistent with Manitowoc’s stated goals;~~

~~the ability to convert orders and order activity into sales and the timing of those sales;~~

~~pressure of financing leverage;~~

~~foreign currency fluctuation and its impact on reported results and hedges in place with Manitowoc;~~

~~changes in raw material and commodity prices;~~

~~unexpected issues associated with the quality and availability of materials, components and products sourced from third parties and the ability to successfully resolve those issues;~~

~~unexpected issues associated with the availability, operations and viability of suppliers;~~

~~the risks associated with growth or contraction;~~

~~geographic factors and political and economic conditions and risks;~~

~~actions of competitors;~~

~~changes in economic or industry conditions generally or in the markets served by Manitowoc;~~

~~global expansion of customers;~~

~~the replacement cycle of technologically obsolete cranes;~~

~~the ability of Manitowoc's customers to receive financing;~~

~~issues related to workforce reductions and potential subsequent rehiring;~~

~~work stoppages, labor negotiations, labor rates and temporary labor costs;~~

~~government approval and funding of projects and the effect of government-related issues or developments;~~

•

~~the ability to complete and appropriately integrate restructurings, consolidations, acquisitions, divestitures, strategic alliances, joint ventures and other strategic alternatives;~~

realization of anticipated earnings enhancements, cost savings, strategic options and other synergies, and the anticipated timing to realize those savings, synergies, and options;



the ability to generate cash and manage working capital consistent with Manitowoc’s stated goals;



the ability to convert orders and order activity into sales and the timing of those sales;



the ability to direct resources to those areas that will deliver the highest returns;



unexpected issues associated with the availability and viability of suppliers;



the Company’s ability to attract and retain qualified personnel;



the replacement cycle of technologically obsolete products;



natural disasters, other weather events, epidemics, pandemics and other public health crises disrupting commerce in one or more regions of the world;



the ability of Manitowoc's customers to receive financing;



the ability to focus and capitalize on product quality and reliability;



risks associated with manufacturing or design defects;



unexpected issues associated with the quality of materials, components and products sourced from third parties and the ability to successfully resolve those issues;



changes in laws throughout the world;



failure to comply with regulatory requirements related to the products the Company sells;



the inability to defend against potential infringement claims on intellectual property rights;



impairment of goodwill and/or intangible assets;



foreign currency fluctuation and its impact on reported results;



potential delays or failures to implement specific initiatives within the Company’s restructuring programs;



issues related to workforce reductions and potential subsequent rehiring;



the ability to sell products through distributors and other third parties;



work stoppages, labor negotiations, labor rates, and temporary labor costs;



risks associated with high debt leverage;



unanticipated issues affecting the effective tax rate for the year;



~~unanticipated changes in the capital and financial markets;~~

~~risks related to actions of activist shareholders;~~

~~changes in laws throughout the world;~~

~~natural disasters and~~ other ~~weather events disrupting commerce in one or more regions of the world;~~

~~risks associated with data security and technological systems and protections;~~

~~acts of terrorism; and~~

~~risks and other~~risk factors ~~cited~~detailed in Manitowoc's ~~2016~~2020 Annual Report on Form 10-K, as such may be amended or supplemented in Manitowoc’s subsequently filed Quarterly Reports on 10-Q (including this report), and its other filings with the United States Securities and Exchange Commission.

These statements reflect the current views and assumptions of management with respect to future events. ~~The~~Except to the extent required by the federal securities laws, the Company does not undertake, and hereby disclaims, any duty to update these forward-looking statements, even though its situation and circumstances may change in the future. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this report. The inclusion of any statement in this report does not constitute an admission by the Company or any other person that the events or circumstances described in such statement are material.

COVID-19 Pandemic

The Company continues to monitor supply chain disruptions and associated cost and labor pressures as a result of the pandemic. The Company is working with its suppliers to minimize supply chain disruptions. Contingency plans are continuously modified to minimize supply chain challenges that may impact the Company's ability to meet increasing customer demand. The future extent of the impact from the COVID-19 pandemic on the Company’s financial results is dependent on a number of factors, including the length of the pandemic, associated additional government actions and the related effect on the global economy and markets in which the Company serves, all of which are uncertain and cannot be predicted.

Cybersecurity Incident

In June 2021, the Company experienced a systems outage that was caused by a cybersecurity incident. The Company engaged an industry-leading third-party information technology firm, forensics specialists, and legal counsel to assist in the Company’s forensic investigation of the incident, which is completed. The Company continues to assess its legal obligations stemming from the incident. Due to the cybersecurity incident, the Company experienced delays and disruptions to its business during the quarter ended June 30, 2021. The Company has insurance for this matter with a self-insured retention of $100,000. The Company is currently working with its insurance carrier to determine which costs, if any, will be covered by its insurance policy.

Segment Operating Performance

The Company manages its business primarily on a geographic basis. The Company’s reportable operating segments consist of the Americas, EURAF, and MEAP. Further information regarding the Company’s reportable segments can be found in Note 18, “Segments,” to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.


	Three Months Ended September 30,											Nine Months Ended September 30,
	2021			2020		Dollar Change			Percentage Change			2021		2020		Dollar Change		Percentage Change
Net Sales
Americas	$	190.6		$	150.7	$	39.9			26.5	%	$	516.0	$	456.5	$	59.5		13.0	%
EURAF		150.0			154.7		(4.7	)		(3.0	)%		485.3		413.1		72.2		17.5	%
MEAP		63.9			50.2		13.7			27.3	%		221.1		143.5		77.6		54.1	%

Segment Operating Income (Loss)
Americas	$	15.3		$	7.5	$	7.8			104.0	%	$	44.2	$	21.4	$	22.8		106.5	%
EURAF		(5.4	)		7.3		(12.7	)	*				6.6		2.5		4.1		164.0	%
MEAP		6.5			7.8		(1.3	)		(16.7	)%		23.1		20.7		2.4		11.6	%
*Measure not meaningful

Americas

Americas net sales increased 26.5% for the three months ended September 30, 2021 to $190.6 million from $150.7 million for the three months ended September 30, 2020. The increase was primarily due to higher shipments of cranes for the energy and commercial construction end markets as compared to the three months ended September 30, 2020, which was negatively impacted by the COVID-19 pandemic.

