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Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes appearing in Part II, Item 8 of this Annual Report on Form 10-K.

Overview: Manitowoc is a leading provider of engineered lifting solutions, including lattice-boom cranes, tower cranes, mobile hydraulic cranes and boom trucks. The Company has three reportable segments, the Americas segment, EURAF segment and MEAP segment. The segments were identified using the “management approach,” which designates the internal organization that is used by the CEO, who is also the Company’s Chief Operating Decision Maker (“CODM”), for making decisions about the allocation of resources and assessing performance. Further information regarding the Company’s reportable segments can be found in Note 18, “Segments,” to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.

In Management’s Discussion and Analysis, unless otherwise indicated, references to “Manitowoc” and the “Company” refer to The Manitowoc Company, Inc. and its consolidated subsidiaries.

All dollar amounts are in millions throughout the tables included in Management’s Discussion and Analysis of Financial Conditions and Results of Operations unless otherwise indicated.

Segment Operating Performance

Net Sales

Segment Operating Income

Americas

Americas net sales increased 21.0% in 2021 to $757.6 million from $626.1 million in 2020. The increase was primarily due to favorable product mix and pricing actions taken during the year. While demand for cranes was higher year over year, supply chain constraints impacted the Company's ability to produce and ship certain products. The acquisitions of Aspen Equipment Company ("Aspen") and the crane business of H&E Equipment Services, Inc. ("H&E") contributed to the increase of net sales by $26.7 million. However, the acquisitions generated $74.2 million of net sales during the period on a standalone basis.

Americas operating income increased 78.5% in 2021 to $57.3 million from $32.1 million in 2020. The increase was primarily due to higher net sales, favorable product mix and the impact of pricing actions taken during the year. This was partially offset by unfavorable impacts from higher material and transportation costs, increased short-term incentive compensation costs and a $1.9 million asset impairment charge to write-down the value of one of the Company's Brazil entities to its expected sale price.

Americas net sales decreased 35.4% in 2020 to $626.1 million from $969.7 million in 2019. The decrease was primarily related to lower crane shipments as a result of entering the year with lower backlog coupled with the impacts from the COVID-19 pandemic, which significantly reduced demand in most of the Company’s end markets.

Americas operating income decreased 71.7% in 2020 to $32.1 million from $113.4 million in 2019. This change was mainly due to the decrease in net sales and under absorption of facility costs. This was partially offset by decreases of $4.3 million in engineering, selling and administrative expenses and $1.8 million in restructuring expense. Lower engineering, selling and administrative expenses were driven by lower discretionary spend in response to the COVID-19 pandemic.

EURAF

EURAF net sales increased 13.1% in 2021 to $677.0 million from $598.7 million in 2020. The increase was primarily due to higher shipments of cranes compared to the year ended December 31, 2020, which was negatively impacted by the COVID-19

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pandemic. While demand for cranes was higher year over year, supply chain constraints impacted the ability to produce and ship certain products. EURAF net sales were favorably impacted by approximately $20.9 million from changes in foreign currency exchange rates.

EURAF operating income decreased in 2021 to $8.9 million from $12.0 million in 2020. The decrease was primarily due to higher material and transportation costs and engineering, selling and administrative expenses including short-term incentive compensation costs. This was partially offset by higher net sales. Operating income was favorably impacted by approximately $2.4 million from changes in foreign currency exchange rates.

EURAF net sales decreased 7.2% in 2020 to $598.7 million from $644.9 million in 2019. The decrease was primarily related to lower crane shipments as a result of the COVID-19 pandemic, which significantly reduced demand in most of the Company’s end markets. This was partially offset by $10.4 million from favorable changes in foreign currency exchange rates.

EURAF operating income increased in 2020 to $12.0 million from $3.8 million in 2019. The increase was primarily related to favorable sales mix, $6.6 million of lower engineering, selling and administrative expenses and $2.6 million of lower restructuring expense. Lower engineering, selling and administrative expenses were driven by lower discretionary spend in response to the COVID-19 pandemic. This was partially offset by the decrease in net sales. In addition, operating income was impacted by $1.4 million from favorable changes in foreign currency exchange rates.

MEAP

MEAP net sales increased 30.6% in 2021 to $285.6 million from $218.6 million in 2020. The increase was primarily due to higher crane shipments compared to the year ended December 31, 2020, which was negatively impacted by the COVID-19 pandemic. MEAP net sales were favorably impacted by approximately $10.0 million from changes in foreign currency exchange rates.

MEAP operating income increased 1.6% in 2021 to $30.9 million from $30.4 million in 2020. The increase was primarily due to higher net sales. This was partially offset by higher material and transportation costs, engineering, selling and administrative expenses including short-term incentive compensation costs 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.

MEAP net sales decreased 0.4% in 2020 to $218.6 million from $219.5 million in 2019. Net sales were impacted favorably by project driven demand in the Middle East, offset by lower crane shipments as a result of the COVID-19 pandemic. MEAP net sales were favorably impacted by $2.4 million from changes in foreign currency exchange rates.

MEAP operating income increased 34.5% in 2020 to $30.4 million from $22.6 million in 2019. The increase was primarily due to $7.1 million of lower engineering, selling and administrative expenses and $1.9 million of lower restructuring expense compared to 2019. Lower engineering, selling and administrative expenses were driven by lower discretionary spend in response to the COVID-19 pandemic.

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Results of Operations for the Years Ended December 31, 2021, 2020 and 2019

Asset impairment expense 1.9 — — * *

Loss on debt extinguishment — — 25.0 * *

*Measure not meaningful

Orders and Backlog

Backlog represents the dollar value of orders which are expected to be recognized in net sales in the future. Orders are included in backlog when an executed binding contract has been received but has not been recognized in net sales. Orders and backlog are not measures defined by accounting principles generally accepted in the United States of America (“GAAP”) and our methodology for determining orders and backlog may vary from the methodology used by other companies.

Management uses orders and backlog for capacity and resource planning. We believe this information is useful to investors to provide an indication of our future revenues.

Orders for the year ended December 31, 2021 increased 43.4% to $2,166.6 million from $1,511.4 million for the same period in 2020 of which $55.4 million was from the acquisitions. The increase was primarily related to higher global demand as the year ended December 31, 2020 was significantly impacted by the COVID-19 pandemic. Orders were favorably impacted by approximately $31.7 million from changes in foreign currency exchange rates.