Americas operating income increased $7.8 million for the three months ended September 30, 2021 to $15.3 million from $7.5 million for the three months ended September 30, 2020. The increase was primarily due to increased volume and a favorable mix. This was partially offset by higher material and transportation costs, increased short-term incentive compensation costs and a $1.9 million asset impairment charge on one of the Company's Brazilian entities.

Americas net sales increased 13.0% for the nine months ended September 30, 2021 to $516.0 million from $456.5 million for the nine months ended September 30, 2020. The increase was primarily due to product mix. While demand for cranes was higher year over year, supply chain constraints impacted the Company's ability to produce and ship certain products.

Americas operating income increased $22.8 million for the nine months ended September 30, 2021 to $44.2 million from $21.4 million for the nine months ended September 30, 2020. The increase was primarily due to higher net sales, a favorable mix and lower expenses as 2020 included costs related to the triennial ConExpo tradeshow last held in March 2020. This was partially offset by unfavorable impacts from higher material and transportation costs, the cybersecurity incident, increased short-term incentive compensation costs and a $1.9 million asset impairment charge on one of the Company's Brazilian entities.

EURAF

EURAF net sales decreased 3.0% for the three months ended September 30, 2021 to $150.0 million from $154.7 million for the three months ended September 30, 2020. The decrease was primarily due to lower shipments of cranes from supply chain and shipping constraints. EURAF net sales was favorably impacted by approximately $1.7 million from changes in foreign currency exchange rates.

EURAF operating income (loss) decreased $12.7 million for the three months ended September 30, 2021 to a loss of $(5.4) million from income of $7.3 million for the three months ended September 30, 2020. The decrease was primarily due to higher material and transportation costs and increased short-term incentive compensation costs. Operating income was favorably impacted by approximately $0.2 million from changes in foreign currency exchange rates.

EURAF net sales increased 17.5% for the nine months ended September 30, 2021 to $485.3 million from $413.1 million for the nine months ended September 30, 2020. The increase was primarily due to higher shipments of cranes for the commercial construction end market compared to the nine months ended September 30, 2020, which was negatively impacted by the COVID-19 pandemic. This was partially offset by unfavorable impacts from the cybersecurity incident and supply chain and shipping constraints. EURAF net sales was favorably impacted by approximately $28.5 million from changes in foreign currency exchange rates.

EURAF operating income increased $4.1 million for the nine months ended September 30, 2021 to $6.6 million from $2.5 million for the nine months ended September 30, 2020. The increase was primarily due to higher volume of crane shipments and a favorable mix, partially offset by higher material and transportation costs, unfavorable impacts from the cybersecurity incident and increased short-term incentive compensation costs. Operating income was favorably impacted by approximately $3.2 million from changes in foreign currency exchange rates.

MEAP

MEAP net sales increased 27.3% for the three months ended September 30, 2021 to $63.9 million from $50.2 million for the three months ended September 30, 2020. The increase was primarily due to higher crane shipments within the commercial construction end market compared to the three months ended September 30, 2020, which was impacted negatively by the COVID-19 pandemic. Net sales was favorably impacted by approximately $1.0 million from changes in foreign currency exchange rates.

MEAP operating income decreased $1.3 million for the three months ended September 30, 2021 to $6.5 million from $7.8 million for the three months ended September 30, 2020. The decrease was primarily due to higher material and transportation costs and increased engineering, selling and administrative expenses, partially offset by higher volume of crane shipments.

MEAP net sales increased 54.1% for the nine months ended September 30, 2021 to $221.1 million from $143.5 million for the nine months ended September 30, 2020. The increase was primarily due to higher crane shipments within the commercial construction end market compared to the nine months ended September 30, 2020, which was negatively impacted by the COVID-19 pandemic. MEAP net sales were favorably impacted by approximately $10.9 million from changes in foreign currency exchange rates.

MEAP operating income increased $2.4 million for the nine months ended September 30, 2021 to $23.1 million from $20.7 million for the nine months ended September 30, 2020 primarily due to higher volume of crane shipments. This was partially offset by higher material and transportation costs, increased engineering, selling and administrative expenses and a $3.6 million loss from a write-off of a long-term note receivable resulting from the 2014 divestiture of the Company’s Chinese joint venture. MEAP operating income was favorably impacted by approximately $0.3 million from changes in foreign currency exchange rates.

Consolidated Results of Operations for the three and nine months ended September 30, 2021 and 2020


	Three Months Ended September 30,									Nine Months Ended September 30,
	2021			2020			2021 to 2020 % Change			2021			2020			2021 to 2020 % Change
Orders	$	535.2		$	389.9			37.3	%	$	1,546.0		$	1,002.8			54.2	%
Backlog		890.6			464.8			91.6	%		890.6			464.8			91.6	%
Net sales		404.5			355.6			13.8	%		1,222.4			1,013.1			20.7	%
Gross profit		69.0			65.1			6.0	%		227.8			176.7			28.9	%
Gross profit %		17.1	%		18.3	%					18.6	%		17.4	%
Engineering, selling and administrative expenses		59.7		49.5				20.6	%		181.0		155.1				16.7	%
Asset impairment expense		1.9			—		*				1.9			—		*
Restructuring (income) expense		(0.4	)		3.9		*				(0.5	)		5.6		*
Interest expense		7.1			7.3			(2.7	)%		21.5			21.7			(0.9	)%
Other income (expense) - net		(0.9	)		2.6		*				(0.2	)		(4.3	)		(95.3	)%
Provision (benefit) for income taxes		(0.9	)		7.0		*				7.3			9.6			(24.0	)%
*Measure not meaningful

Orders and Backlog

Orders for the three months ended September 30, 2021 increased 37.3% to $535.2 million from $389.9 million for the same period in 2020. The increase in orders was primarily attributable to higher global demand as the three months ended September 30, 2020 was significantly impacted by the COVID-19 pandemic. Orders were favorably impacted by approximately $2.4 million from changes in foreign currency exchange rates.

Orders for the nine months ended September 30, 2021 increased 54.2% to $1,546.0 million from $1,002.8 million for the same period in 2020. The increase in orders was primarily attributable to higher global demand as the nine months ended September 30, 2020 was significantly impacted by the COVID-19 pandemic. Orders were favorably impacted by approximately $44.6 million from changes in foreign currency exchange rates.

As of September 30, 2021, total backlog was $890.6 million, a 91.6% increase from the September 30, 2020 backlog of $464.8 million. Backlog increased across all segments and was unfavorably impacted by approximately $4.5 million from changes in foreign currency exchange rates.

Net Sales

Net sales for the three months ended September 30, 2021 increased 13.8% to $404.5 million from $355.6 million in the same period in 2020. The increase was primarily from higher crane shipments due to increased demand as compared to the three months ended September 30, 2020, which was negatively impacted by the COVID-19 pandemic. While demand for cranes was higher year over year, supply chain constraints impacted the Company's ability to produce and ship certain products. Net sales was favorably impacted by approximately $2.7 million from changes in foreign currency exchange rates.

Net sales for the nine months ended September 30, 2021 increased 20.7% to $1,222.4 million from $1,013.1 million for the same period in 2020. The increase was primarily from higher crane shipments due to increased demand as compared to the nine months ended September 30, 2020, which was negatively impacted by the COVID-19 pandemic. While demand for cranes was higher year over year, supply chain constraints impacted the Company's ability to produce and ship certain products. Additionally, the increase was driven by entering the year with a higher shippable backlog, partially offset by unfavorable impacts from the cybersecurity incident. Net sales was favorably impacted by approximately $39.5 million from changes in foreign currency exchange rates.

Gross Profit

Gross profit for the three months ended September 30, 2021 was $69.0 million, an increase of $3.9 million compared to $65.1 million for the same period in 2020. The increase was primarily due to an increase in net sales, partially offset by increases in material and transportation costs. Gross profit was favorably impacted by approximately $0.7 million from changes in foreign currency exchange rates.

Gross profit percentage decreased in the three months ended September 30, 2021 to 17.1% from 18.3% to the same period in 2020 primarily due to increases in material and transportation costs.

Gross profit for the nine months ended September 30, 2021 was $227.8 million, an increase of $51.1 million compared to $176.7 million for the same period in 2020. The increase was primarily due to the increase in net sales, partially offset by increases in material and transportation costs and unfavorable impacts from the cybersecurity incident. Gross profit was favorably impacted by approximately $9.1 million from changes in foreign currency exchange rates.

Gross profit percentage increased in the nine months ended September 30, 2021 to 18.6% from 17.4% in the same period in 2020 primarily due to increased absorption of fixed costs, partially offset by increases in material and transportation costs.

Engineering, Selling and Administrative Expenses

Engineering, selling and administrative expenses increased 20.6% to $59.7 million for the three months ended September 30, 2021 compared to $49.5 million for the same period in 2020. The increase was primarily due to higher employee-related costs, inclusive of short-term incentive compensation costs, and acquisition related costs. Engineering, selling and administrative expenses were unfavorably impacted by approximately $0.4 million from changes in foreign currency exchange rates.

Engineering, selling and administrative expenses increased 16.7% to $181.0 million for the nine months ended September 30, 2021 compared to $155.1 million for the same period in 2020. The increase was primarily due to higher employee-related costs, inclusive of short-term incentive compensation costs, a $3.6 million loss from a write-off of a long-term note receivable resulting from the 2014 divestiture of the Company’s Chinese joint venture and acquisition related costs. This was partially offset by lower tradeshow costs from the triennial ConExpo trade show in March 2020. Engineering, selling and administrative expenses were unfavorably impacted by approximately $5.8 million from changes in foreign currency exchange rates.

Restructuring (Income) Expense

During the three months ended September 30, 2021 and 2020, the Company recorded $(0.4) million and $3.9 million of restructuring (income) expense, respectively. During the nine months ended September 30, 2021 and 2020, the Company recorded $(0.5) million of restructuring income and $5.6 million of restructuring expense, respectively. Restructuring income for the three months ended September 30, 2021 primarily related to the sale of Brazilian tax credits. Restructuring income for the nine months ended September 30, 2021 primarily related to adjustments of previously recorded costs associated with headcount reductions in Europe and the sale of Brazilian tax credits. Restructuring expenses for the three months ended September 30, 2020 related primarily to costs associated with headcount reductions in North America. Restructuring expenses for the nine months ended September 30, 2020 related primarily to costs associated with headcount reductions in Europe and North America.

Interest Expense

Interest expense for the three and nine months ended September 30, 2021 remained flat year-over-year. See further detail at Note 12, “Debt” to the Condensed Consolidated Financial Statements.

Other Income (Expense) - Net

Other income (expense) - net was $(0.9) million during the three months ended September 30, 2021 and $2.6 million for the same period in 2020. Other income (expense) – net during the three months ended September 30, 2021 was primarily composed of $0.6 million of net foreign currency loss and $0.2 million of pension benefit and postretirement health costs. Other income (expense) – net during the three months ended September 30, 2020 was primarily composed of $3.4 million of net foreign currency gains partially offset by $0.4 million of pension benefit and postretirement health costs.