The Company’s backlog as of December 31, 2021, 2020, and 2019, was $1,010.9 million, $543.2 million and $475.1 million, respectively, of which $39.3 million as of December 31, 2021 was from the acquisitions. Backlog increased across all segments and was unfavorably impacted by $39.5 million from changes in foreign currency exchange rates.

Net Sales

Consolidated net sales for the year ended December 31, 2021 increased 19.2% to $1,720.2 million from $1,443.4 million for the same period in 2020. The increase was primarily from higher crane shipments due to increased demand as compared to the year ended December 31, 2020, which was negatively impacted by the COVID-19 pandemic. While demand for cranes was higher year over year, supply chain constraints negatively impacted the Company's ability to produce and ship certain products. The acquisitions of Aspen and the crane business of H&E contributed to the increase of net sales by $26.7 million. However, the acquisitions generated $74.2 million of net sales during the period on a standalone basis. Net sales were favorably impacted by approximately $31.0 million from changes in foreign currency exchange rates.

Consolidated net sales decreased 21.3% in 2020 compared to 2019. The decrease was primarily related to lower crane shipments as a result of entering the year with lower backlog in the Americas segment as well as the impacts from the COVID-19 pandemic, which significantly reduced demand in most of the Company’s end markets. This was partially offset by $12.4 million from favorable changes in foreign currency exchange rates.

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Gross Profit

Gross profit for the year ended December 31, 2021 increased 20.6% to $307.2 million compared to $254.7 million for the year ended December 31, 2020. The increase was primarily due to the increase in net sales, partially offset by increases in material and transportation costs. Gross profit was favorably impacted by approximately $7.1 million from changes in foreign currency exchange rates.

Gross profit percentage in 2021 was 17.9% compared to 17.6% in 2020, or relatively flat year over year.

Gross profit for the year ended December 31, 2020 decreased by 26.0% to $254.7 million compared to $344.1 million for the year ended December 31, 2019. This decrease was primarily due to the decrease in net sales and an increase in costs due to under absorption of facility costs from lower utilization of the Company’s manufacturing facilities due to the COVID-19 pandemic. Gross profit was favorably impacted by $3.0 million from changes in foreign currency exchange rates.

Gross profit percentage decreased in 2020 to 17.6% from 18.8% in 2019 primarily due to under absorption of facility costs from lower utilization of the Company’s manufacturing facilities due to the COVID-19 pandemic.

Engineering, Selling and Administrative Expenses

Engineering, selling and administrative expenses for the year ended December 31, 2021 increased $49.7 million to $258.5 million. The increase was primarily due to a $13.9 million charge related to a legal matter with the U.S. Environmental Protection Agency, 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 $4.4 million from changes in foreign currency exchange rates.

Engineering, selling and administrative expenses for the year ended December 31, 2020 decreased $16.8 million to $208.8 million. The decrease was primarily due to lower short-term incentive compensation costs, reduced discretionary spending in response to the COVID-19 pandemic and a decrease in compensation and benefits due to cost reduction actions primarily in North America. This was partially offset by a $8.9 million benefit recorded in 2019 related to the settlement of a legal matter. Engineering, selling and administrative expenses were also unfavorably impacted by $1.1 million from changes in foreign currency exchange rates.

Asset Impairment Expense

During the year ended December 31, 2021, the Company recorded an asset impairment of $1.9 million to write-down the value of one of the Company's Brazil entities to its expected sale price.

There were no asset impairments for the years ended December 31, 2020 and 2019.

Restructuring (Income) Expense

Restructuring (income) expense for the year ended December 31, 2021 totaled $1.1 million of income compared to $7.0 million of expense in 2020. Restructuring income for 2021 primarily related to adjustments of previously recorded costs associated with a lease write-off in the Americas and headcount reductions in Europe. In addition, the Company recorded income on the sale of previously expensed Brazilian tax credits.

Restructuring expense for the year ended December 31, 2020 totaled $7.0 million compared to $9.8 million in 2019. Expenses in 2020 related primarily to costs associated with headcount reductions in Europe and North America, partially offset by $2.5 million of income from the forfeiture of equity compensation awards associated with employee separation agreements.

Interest Expense

Interest expense remained flat for the year ended December 31, 2021 at $28.9 million compared to $29.1 million for the year ended December 31, 2020. Refer to Note 12, “Debt” to the Consolidated Financial Statements.

Interest expense for the year ended December 31, 2020 totaled $29.1 million versus $32.7 million for the year ended December 31, 2019. This decrease was primarily due to a reduction of the average effective interest rate from 10.1% in 2019 to 9.0% in 2020. The decrease in the average effective interest rate was primarily due to the refinancing of the Company’s senior secured

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high yield notes that occurred in the first quarter of 2019 as well as the reduction in interest rates on the Company’s variable rate debt.

Loss on Debt Extinguishment

During the year ended December 31, 2019, the Company recorded a $25.0 million charge associated with the refinancing of the Company’s prior credit facility and notes. The charge is composed of $16.6 million of call premium on the prior notes, $5.3 million of unamortized discount on the prior notes and $3.1 million of unamortized debt issuance costs.

Other income (expense) – Net

Other income (expense) - net for the year ended December 31, 2021 was $1.0 million of income and was primarily composed of $1.1 million of net foreign currency gains.

Other income (expense) - net for the year ended December 31, 2020 was $10.0 million of expense and was primarily composed of $3.9 million of net foreign currency losses, $3.7 million charge related to the settlement of a legal matter and $1.6 million of pension benefit costs.

Other income (expense) - net for the year ended December 31, 2019 was $9.8 million of income and was primarily composed of a $15.5 million benefit related to a settlement of a legal matter and a $3.5 million gain on the sale of the Company’s Manitowoc, Wisconsin manufacturing facility. This was partially offset by $4.4 million of pension benefit costs and $5.5 million of net foreign currency losses.

Income Taxes

During the year ended December 31, 2021, 2020 and 2019 the Company recorded income tax expense of $6.1 million, $17.1 million and $12.4 million respectively.

Due to the Company’s historic losses, impacts from U.S. tax reform and full valuation allowances in certain jurisdictions, the effective annual tax rate is not a meaningful measure of the Company’s cash tax position or performance of the business.