Other income (expense) - net was $(0.2) million during the nine months ended September 30, 2021 and $(4.3) million for the same period in 2020. Other income (expense) – net during the nine months ended September 30, 2021 was primarily composed of $0.8 million of net foreign currency gains offset by $0.5 million of pension benefit and postretirement health costs. Other income (expense) – net during the nine months ended September 30, 2020 was primarily composed of $2.6 million of net foreign currency losses and $1.2 million of pension benefit and postretirement health costs.

Provision for Income Taxes

For the three months ended September 30, 2021 and 2020, the Company recorded an income tax benefit of $0.9 million and income tax provision of $7.0 million, respectively. The year-over-year decrease in the Company’s provision for income taxes primarily relates to a change in the jurisdictional mix of pre-tax income compared to the previous year and a discrete tax benefit recorded in 2021 related to a refund of French income taxes as a result of a Mutually Agreed upon Procedure for 2006 with Italian and French tax authorities. In addition, the Company’s effective tax rate varies from the U.S. federal statutory rate of 21% due to results of foreign operations that are subject to income taxes at different statutory rates.

For the nine months ended September 30, 2021 and 2020, the Company recorded income tax expense of $7.3 million and $9.6 million, respectively. The year-over-year decrease in the Company’s provision for income taxes primarily relates to a change in the jurisdictional mix of pre-tax income compared to the previous year and a discrete tax benefit recorded in 2021 related to a refund of French income taxes as a result of a Mutually Agreed upon Procedure for 2006 with Italian and French tax authorities. In addition, the Company’s effective tax rate varies from the U.S. federal statutory rate of 21% due to results of foreign operations that are subject to income taxes at different statutory rates.

Financial Condition

Cash Flows

The table below shows a summary of cash flows for the nine months ended September 30, 2021 and 2020:


	Nine Months Ended September 30,
	2021			2020
Net cash provided by (used for) operating activities	$	68.1		$	(70.9	)
Net cash used for investing activities		(73.1	)		(15.1	)
Net cash provided by (used for) financing activities		102.4			(14.6	)
Cash and cash equivalents		222.3			101.1

Cash Flows From Operating Activities

Cash flows provided by operating activities for the nine months ended September 30, 2021 were $68.1 million and were primarily driven by net income and a net decrease in working capital. The decrease in working capital was primarily due to an increase in accounts payable of $77.1 million, partially offset by an increase in inventories of $94.4 million from December 31, 2020.

Cash flows used for operating activities for the nine months ended September 30, 2020 were $70.9 million and were primarily driven by a net increase in working capital of $86.9 million. The increase in working capital was primarily due to an increase in inventory of $55.3 million from December 31, 2019 and payments of incentive compensation earned in the prior year. This was partially offset by a net $16.0 million which is composed of a net loss of $20.9 million less $36.9 million of adjustments to reconcile net loss to operating cash flows from operating activities.

Cash Flows From Investing Activities

Cash flows used for investing activities were $73.1 million for the nine months ended September 30, 2021 and consisted of $50.9 million related to the acquisition of Aspen and $22.3 million of capital expenditures, partially offset by $0.1 million in proceeds from sales of property, plant and equipment.

Cash flows used for investing activities were $15.1 million for nine months ended September 30, 2020 and consisted of $15.3 million of capital expenditures, partially offset by $0.2 million in proceeds from sales of property, plant and equipment.

Cash Flows From Financing Activities

Cash flows provided by financing activities were $102.4 million for the nine months ended September 30, 2021 and consisted primarily of $100.0 million of borrowings on the ABL revolver.

Cash flows used for financing activities were $14.6 million for the nine months ended September 30, 2020 and consisted primarily of $12.0 million of repurchases of the Company’s common stock and $2.7 million of payments on other debt.

Liquidity and Capital Resources

The Company’s liquidity position as of September 30, 2021, December 31, 2020 and September 30, 2020 is summarized as follows:


	September 30, 2021			December 31, 2020			September 30, 2020
Cash and cash equivalents	$	222.3		$	128.7		$	101.1
Revolver borrowing capacity		226.6			243.8			261.2
Other debt availability		47.7			42.2			37.4
Less: Borrowings on revolver		(100.0	)		—			—
Less: Borrowings on other debt		(4.7	)		—			—
Less: Outstanding letters of credit		(3.0	)		(3.0	)		(3.0	)
Total liquidity	$	388.9		$	411.7		$	396.7

Cash Sources

The Company has historically relied primarily on cash flows from operations, borrowings under revolving credit facilities, issuances of notes and other forms of debt financing as its sources of cash.

The maximum availability under the Company’s current ABL Revolving Credit Facility is $275.0 million. The borrowing capacity under the ABL Revolving Credit Facility is based on the value of inventory, accounts receivable and fixed assets of the Loan Parties. The Loan Parties’ obligations under the ABL Revolving Credit Facility are secured on a first-priority basis, subject to certain exceptions and permitted liens, by substantially all of the personal property and fee-owned real property of the Loan Parties. The liens securing the ABL Revolving Credit Facility are senior in priority to the second-priority liens securing the obligations under the 2026 Notes and the related guarantees. The ABL Revolving Credit Facility has a term of five years and includes a $75.0 million letter of credit sub-facility, $10.0 million of which is available to the Company’s German subsidiary that is a borrower under the ABL Revolving Credit Facility.

In addition to the ABL Revolving Credit Facility, the Company has access to non-committed overdraft facilities to fund working capital in Europe and China. There are six facilities, of which four facilities are denominated in Euros totaling €29.0 million, one facility denominated in U.S. dollars totaling $9.5 million and one facility denominated in Chinese Yuan totaling ¥30.0 million. During the three months ended September 30, 2021, the Company borrowed $4.7 million on its Chinese Yuan facility. Total U.S. dollar availability as of September 30, 2021 for the six overdraft facilities is $43.0 million.

Debt

Outstanding debt as of September 30, 2021 and December 31, 2020 is summarized as follows:


	September 30, 2021			December 31, 2020
Senior secured asset based revolving credit facility	$	100.0		$	—
Senior secured second lien notes due 2026		300.0			300.0
Other debt		11.6			14.7
Deferred financing costs		(3.3	)		(3.8	)
Total debt		408.3			310.9
Short-term borrowings and current portion of long-term debt		(8.4	)		(10.5	)
Long-term debt	$	399.9		$	300.4

Both the ABL Revolving Credit Facility and 2026 Notes include customary covenants and events of default. Refer to Note 12, “Debt,” to the Condensed Consolidated Financial Statements for additional discussions of covenants for the ABL Revolving Credit Facility and 2026 Notes. Based upon management’s current plans and outlook, the Company believes it will be able to comply with these covenants during the subsequent twelve months.

Non-GAAP Measures

The Company uses EBITDA, adjusted EBITDA and adjusted operating income, which are financial measures that are not prepared in accordance with GAAP, as additional metrics to evaluate the Company’s performance. The Company defines EBITDA as net income (loss) before interest, taxes, depreciation and amortization. The Company defines adjusted EBITDA as EBITDA plus the addback of certain restructuring and other charges. The Company defines adjusted operating income as adjusted EBITDA excluding the addback of depreciation and amortization. The Company believes these non-GAAP measures provide important supplemental information to readers regarding business trends that can be used in evaluating its results of operations because these financial measures provide a consistent method of comparing financial performance and are commonly used by investors to assess performance. These non-GAAP financial measures should be considered together with, and are not substitutes for, the GAAP financial information provided herein. The reconciliation of net income (loss) to EBITDA, and further to adjusted EBITDA and to adjusted operating income and operating income for the three and nine months ended September 30, 2021 and 2020 and trailing twelve months are summarized as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,						Trailing Twelve
	2021			2020			2021			2020			Months
Net income (loss)	$	(0.2	)	$	(0.4	)	$	14.6		$	(20.9	)	$	16.4
Interest expense and amortization of deferred financing fees		7.5			7.7			22.6			22.8			30.4
Provision (benefit) for income taxes		(0.9	)		7.0			7.3			9.6			14.8
Depreciation expense		9.8			9.2			29.5			27.3			39.4
Amortization of intangible assets		0.5			—			0.7			0.2			0.8
EBITDA		16.7			23.5			74.7			39.0			101.8
Restructuring (income) expense		(0.4	)		3.9			(0.5	)		5.6			0.9
Asset impairment expense		1.9			—			1.9			—			1.9
Other non-recurring charges (1)		0.9			—			5.5			—			5.5
Other (income) expense - net (2)		0.9			(2.6	)		0.2			4.3			5.9
Adjusted EBITDA		20.0			24.8			81.8			48.9			116.0
Depreciation expense		(9.8	)		(9.2	)		(29.5	)		(27.3	)		(39.4	)
Amortization of intangible assets		(0.5	)		—			(0.7	)		(0.2	)		(0.8	)
Adjusted operating income		9.7			15.6			51.6			21.4			75.8
Restructuring (income) expense		0.4			(3.9	)		0.5			(5.6	)		(0.9	)
Asset impairment expense		(1.9	)		—			(1.9	)		—			(1.9	)
Other non-recurring charges (1)		(0.9	)		—			(5.5	)		—			(5.5	)
Operating income	$	7.3		$	11.7		$	44.7		$	15.8		$	67.5

Adjusted EBITDA margin percentage		4.9	%		7.0	%		6.7	%		4.8	%		7.0	%
Adjusted operating income margin percentage		2.4	%		4.4	%		4.2	%		2.1	%		4.6	%

(1)

Other non-recurring charges for the three months ended September 30, 2021 relate to acquisition costs included in engineering, selling and administrative expenses in the Condensed Consolidated Statement of Operations. Other non-recurring charges for the nine and trailing twelve months ended September 30, 2021 relate to acquisition costs and a write-off of a long-term note receivable resulting from the 2014 divestiture of the Company's Chinese joint venture which are included in engineering, selling and administrative expenses in the Condensed Consolidated Statement of Operations.

(2)

Other (income) expense – net includes net foreign currency gains (losses), other components of net periodic pension costs, costs associated with legal matters and other miscellaneous items in the three, nine and trailing twelve months ended September 30, 2021 and the three and nine months ended September 30, 2020.

The Company uses free cash flows, which is a financial measure that is not prepared in accordance with GAAP, as an additional metric to evaluate the Company’s performance. Free cash flows is defined as net cash provided by (used for) operating activities less capital expenditures. Free cash flows for the three and nine months ended September 30, 2021 and 2020 are summarized as follows:


Free Cash Flows
(In millions)
	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Net cash provided by (used for) operating activities	$	18.4		$	27.8		$	68.1		$	(70.9	)
Capital expenditures		(6.9	)		(7.3	)		(22.3	)		(15.3	)
Free cash flows	$	11.5		$	20.5		$	45.8		$	(86.2	)

Critical Accounting Policies

The Company's critical accounting policies have not materially changed since the 2020 Form 10-K was filed. Refer to the Critical Accounting Policies in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Annual Report on Form 10-K for the year ended December 31, 2020 for information about the Company’s policies, methodology and assumptions related to critical accounting policies.

Item 3. Quantitative and Qualitative Disclosure about Market Risk

The Company’s market risk disclosures have not materially changed since the ~~2016~~2020 Form 10-K was filed. The Company’s quantitative and qualitative disclosures about market risk are incorporated by reference from Part II, Item 7A of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2020.