The 2021 effective tax rate was favorably impacted primarily by the release of an unrecognized tax benefits reserve of $2.8 million and a $2.7 million partial release of a Chinese valuation allowance. The rate was unfavorably impacted by the jurisdictional mix of the financial results which includes recognition of additional valuation allowances in certain jurisdictions.

The 2020 effective tax rate was favorably impacted primarily by the passing of The Coronavirus Aid, Relief and Economic Security Act by $3.7 million that allowed the Company to implement certain U.S. tax planning strategies. The rate was unfavorably impacted primarily by additional valuation allowances recorded during the year and the jurisdictional mix of the financial results.

The 2019 effective tax rate equaled the U.S. statutory rate of 21%. The rate was favorably impacted primarily by manufacturing and research incentives and non-U.S. income taxed at a rate other than the U.S. statutory rate. The rate was unfavorably impacted primarily by additional valuation allowances recorded during the year and U.S. tax reform.

See further detail at Note 14, “Income Taxes” to the Consolidated Financial Statements.

Financial Condition

Cash Flows

The table below shows a summary of cash flows for the years ended December 31, 2021, 2020 and 2019:

Year Ended December 31,

Net cash provided by (used for) operating activities $ 76.2 $ (35.1 ) $ (53.3 )

Net cash provided by (used for) financing activities $ 100.9 $ (14.8 ) $ 3.7

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Cash Flows From Operating Activities

Cash flows provided by operating activities in 2021 were $76.2 million and were primarily driven by net income and a net decrease in operating assets and liabilities of $3.1 million. The decrease in operating assets and liabilities was primarily due to an increase in accounts payable and accrued expenses of $83.2 million, partially offset by an increase in inventories of $68.3 million and accounts receivable of $5.2 million from December 31, 2020.

Cash flows used for operating activities in 2020 were $35.1 million and were primarily driven by increases in working capital. Working capital increases were primarily from higher accounts receivable and lower accounts payable and accrued expenses and other liabilities.

Cash flows used for operating activities in 2019 were $53.3 million and were primarily driven by trade receivables sold to the prior accounts receivable securitization program resulting in $126.3 million of cash flows being reported in cash provided by investing activities and $75.0 million of purchases of accounts receivable previously sold to the prior accounts receivable securitization program. This was partially offset by a $124.0 million increase in net income excluding adjustments to reconcile net income (loss) to operating cash flows from operating activities, a $24.0 million net reduction in working capital since December 31, 2018 and $24.4 million of net cash received from the settlement of a legal matter.

Cash Flows From Investing Activities

Cash flows used for investing activities were $226.3 million in 2021. Cash flows used for investing activities in 2021 consisted primarily of $186.2 million related to the acquisitions of Aspen and the crane business of H&E and $40.4 million of capital expenditures.

Cash flows used for investing activities were $25.8 million in 2020. Cash flows provided by investing activities in 2020 primarily consisted of $26.3 million of capital expenditures offset by $0.5 million of cash proceeds on the sale of property, plant and equipment.

Cash flows provided by investing activities were $108.4 million in 2019. Cash flows provided by investing activities in 2019 primarily consisted of $126.3 million of cash collections on accounts receivable sold to the Company’s securitization program and $17.2 million of cash proceeds on the sale of property, plant and equipment. This was partially offset by capital expenditures of $35.1 million.

Cash Flows From Financing Activities

Cash flows provided by financing activities during 2021 totaled $100.9 million and consisted primarily of $100.0 million of borrowings on the ABL Revolving Credit Facility to fund the acquisitions.

Cash flows used for financing activities during 2020 totaled $14.8 million and consisted primarily of $12.0 million for the repurchase of the Company’s common stock and $2.9 million of payments on other debt.

Cash flows provided by financing activities during 2019 totaled $3.7 million and consisted primarily of $300.0 million of proceeds from the issuance of new high-yield notes (i.e., the 2026 Notes), partially offset by payments of $276.6 million to terminate the prior high-yield notes, $8.3 million of debt issuance costs on the ABL Revolving Credit Facility and 2026 Notes, $7.4 million from the repurchase of the Company’s common stock and $4.4 million of payments on other debt.

Liquidity and Capital Resources

Liquidity

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

Cash and cash equivalents $ 75.4 $ 128.7

Other debt availability 47.2 42.2

Less: Borrowings on revolver (100.0 ) —

Less: Borrowings on other debt (4.7 ) —

Less: Outstanding letters of credit (3.0 ) (3.0 )

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The Company’s revolving credit facility, or other future facilities, may be used for working capital requirements, capital expenditures, funding future acquisitions (within the Company’s debt limitations), and other operating, investing and financing needs. The Company believes its liquidity and expected cash flows from operations should be sufficient to meet expected working capital, capital expenditures, contractual obligations and other ongoing operational needs for the subsequent twelve months.

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. From time to time, we opportunistically look at the credit and debt markets for new sources of capital or to reduce our cost of capital.

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 as defined in the ABL Credit Agreement.

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 are denominated in Euros totaling €28.0 million, one denominated in U.S. dollars totaling $9.5 million and one denominated in Chinese Yuan totaling ¥30.0 million. During the year ended 2021, the Company borrowed ¥30.0 million, or approximately $4.7 million on its Chinese Yuan facility. Total availability as of December 31, 2021 for the six overdraft facilities is $47.2 million with $4.7 million outstanding.

Debt

On March 25, 2019, the Company and certain subsidiaries of the Company (the “Loan Parties”) entered into 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 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 Offer Rate (“LIBOR”). The variable interest rate is based upon the average availability as of the most recent determination date as follows:

≥ 50% of Aggregate Commitment 0.25% 1.25%

< 50% of Aggregate Commitment 0.50% 1.50%

As of December 31, 2021, the Company had other indebtedness outstanding of $10.3 million with a weighted-average interest rate of approximately 3.4%. This debt includes balances on local credit lines and capital lease obligations.

As of December 31, 2021, the Company had $100.0 million of borrowings outstanding under the ABL Revolving Credit Facility and no borrowings outstanding as of December 31, 2020. During the year ended December 31, 2021, the highest daily borrowing under the ABL Revolving Credit Facility was $100.0 million and the average borrowing was $26.0 million, while the weighted-average annual interest rate was 1.4%. During the year ended December 31, 2020, the highest daily borrowing under the ABL Revolving Credit Facility was $50.0 million and the average borrowing was $13.3 million, while the

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weighted-average annual interest rate was 1.8%. The interest rate of the ABL Revolving Credit Facility fluctuates based on excess availability. During the year ended December 31, 2021, the spreads for LIBOR and Eurodollar, and Alternative Base Rate borrowings were 1.25% and 0.25%, respectively. Excess availability as of December 31, 2021 was $136.3 million, which represents revolver borrowing capacity of $239.3 million less $100.0 million in borrowings outstanding and U.S. letters of credit outstanding of $3.0 million.