Item 4. Controls and Procedures

Disclosure Controls and Procedures: The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act, and that such information is accumulated and communicated to the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely discussions regarding required disclosure.

Changes in Internal Control Over Financial Reporting: The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). During the period covered by this report, wethe Company made no changes that have materially affected, or that are reasonably likely to materially affect, ~~our~~its internal control over financial reporting.

PART II. ~~OTHE~~ROTHER INFORMATION

Item 1A. Risk Factors

~~The Company’s~~

There have been no material changes to the risk factors ~~disclosures have not materially changed since the 2016 Form 10-K was filed. The Company’s risk factors are incorporated by reference from~~previously disclosed in Part I, Item 1A, of“Risk Factors,” in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2020, which was filed with the Securities and Exchange Commission on February 12, 2021.

Item 6. Exhibits


Exhibit No.	Description	Filed/Furnished Herewith		Description	Filed/Furnished Herewith

10.1	Severance Agreement and Release, executed August 31, 2017, by and between The Manitowoc Company, Inc. and Lawrence J. Weyers (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, dated August 31, 2017).

31	Rule 13a - 14(a)/15d - 14(a) Certifications	X	(1)	Rule 13a - 14(a)/15d - 14(a) Certifications	X	(1)

32.1	Certification of CEO pursuant to 18 U.S.C. Section 1350	X	(2)	Certification of CEO pursuant to 18 U.S.C. Section 1350	X	(2)

32.2	Certification of CFO pursuant to 18 U.S.C. Section 1350	X	(2)	Certification of CFO pursuant to 18 U.S.C. Section 1350	X	(2)

101	The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Statements of Operations, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Cash Flows and (v) related notes.	X	(1)
101.INS 101.SCH 101.CAL 101.DEF 101.LAB 101.PRE				Inline XBRL Instance Document – The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. Inline XBRL Taxonomy Extension Schema Document Inline XBRL Taxonomy Extension Calculation Linkbase Document Inline XBRL Taxonomy Extension Definition Linkbase Document Inline XBRL Taxonomy Extension Labels Linkbase Document Inline XBRL Taxonomy Extension Presentation Linkbase Document	X X X X X X	(1) (1) (1) (1) (1) (1)

104				Cover Page Interactive Data File (embedded within the Inline XBRL document)	X	(1)

~~(1)~~

~~Filed Herewith~~

~~(2)~~

~~Furnished Herewith~~

~~SIGNATURES~~

(1) Filed Herewith

(2) Furnished Herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Date: November ~~7, 2017~~4, 2021	The Manitowoc Company, Inc.
	(Registrant)


	/s/ ~~Barry L. Pennypacker~~Aaron H. Ravenscroft
	~~Barry L. Pennypacker~~Aaron H. Ravenscroft
	President and Chief Executive Officer
	(Principal Executive Officer)

	/s/ David J. Antoniuk
	David J. Antoniuk
	~~Senior~~Executive Vice President and Chief Financial Officer
	(Principal Financial Officer)

	/s/ Brian P. Regan
	Brian P. Regan
	Vice President and Corporate Controller (Principal Accounting Officer)

3233


Wisconsin		39-0448110
(State or other jurisdiction		(I.R.S. Employer
of incorporation or organization)		Identification Number)


~~2400 South 44th Street,~~11270 West Park Place Suite 1000
~~Manitowoc,~~ Milwaukee, Wisconsin		~~54220~~53224
(Address of principal executive offices)		(Zip Code)


Large accelerated filer	☒☐	Accelerated filer	☐☒
Non-accelerated filer	☐ ~~(Do not check if a smaller reporting company)~~	Smaller reporting company	☐
Emerging growth company	☐


	September 30, 2017			December 31, 2016			September 30, 2021			December 31, 2020
Assets
Current Assets:
Cash and cash equivalents	$	29.3		$	69.9		$	222.3		$	128.7
Accounts receivable, less allowances of $11.4 and $11.1, respectively		165.0			134.4
Accounts receivable, less allowances of $8.6 and $8.5, respectively								202.3			215.1
Inventories — net		482.2			429.0			567.2			473.1
Notes receivable — net		35.6			62.4			17.6			13.6
Other current assets		65.3			54.0			43.1			35.5
Total current assets		777.4			749.7			1,052.5			866.0

Property, plant and equipment — net		314.1			308.8			301.8			294.3
Operating lease right-of-use assets								31.9			37.9
Goodwill		317.7			299.6			239.7			235.1
Other intangible assets — net		120.9			114.1			124.2			121.6
Other long-term assets		53.1			45.6
Other non-current assets								35.5			48.6
Total assets	$	1,583.2		$	1,517.8		$	1,785.6		$	1,603.5
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable and accrued expenses	$	360.3		$	321.2		$	424.2		$	329.4
Short-term borrowings and current portion of long-term debt		10.2			12.4			8.4			10.5
Product warranties		33.2			36.5			45.4			50.2
Customer advances		15.6			21.0			27.6			25.5
Product liabilities		22.8			21.7
Other liabilities								21.3			20.2
Total current liabilities		442.1			412.8			526.9			435.8
Non-Current Liabilities:
Long-term debt		277.4			269.1			399.9			300.4
Operating lease liabilities								23.1			28.4
Deferred income taxes		43.5			36.6			1.5			5.9
Pension obligations		85.1			86.4			88.3			89.3
Postretirement health and other benefit obligations		28.8			38.0			13.0			14.0
Long-term deferred revenue		19.2			20.3			29.0			32.4
Other non-current liabilities		59.2			64.1			54.9			53.8
Total non-current liabilities		513.2			514.5			609.7			524.2
Commitments and contingencies (Note 14)
Commitments and contingencies (Note 19)
Stockholders' Equity:
Preferred stock (authorized 3,500,000 shares of $.01 par value; none outstanding)		—			—
Common stock (300,000,000 shares authorized, 163,175,928 shares issued, 140,734,391 and 139,841,214 shares outstanding, respectively)		1.4			1.4
Preferred stock (3,500,000 shares authorized of $.01 par value; NaN outstanding)								0			0
Common stock (75,000,000 shares authorized, 40,793,983 shares issued, 35,041,379 and 34,580,638 shares outstanding, respectively)								0.4			0.4
Additional paid-in capital		573.6			567.6			601.8			595.1
Accumulated other comprehensive loss		(108.1	)		(162.9	)		(118.6	)		(97.5	)
Retained earnings		221.4			247.3			231.5			216.9
Treasury stock, at cost (22,441,537 and 23,334,714 shares, respectively)		(60.4	)		(62.9	)
Treasury stock, at cost (5,752,604 and 6,213,345 shares, respectively)								(66.1	)		(71.4	)
Total stockholders' equity		627.9			590.5			649.0			643.5
Total liabilities and stockholders' equity	$	1,583.2		$	1,517.8		$	1,785.6		$	1,603.5