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.

The aggregate scheduled future maturities of outstanding debt obligations as of December 31, 2021 is as follows:

Year

Thereafter —

The table of scheduled maturities above does not agree to the Company’s total debt as of December 31, 2021 as shown on the Consolidated Balance Sheet and in Note 12, “Debt” to the Consolidated Financial Statements due to $3.1 million of deferred financing costs related to the 2026 Notes.

As of December 31, 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.

Other Financing Arrangements

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 $40.5 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. As of the year ended December 31, 2021, the Company sold receivables and received cash of $228.6 million. Transactions under the U.S. and non-U.S. accounts receivable financing programs are accounted for as sales in accordance with Accounting Standards Codification ("ASC") Topic 860.

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See further details at Note 13, “Accounts Receivable Factoring” to the Consolidated Financial Statements.

Off-Balance Sheet Arrangements

The Company's disclosures concerning transactions, arrangements and other relationships with unconsolidated entities or other persons that are reasonably likely to materially affect liquidity or the availability of or requirements for capital resources are as follows:

•

The Company has disclosed its buyback commitments in Note 20, “Guarantees,” to the Consolidated Financial Statements.

•

The Company has disclosed its accounts receivable securitization arrangement in Note 13, “Accounts Receivable Factoring” to the Consolidated Financial Statements.

Contractual Obligations and Commercial Commitments

A summary of the Company's significant contractual obligations as of December 31, 2021 is as follows:

•

Unrecognized tax benefits totaling $18.4 million as of December 31, 2021, excluding related interest and penalties, are not included in the table because the timing of their resolution cannot be estimated. See Note 14, “Income Taxes,” to the Consolidated Financial Statements for disclosures surrounding uncertain income tax positions under ASC Topic 740 “Income Taxes.”

As of December 31, 2021, the Company had buyback commitments with a balance outstanding of $36.4 million. This amount is not reduced for amounts the Company would recover from the repossession and subsequent resale of collateral. The Company is committed to pay $27.0 million of annual interest on the 2026 Notes. Additionally, the Company's debt outstanding under the ABL Revolving Credit Facility is subject to variable interest based on prevailing rates.

The Company maintains defined benefit pension plans for some of the Company’s employees and retirees. The Board of Directors has established the Retirement Plan Committee to manage the operations and administration of all benefit plans and related trusts. For further information see Note 22, “Employee Benefit Plans,” to the Consolidated Financial Statements.

In 2021, cash contributions by the Company to defined benefit pension plans were $4.4 million, and the Company estimates that its contributions in 2022 will be approximately $3.9 million. Cash contributions to the Company’s 401(k) plan were $5.8 million in 2021.

Capital Expenditures

The Company funds capital expenditures that are intended to:

•

improve the cost structure of the Company’s business,

•

invest in new processes, products and technology,

•

maintain high-quality production standards and

•

maintain and expand the Company's rental fleet.

The Company paid a total of $40.4 million during 2021 for capital expenditures. For the year ended December 31, 2021, depreciation was $45.5 million. The Company anticipates that capital expenditures for fiscal year 2022 will be approximately $85.0 million, of which approximately $35.0 million will be funded from sales of the Company's existing rental fleet through rent to own programs and sales of older cranes. If the value of rental fleet sales is less than expected, capital expenditures will be proportionally reduced.

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Management also considers the following regarding liquidity and capital resources to identify trends, demands, commitments, events and uncertainties that require disclosure:

A. Our ABL Revolving Credit Facility and indenture governing the 2026 Notes require us to comply with certain financial ratios and tests. The Company was in compliance with these covenants as of December 31, 2021, the latest measurement date. The occurrence of any default of these covenants could result in acceleration of any outstanding balances under the ABL Revolving Credit Facility. Further, such acceleration would constitute an event of default under the indenture governing the Company's 2026 Notes and other debt and could trigger cross default provisions in other agreements.

B. Circumstances that could impair our ability to continue to engage in transactions that have been integral to historical operations or are financially or operationally essential, or that could render that activity commercially impracticable, such as the inability to maintain a specified credit rating, level of earnings, earnings per share, financial ratios, or collateral. The Company does not believe that these risk factors are reasonably likely to impair its ability to continue to engage in planned activities at this time.

C. Factors specific to us and our markets that we expect to be given significant weight in the determination of our credit rating or will otherwise affect our ability to raise short-term and long-term financing. The Company does not presently believe that events covered by these risk factors applicable to the business could materially affect its credit ratings or could adversely affect its ability to raise short-term or long-term financing.

D. The Company has disclosed information related to certain guarantees in Note 20, “Guarantees,” to the Consolidated Financial Statements.

E. Written options on non-financial assets (for example, real estate puts). The Company does not have any written options on non-financial assets.

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, income 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.

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The reconciliation of net income (loss) to EBITDA, and further to adjusted EBITDA and to adjusted operating income and operating income is as follows:

Year Ended December 31,

Interest expense and amortization of deferred financing fees 30.4 30.6 34.2

Amortization of intangible assets 1.4 0.3 0.3

Restructuring (income) expense (1.1 ) 7.0 9.8

Asset impairment expense 1.9 — —

Loss on debt extinguishment — — 25.0

Other non-recurring charges (1) 21.8 — 3.1

Other (income) expense - net (2) (1.0 ) 10.0 (9.8 )

Amortization of intangible assets (1.4 ) (0.3 ) (0.3 )

Restructuring income (expense) 1.1 (7.0 ) (9.8 )

Asset impairment expense (1.9 ) — —

Other non-recurring charges (1) (21.8 ) — (3.1 )

(1)

Other non-recurring charges for the year ended December 31, 2021, relate to acquisition costs, certain purchase accounting impacts from the acquisitions, a write-off of a long-term note receivable resulting from the 2014 divestiture of the Company's Chinese joint venture and costs associated with a legal matter with the U.S. Environmental Protection Agency. Costs are included in engineering, selling and administrative expenses or cost of sales in the 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 a legal matter and other miscellaneous items.

The Company uses adjusted operating cash flows and free cash flows, which are financial measures that are not prepared in accordance with GAAP, as additional metrics to evaluate the Company’s performance. Adjusted operating cash flows is defined as cash flows provided by (used for) operating activities plus cash receipts on sold accounts receivable to the terminated securitization program and other one-time items. Free cash flows are defined as adjusted operating cash flows less capital expenditures. The reconciliation of cash flows used for operating activities to adjusted operating cash flows and further to free cash flows for the year ended December 31, 2021, 2020 and 2019 are summarized as follows:

Year Ended December 31,

Net cash provided by (used for) operating activities $ 76.2 $ (35.1 ) $ (53.3 )

Cash receipts on sold accounts receivable — — 126.3

Net payments on accounts receivable securitization program — — 75.0

Financial Risk Management

The Company is exposed to market risks from changes in interest rates, commodities and foreign currency exchange rates. To reduce these risks, the Company selectively use derivative financial instruments and other proactive management techniques. The Company has written policies and procedures that place financial instruments under the direction of corporate finance and

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restrict all derivative transactions to those intended for hedging purposes. The use of financial instruments for trading purposes or speculation is strictly prohibited.

For a more detailed discussion of our accounting policies and the financial instruments that we use, please refer to Note 2, “Summary of Significant Accounting Policies,” Note 5, “Fair Value of Financial Instruments,” and Note 12, “Debt,” to the Consolidated Financial Statements.

Interest Rate Risk

The Company is exposed to fluctuating interest rates for certain of its debt. At any time, the Company could be party to various interest rate swaps in connection with its fixed or floating rate debt. No interest rate swaps were entered into or outstanding during 2021 and 2020.

Commodity Prices

The Company is exposed to fluctuating market prices for commodities, including steel, copper, aluminum, and petroleum-based products. The Company’s business is subject to the effect of changing raw material costs caused by movements in underlying commodity prices. The Company has established programs to manage the negotiations of commodity prices. From time to time the Company may use commodity financial instruments to hedge commodity prices. No commodity financial instruments were entered into or outstanding during 2021 and 2020.

Currency Risk

The Company has manufacturing, sales and distribution facilities around the world, and therefore, makes investments and enters into transactions denominated in various currencies, which introduces transactional currency exchange risk.

To mitigate transactional currency exchange risk, the Company, from time-to-time, enters into foreign exchange contracts to 1) reduce the earnings and cash flows impact on non-functional currency denominated receivables and payables and 2) reduce the impact of changes in foreign currency rates between a budgeted rate and the rate realized at the time it recognizes a particular purchase or sale transaction. Gains and losses resulting from hedging instruments either impact the Company’s Consolidated Statements of Operations in the period of the underlying purchase or sale transaction, or offset the foreign exchange gains and losses on the underlying receivables and payables being hedged. The maturities of these foreign exchange contracts coincide with the expected underlying settlement date of the related cash inflow or outflow. The hedges of anticipated transactions are designated as cash flow hedges as required under ASC Topic 815 “Derivatives and Hedging.” As of December 31, 2021, the Company was party to foreign currency forward contracts with a notional value of $11.3 million all of which are carried on the Company’s balance sheet at fair value. As of December 31, 2021, a 10% increase or decrease in the exchange rate in the Company’s portfolio of foreign currency contracts would have increased or decreased the Company’s unrealized gains or losses by $1.1 million. Consistent with the use of these contracts to neutralize the effect of exchange rate fluctuations, such unrealized losses or gains would be offset by corresponding gains or losses, respectively, in the remeasurement of the underlying transactions being hedged.

Amounts invested in non-U.S. based subsidiaries are translated into U.S. dollars at the exchange rate in effect at year-end. Results of operations are translated into U.S. dollars at an average exchange rate for the period. The resulting translation adjustments are recorded in stockholders’ equity as other comprehensive income (loss). The cumulative translation adjustment recorded in accumulated other comprehensive loss as of December 31, 2021 was a loss of $20.5 million.

Environmental, Health, Safety, Contingencies and Other Matters

Refer to Part II, Item 8, Note 19, “Commitments and Contingencies,” where the Company has disclosed environmental, health, safety, contingencies and other matters.

Critical Accounting Policies and Estimates

The Consolidated Financial Statements include the accounts of the Company and all its subsidiaries. The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying Consolidated Financial Statements and related footnotes. In preparing these Consolidated Financial Statements, the Company has made its best estimates and judgments of certain amounts included in the Consolidated Financial Statements giving due consideration to materiality. However, application of these accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates. Although the Company has listed a number of accounting policies below which the

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Company believes to be most critical, the Company also believes that all of the Company’s accounting policies are important to the reader. Therefore, please refer also to the Notes to the Consolidated Financial Statements for more detailed description of these and other accounting policies of the Company.

Revenue Recognition – The Company records revenue in accordance with ASC Topic 606 – “Revenue from Contracts with Customers.” Below are the Company's revenue recognition policies by performance obligation.

•

Crane Sales

Crane sales are primarily generated through the sale of new and used cranes. Contracts with customers are generally in the form of a purchase order. Based on the nature of the Company’s contracts, the Company does not have any significant financing terms. Contracts may have variable consideration in the form of early pay discounts or rebates. Revenue is earned under these contracts when control of the product is transferred to the customer. Control transfers to the customer generally upon delivery to the carrier or acceptance through an independent inspection company that acts as an agent of the customer.

From time to time, the Company enters into agreements where the customer has the right to exercise a put option requiring the Company to buyback a crane at an agreed upon price. The Company evaluates each agreement at the inception of the order to determine if the customer has a significant economic incentive to exercise that right. If it is determined that the customer has a significant economic incentive to exercise that right, the agreement is accounted for as a lease in accordance with ASC Topic 842 - “Leases.” 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 asset is transferred to the customer.

Given the nature of the Company’s products, the customer may request that the product be held until a delivery location is identified. Under these “bill and hold” arrangements, sales are recognized when all of the following criteria are met: 1) the reason for the bill-and-hold arrangement is substantive, 2) the product is separately identified as belonging to the customer, 3) the product is ready for transfer to the customer and 4) the Company does not have the ability to use the product or direct it to another customer.