	Three Months Ended September 30,					Nine Months Ended September 30,
	2017		2016			2017			2016
Net income (loss)	$	9.6	$	(140.7	)	$	(25.9	)	$	(342.4	)
Other comprehensive income (loss), net of tax
Unrealized income on derivatives, net of income tax provision of $0.0, $0.0, $0.0 and $0.0, respectively		—		0.2			0.6			1.7
Employee pension and postretirement benefits, net of income tax provision of $3.3, $0.0, $4.1 and $0.0, respectively		5.7		1.1			6.8			3.5
Foreign currency translation adjustments		14.2		5.7			47.4			37.5
Total other comprehensive income, net of tax		19.9		7.0			54.8			42.7
Comprehensive income (loss)	$	29.5	$	(133.7	)	$	28.9		$	(299.7	)

	Nine Months Ended
	2017			2016
Cash Flows from Operations:
Net loss	$	(25.9	)	$	(342.4	)
Adjustments to reconcile net loss to cash used for operating activities of continuing operations:
Asset impairment expense		—			96.9
Discontinued operations, net of income taxes		0.3			5.8
Depreciation		29.1			34.9
Amortization of intangible assets		0.7			2.2
Amortization of deferred financing fees		1.4			1.8
Deferred income taxes		(1.3	)		114.0
Loss on early debt extinguishment		—			15.4
(Gain) loss on sale of property, plant and equipment		(1.0	)		1.1
Other		6.4			(2.7	)
Changes in operating assets and liabilities, excluding effects of business divestitures:
Accounts receivable		(19.8	)		25.3
Inventories		(33.8	)		(32.5	)
Notes receivable		15.0			24.6
Other assets		(12.1	)		(11.5	)
Accounts payable		36.4			(87.0	)
Accrued expenses and other liabilities		(29.3	)		(26.1	)
Net cash used for operating activities of continuing operations		(33.9	)		(180.2	)
Net cash used for operating activities of discontinued operations		(0.3	)		(49.3	)
Net cash used for operating activities		(34.2	)		(229.5	)

Cash Flows from Investing:
Capital expenditures		(17.0	)		(34.8	)
Proceeds from sale of fixed assets		6.7			2.3
Other		0.3			(0.3	)
Net cash used for investing activities of continuing operations		(10.0	)		(32.8	)
Net cash used for investing activities of discontinued operations		—			(2.4	)
Net cash used for investing activities		(10.0	)		(35.2	)

Cash Flows from Financing:
Proceeds from revolving credit facility		10.0			20.0
Payments on long-term debt		(7.5	)		(1,372.0	)
Proceeds from long-term debt		—			262.0
Payments on notes financing - net		(3.6	)		(8.7	)
Debt issuance costs		—			(8.9	)
Exercises of stock options		3.7			6.4
Dividend from spun-off subsidiary		—			1,361.7
Cash transferred to spun-off subsidiary		—			(17.7	)
Net cash provided by financing activities of continuing operations		2.6			242.8
Net cash provided by financing activities of discontinued operations		—			0.2
Net cash provided by financing activities		2.6			243.0

Effect of exchange rate changes on cash		1.0			1.2

Net decrease in cash and cash equivalents		(40.6	)		(20.5	)
Balance at beginning of period, including cash of discontinued operations of $0.0 and $31.9		69.9			63.4
Balance at end of period	$	29.3		$	42.9

	Three Months Ended September 30, 2016									Nine Months Ended September 30, 2016
	As previously presented			Impact of change to FIFO			As revised			As previously presented			Impact of change to FIFO			As revised
Cost of sales	$	308.3		$	0.7		$	309.0		$	1,023.3		$	3.8		$	1,027.1
Operating loss		(133.5	)		(0.7	)		(134.2	)		(125.7	)		(3.8	)		(129.5	)
Loss from continuing operations before taxes on income		(143.5	)		(0.7	)		(144.2	)		(229.7	)		(3.8	)		(233.5	)
Provision (benefit) for taxes on income		(5.3	)		—			(5.3	)		116.9			(13.8	)		103.1
Income (loss) from continuing operations		(138.2	)		(0.7	)		(138.9	)		(346.6	)		10.0			(336.6	)
Discontinued operations:
Loss from discontinued operations, net of income taxes		(1.8	)		—			(1.8	)		(5.8	)		—			(5.8	)
Net income (loss)	$	(140.0	)	$	(0.7	)	$	(140.7	)	$	(352.4	)	$	10.0		$	(342.4	)

Income (loss) per common share - basic and diluted
Income (loss) from continuing operations	$	(1.00	)	$	(0.01	)	$	(1.01	)	$	(2.52	)	$	0.07		$	(2.45	)
Loss from discontinued operations		(0.01	)		—			(0.01	)		(0.04	)		—			(0.04	)
Income (loss) per common share	$	(1.01	)	$	(0.01	)	$	(1.02	)	$	(2.56	)	$	0.07		$	(2.49	)