•

Aftermarket Part Sales

Aftermarket part sales are generated through the sale of new and used parts to end customers and distributors. Aftermarket part sales are recognized when control of the product is transferred to the customer. Control transfers to the customer generally upon delivery to the carrier. Customers generally have a right of return which the Company estimates using historical information. The amount of estimated returns is deducted from net sales.

•

Other Sales

The Company’s other sales consist primarily of sales from:

o

Repair and field service work;

o

Rental of cranes; and

o

Training and technical publications.

As it relates to the Company’s other sales, the Company’s performance obligations generally relate to performing specific agreed upon services. Sales are earned upon the completion of those services.

Inventories and Related Reserve for Obsolete and Excess Inventory - Inventories are valued at the lower of cost or net realizable value. Finished goods and work-in-process inventories include material, labor and manufacturing overhead costs. Inventories are reduced by a reserve for excess and obsolete inventories. The estimated reserve is based upon specific identification of excess or obsolete inventories based on historical usage, estimated future usage, sales requiring the inventory and historical write-off experience and are subject to change if experience improves or deteriorates.

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. The date for the annual impairment review is October 31, 2021, or more frequently if events or changes in circumstances indicate that the assets might be impaired. To perform its

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goodwill impairment review, the Company uses the income approach and market approach with a weighting of 70/30, respectively, to fair value each reporting unit. Goodwill impairment is determined by the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. 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 and are subject to a write-down to the extent that the carrying amount exceeds the estimated fair value.

The Company has four reporting units: Americas - Manufacturing, Americas - Distribution, EURAF and MEAP.

As of October 31, 2021, the Company performed its annual goodwill and indefinite-lived assets impairment tests, and based on those results, no impairments were indicated. The valuation of the goodwill is particularly sensitive to management’s assumptions of revenue growth rates and projected operating income, and an unfavorable change in those assumptions could put goodwill at risk for impairment in future periods.

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. If an indicator of impairment is identified, the Company would use the income approach, which is based on the present value of expected future cash flows.

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.

The Company monitors for events and market conditions to 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 recognize a non-cash impairment charge, which could have a material adverse effect on the Company’s Consolidated Balance Sheet and Results of Operations.

Employee Benefit Plans – The Company provides a range of benefits to its employees and retired employees, including pensions and postretirement health care coverage. Plan assets and obligations are recorded annually based on the Company’s measurement date utilizing various actuarial assumptions such as discount rates, expected return on plan assets, compensation increases, retirement and mortality rates and health care cost trend rates as of that date. The approach the Company used to determine the annual assumptions are as follows:

•

Discount Rate – The Company’s discount rate assumptions are based on the interest rate of noncallable high-quality corporate bonds, with appropriate consideration of pension plan participant demographics and benefit payment terms. The Company’s discount rate is provided by an independent third party calculated based on an appropriate mix of high-quality bonds.

•

Expected Return on Plan Assets – The Company’s expected return on plan assets assumptions are based on the Company’s expectation of the long-term average rate of return on assets in the pension funds, which is reflective of the current and projected asset mix of the funds and considers the historical returns earned on the funds, net of estimated fees.

•

Compensation increase – The Company’s compensation increase assumptions reflect its long-term actual experience, the near-term outlook and assumed inflation.

•

Retirement and Mortality Rates – The Company’s retirement and mortality rate assumptions are based primarily on actual plan experience and mortality tables.

•

Health Care Cost Trend Rates – The Company’s health care cost trend rate assumptions are developed based on historical cost data, near-term outlook and an assessment of likely long-term trends.

Measurements of net periodic benefit cost are based on the assumptions used for the previous year-end measurements of assets and obligations. The Company reviews its actuarial assumptions on an annual basis and makes modifications to the assumptions when appropriate. As required by GAAP, the effects of the modifications are recorded currently or amortized over

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future periods. The Company has developed the assumptions with the assistance of its independent actuaries and other relevant sources, and believes the assumptions used are reasonable; however, changes in these assumptions could impact the Company’s financial position, results of operations or cash flows. Refer to Note 22, “Employee Benefit Plans” to the Consolidated Financial Statements, for a summary of the impact of a 0.50% change in the discount rate and rate of return on plan assets would have on the Company’s financial statements. Based on information provided by its independent actuaries and other relevant sources, the Company believes that the assumptions used are reasonable; however, change in these assumptions could impact the Company's financial position, results of operations or cash flows.

Product Liability – The Company is subject, in the normal course of business, to product liability lawsuits. To the extent permitted under applicable laws, the Company’s exposure to losses from these lawsuits is mitigated by insurance with self-insurance retention limits. The Company’s reserve is based upon two estimates. First, the Company tracks the population of all outstanding product liability cases to determine an appropriate case reserve for each based upon its best judgment and the advice of legal counsel. These estimates are continuously evaluated and adjusted based upon changes to the facts and circumstances surrounding the case. Second, the Company determines the amount of additional reserve required to cover incurred, but not reported, product liability issues and to account for possible adverse development of the established case reserves (collectively referred to as “IBNR”). The Company has established a position within the actuarially determined range, which it believes is the best estimate of the IBNR liability.

Income Taxes – The Company accounts for income taxes under the guidance of ASC Topic 740-10, “Income Taxes.” Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company records a valuation allowance that represents a reserve on deferred tax assets for which utilization is not more likely than not. Management judgment is required in determining its provision for income taxes, deferred tax assets and liabilities, and the valuation allowance recorded against its net deferred tax assets. The Company does not currently provide for additional U.S. and non-U.S. income taxes which would become payable upon repatriation of undistributed earnings of non-U.S. subsidiaries.

The Company measures and records income tax contingency accruals under the guidance of ASC Topic 740-10. The Company recognizes liabilities for uncertain income tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step requires the Company to estimate and measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as the Company must determine the probability of various possible outcomes. The Company reevaluates these uncertain tax positions on a quarterly basis or when new information becomes available to management. These reevaluations are based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, successfully settled issues under audit, expirations due to statutes, and new audit activity. Such a change in recognition or measurement could result in the recognition of a tax benefit or an increase to the tax accrual.

Warranties – In the normal course of business, the Company provides its customers warranties covering workmanship, and in some cases materials, on products manufactured. Such warranties generally provide that products will be free from defects for periods ranging from 12 months to 60 months with certain equipment having longer-term warranties. If a product fails to comply with the Company’s warranties, it may be obligated, at its expense, to correct any defect by repairing or replacing such defective product. The Company provides for an estimate of costs that may be incurred under its warranties at the time product revenue is recognized based on historical warranty experience for the related product or estimates of projected losses due to specific warranty issues on new products. These costs primarily include labor and materials, as necessary, associated with repair or replacement. The primary factors that affect the Company’s warranty liabilities include the number of shipped units and historical and anticipated rates or 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.

Recent Accounting Changes and Pronouncements

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12 “Income Taxes (Topic 740).” The amendments in this ASU simplify accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The standard is effective for annual periods

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beginning after December 15, 2020. The adoption of ASU 2019-02 did not have a material impact on the Company’s consolidated financial statements.

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See Liquidity and Capital Resources, and Financial Risk Management in Management’s Discussion and Analysis of Financial Condition and Results of Operations for a description of the quantitative and qualitative disclosure about market risk.

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Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Consolidated Financial Statements:

Financial Statements:

Report of Independent Registered Public Accounting Firm (PCAOB ID: 238) 41

Consolidated Balance Sheets for the years ended December 31, 2021 and 2020 46

Notes to Consolidated Financial Statements 49

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of The Manitowoc Company, Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of The Manitowoc Company, Inc. and its subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of operations, of comprehensive income, of equity and of cash flows for each of the three years in the period ended December 31, 2021, including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended December 31, 2021 appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

As described in Management’s Report on Internal Control over Financial Reporting, management has excluded Aspen Equipment and H&E Equipment from its assessment of internal control over financial reporting as of December 31, 2021 because they were acquired by the Company in purchase business combinations during 2021. We have also excluded Aspen Equipment and H&E Equipment from our audit of internal control over financial reporting. Aspen Equipment and H&E Equipment are wholly-owned subsidiaries whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting represent approximately 3% and 9% of total assets, respectively, and

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approximately 1% and 3% of total revenues, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2021.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill Impairment Test

As described in Notes 2 and 10 to the consolidated financial statements, the Company’s consolidated goodwill balance was $249.7 million as of December 31, 2021. Management tests for impairment of goodwill annually in the fourth quarter. To test goodwill, management uses the income approach and market approach with a weighting of 70/30, respectively, to fair value each reporting unit, subject to a comparison for reasonableness to its market capitalization at the date of valuation. If the carrying amount exceeds the fair value, an impairment loss is recognized in an amount equal to that excess, not to exceed the carrying amount of the goodwill. In addition, goodwill of a reporting unit is tested for impairment between annual tests if an event occurs or circumstances change that would more-likely-than-not reduce the fair value of a reporting unit below its carrying value. A considerable amount of management judgment and assumptions are required in performing the impairment tests as it relates to revenue growth rates and projected operating income.

The principal considerations for our determination that performing procedures relating to the goodwill impairment test is a critical audit matter are (i) the significant judgment by management when developing the fair value of the reporting units and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to revenue growth rates and projected operating income.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s goodwill test, including controls over the determination of the fair value of the reporting units. These procedures also included, among others (i) testing management’s process for developing the fair value of the reporting units, (ii) evaluating the appropriateness of the method, (iii) testing the completeness, accuracy, and relevance of underlying data, and (iv) evaluating the reasonableness of the significant assumptions related to revenue growth rates and projected operating income. Evaluating management’s assumptions related to the revenue growth rates and projected operating income involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the

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reporting units, (ii) the consistency with external market and industry data, and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.

/s/ PricewaterhouseCoopers LLP

Milwaukee, Wisconsin

February 22, 2022

We have served as the Company’s auditor since 1995.

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The Manitowoc Company, Inc.

Consolidated Statements of Operations

For the years ended December 31, 2021, 2020 and 2019

Operating costs and expenses:

Engineering, selling and administrative expenses 258.5 208.8 225.6

Asset impairment expense 1.9 — —

Amortization of intangible assets 1.4 0.3 0.3

Restructuring (income) expense (1.1 ) 7.0 9.8

Other operating expenses — — —

Other income (expense):

Amortization of deferred financing fees (1.5 ) (1.5 ) (1.5 )

Loss on debt extinguishment — — (25.0 )

Other income (expense) — net 1.0 (10.0 ) 9.8

Total other expense - net (29.4 ) (40.6 ) (49.4 )

Income (loss) before income taxes 17.1 (2.0 ) 59.0

Per Share Data

Basic income (loss) per common share $ 0.32 $ (0.55 ) $ 1.31

Diluted income (loss) per share $ 0.31 $ (0.55 ) $ 1.31

The accompanying notes are an integral part of these consolidated financial statements.

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The Manitowoc Company, Inc.

Consolidated Statements of Comprehensive Income

For the years ended December 31, 2021, 2020 and 2019

Other comprehensive income (loss), net of income tax:

Total other comprehensive income (loss), net of income tax (4.9 ) 23.5 (4.4 )

Comprehensive income $ 6.1 $ 4.4 $ 42.2

The accompanying notes are an integral part of these consolidated financial statements.

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The Manitowoc Company, Inc.

Consolidated Balance Sheets

As of December 31, 2021 and 2020

Millions of dollars, except share amounts 2021 2020

Assets

Current Assets:

Cash and cash equivalents $ 75.4 $ 128.7

Accounts receivable, less allowances of $7.3 and $8.5, respectively 236.1 215.1

Notes receivable — net 16.7 13.6

Property, plant and equipment — net 358.8 294.3

Operating lease right-of-use assets 40.6 37.9

Other intangible assets — net 139.6 121.6

Other non-current assets 44.7 48.6

Liabilities and Stockholders' Equity

Current Liabilities:

Accounts payable and accrued expenses $ 413.4 $ 329.4

Short-term borrowings and current portion of long-term debt 7.3 10.5

Non-Current Liabilities:

Operating lease liabilities 29.2 28.4

Deferred income taxes 6.5 5.9

Postretirement health and other benefit obligations 12.1 14.0

Long-term deferred revenue 22.9 32.4

Other non-current liabilities 51.8 53.8

Total non-current liabilities 591.8 524.2

Commitments and contingencies (Note 19)

Total stockholders' equity:

Accumulated other comprehensive loss (102.4 ) (97.5 )

Total liabilities and stockholders' equity $ 1,775.2 $ 1,603.5

The accompanying notes are an integral part of these consolidated financial statements.