($ in millions)	Three Months Ended September 30, 2016			Nine Months Ended September 30, 2016
Net sales	$	—		$	219.6

Cost of sales		—			141.5
Engineering, selling and administrative expenses		—			48.4
Amortization expense		—			5.2
Restructuring expense		—			0.3
Separation expense		—			27.7
Total operating costs and expenses		—			223.1
Loss from operations		—			(3.5	)
Other expense		—			(1.8	)
Loss from discontinued operations before income taxes		—			(5.3	)
Provision for taxes on earnings		1.8			0.5
Loss from discontinued operations, net of income taxes	$	(1.8	)	$	(5.8	)

($ in millions)	Total
Balance as of January 1, 2016	$	306.5
Foreign currency impact		(6.9	)
Balance as of December 31, 2016		299.6
Foreign currency impact		18.1
Balance as of September 30, 2017	$	317.7

	September 30, 2017							December 31, 2016
($ in millions)	Gross Carrying Amount		Accumulated Amortization			Net Book Value		Gross Carrying Amount		Accumulated Amortization			Net Book Value
Trademarks and tradenames	$	98.6	$	—		$	98.6	$	92.4	$	—		$	92.4
Customer relationships		10.5		(8.5	)		2.0		10.3		(7.8	)		2.5
Patents		30.4		(29.4	)		1.0		28.5		(27.4	)		1.1
Engineering drawings		10.7		(10.6	)		0.1		10.0		(9.9	)		0.1
Distribution network		19.3		(0.1	)		19.2		18.0		—			18.0
Other intangibles		0.3		(0.3	)		—		0.2		(0.2	)		—
Total	$	169.8	$	(48.9	)	$	120.9	$	159.4	$	(45.3	)	$	114.1

($ in millions)	Retained Earnings
Balance at December 31, 2016	$	247.3
Net loss		(25.9	)
Balance at September 30, 2017	$	221.4

($ in millions)	Retained Earnings
Balance at December 31, 2015	$	562.3
Net loss		(342.4	)
Distribution of MFS		51.2
Balance at September 30, 2016	$	271.1

	Three Months Ended September 30, 2017			Nine Months Ended September 30, 2017
($ in millions)	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)			Amount Reclassified from Accumulated Other Comprehensive Income (Loss)				Recognized Location
Gains and losses on cash flow hedges
Commodity contracts	$	—		$	(0.3	)		Cost of sales
		—			(0.3	)		Total before tax
		—			—			Tax expense
	$	—		$	(0.3	)		Net of tax
Amortization of pension and postretirement items
Actuarial losses	$	(1.3	)	$	(3.9	)	(a)
Prior service cost		0.3			1.0
		(1.0	)		(2.9	)		Total before tax
		3.3			4.1			Tax expense
	$	2.3		$	1.2			Net of tax

Total reclassifications for the period	$	2.3		$	0.9			Net of tax

	Fair Value as of September 30, 2017
($ in millions)	Level 1		Level 2		Level 3		Total
Current Liabilities:
Foreign currency exchange contracts	$	—	$	0.2	$	—	$	0.2
Total current liabilities at fair value	$	—	$	0.2	$	—	$	0.2

	Fair Value as of December 31, 2016
($ in millions)	Level 1		Level 2		Level 3		Total
Current Assets:
Foreign currency exchange contracts	$	—	$	0.2	$	—	$	0.2
Commodity contracts		—		0.2		—		0.2
Total current assets at fair value	$	—	$	0.4	$	—	$	0.4

Current Liabilities:
Foreign currency exchange contracts	$	—	$	1.0	$	—	$	1.0
Total current liabilities at fair value	$	—	$	1.0	$	—	$	1.0

($ in millions)	Nine Months Ended September 30, 2017			Year Ended December 31, 2016
Balance at beginning of period	$	28.6		$	32.4
Accruals for warranties issued during the period		24.6			20.4
Settlements made (in cash or in kind) during the period		(22.5	)		(23.7	)
Currency translation		1.6			(0.5	)
Balance at end of period	$	32.3		$	28.6

	Three Months Ended						Nine Months Ended
($ in millions)	September 30, 2017			September 30, 2016			September 30, 2017			September 30, 2016
Net income (loss)	$	9.6		$	(140.7	)	$	(25.9	)	$	(342.4	)
Loss from discontinued operations, net of income taxes		0.1			1.8			0.3			5.8
Interest expense and amortization of deferred financing fees		10.1			10.5			30.8			31.4
Provision (benefit) for income taxes		(13.1	)		(5.3	)		(9.3	)		103.1
Depreciation expense		9.2			11.3			29.1			34.9
Amortization of intangible assets		—			0.7			0.7			2.2
EBITDA		15.9			(121.7	)		25.7			(165.0	)
Restructuring expense		3.7			3.9			21.3			17.1
Asset impairment expense		—			96.9			—			96.9
Loss on debt extinguishment		—			—			—			76.3
Other (income) expense - net (1)		1.2			—			(1.8	)		(1.4	)
Adjusted EBITDA		20.8			(20.9	)		45.2			23.9
Depreciation expense		(9.2	)		(11.3	)		(29.1	)		(34.9	)
Non-GAAP adjusted operating income (loss)		11.6			(32.2	)		16.1			(11.0	)
Restructuring expense		(3.7	)		(3.9	)		(21.3	)		(17.1	)
Amortization of intangible assets		—			(0.7	)		(0.7	)		(2.2	)
Asset impairment expense		—			(96.9	)		—			(96.9	)
Other operating costs and expenses		—			(0.5	)		—			(2.3	)
GAAP operating income (loss)	$	7.9		$	(134.2	)	$	(5.9	)	$	(129.5	)