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The Manitowoc Company, Inc.

Consolidated Statements of Cash Flows

For the years ended December 31, 2021, 2020 and 2019

Cash Flows From Operating Activities

Asset impairment expense 1.9 — —

Amortization of intangible assets 1.4 0.3 0.3

Amortization of deferred financing fees 1.5 1.5 1.5

Deferred income taxes - net 0.6 4.8 1.5

Loss on early extinguishment of debt — — 25.0

Loss (gain) on sale of property, plant and equipment 0.2 — (3.5 )

Net unrealized foreign currency transaction losses 0.7 3.6 7.5

Stock-based compensation expense 7.1 6.0 9.5

Changes in operating assets and liabilities, net of effects from acquisitions

Accrued expenses and other liabilities 20.3 (20.7 ) 5.6

Net cash provided by (used for) operating activities 76.2 (35.1 ) (53.3 )

Cash Flows From Investing Activities

Proceeds from sale of fixed assets 0.3 0.5 17.2

Acquisition of business (Note 3) (186.2 ) — —

Cash receipts on sold accounts receivable — — 126.3

Net cash provided by (used for) investing activities (226.3 ) (25.8 ) 108.4

Cash Flows From Financing Activities

Proceeds from revolving credit facility 100.0 50.0 139.7

Payments on revolving credit facility — (50.0 ) (139.7 )

Payments on long-term debt — — (276.6 )

Proceeds from long-term debt — — 300.0

Other debt - net (4.9 ) (2.9 ) (4.4 )

Debt issuance costs — — (8.3 )

Exercises of stock options including windfall tax benefits 5.8 0.1 0.4

Common stock repurchases — (12.0 ) (7.4 )

Net cash provided by (used for) financing activities 100.9 (14.8 ) 3.7

Effect of exchange rate changes on cash (4.1 ) 5.1 0.2

Net increase (decrease) in cash and cash equivalents (53.3 ) (70.6 ) 59.0

Cash and cash equivalents at beginning of period 128.7 199.3 140.3

Cash and cash equivalents at end of period $ 75.4 $ 128.7 $ 199.3

Supplemental Cash Flow Information

Income taxes (paid) refunded 3.7 (13.6 ) (10.5 )

The accompanying notes are an integral part of these consolidated financial statements.

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The Manitowoc Company, Inc.

Consolidated Statements of Equity

For the years ended December 31, 2021, 2020 and 2019

Common Stock - Par Value

Balance at beginning of year $ 0.4 $ 0.4 $ 0.4

Balance at end of year $ 0.4 $ 0.4 $ 0.4

Additional Paid-in Capital

Stock options exercised and issuance of other stock awards 0.2 (3.1 ) (2.1 )

Stock-based compensation 7.1 6.0 9.5

Accumulated Other Comprehensive Loss

Balance at beginning of year $ (97.5 ) $ (121.0 ) $ (116.6 )

Other comprehensive income (loss) (4.9 ) 23.5 (4.4 )

Retained Earnings

Adoption of accounting standards update — (0.2 ) —

Treasury Stock

Balance at beginning of year $ (71.4 ) $ (61.9 ) $ (56.9 )

Stock options exercised and issuance of other stock awards 5.5 2.5 2.4

Common stock repurchases — (12.0 ) (7.4 )

Balance at end of year $ (65.9 ) $ (71.4 ) $ (61.9 )

The accompanying notes are an integral part of these consolidated financial statements.

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Notes to Consolidated Financial Statements

1. Company and Basis of Presentation

The Manitowoc Company, Inc. (“Manitowoc” and the “Company”) was founded in 1902 and has over a 119-year tradition of providing high-quality, customer-focused products and support services to its markets. Manitowoc is one of the world's leading providers of engineered lifting solutions. Manitowoc, through its wholly-owned subsidiaries, designs, manufactures, markets, and supports comprehensive product lines of mobile hydraulic cranes, lattice-boom crawler cranes, boom trucks, and tower cranes under the Aspen Equipment, Grove, Manitowoc, MGX Equipment Services, National Crane, Potain and Shuttlelift brand names. The Company serves a wide variety of customers, including dealers, rental companies, contractors, and government entities, across the petrochemical, industrial, commercial construction, power and utilities, infrastructure and residential construction end markets. Additionally, the Company leverages its installed base of approximately 155,000 cranes to provide aftermarket parts and services to enable its customers to manage their fleets more effectively and improve their return on investment. Due to the ongoing and predictable maintenance needed by cranes, as well as the high cost of crane downtime, Manitowoc’s aftermarket support operations provide the Company with a consistent stream of recurring revenue. The Company continues to expand its tower crane rental fleet in the EURAF segment to directly serve its customers in the region. Manitowoc is a Wisconsin corporation and its principal executive offices are located at 11270 West Park Place Suite 1000, Milwaukee, Wisconsin 53224.

Basis of Presentation The consolidated financial statements include the accounts of The Manitowoc Company, Inc. and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

All amounts, except share and per share amounts, are in millions throughout the tables in these notes unless otherwise indicated.

Certain prior period amounts have been reclassified to conform to the current period presentation. All amounts, except share and per share amounts, are in millions throughout the tables in these notes unless otherwise indicated.

Impact of the COVID-19 Pandemic

During 2020, the COVID-19 pandemic significantly impacted demand for the Company’s products which subsided in 2021. However, the Company experienced, and is still experiencing, supply chain and logistic constraints that negatively impacted its ability to manufacture and ship products. In addition, the Company experienced inflationary cost pressures which have negatively impacted its results.

2. Summary of Significant Accounting Policies

Cash and Cash Equivalents The Company considers all cash and short-term investments purchased with an original maturity of three months or less as cash and cash equivalents.

Allowance for Doubtful Accounts Accounts receivable are reduced by an allowance for amounts that may become uncollectible in the future. The Company's estimate for the allowance for doubtful accounts is based on an estimate of the losses inherent in amounts billed, pools of receivables with similar risk characteristics, existing and future economic conditions, reasonable and supportable forecasts that affect the collectability of the related receivable and any specific customer collection issues the Company has identified.

The following table is a rollforward of the allowance for doubtful accounts for the years ended December 31, 2021 and 2020.

Balance at beginning of period $ 8.5 $ 7.9

Bad debt expenses — 3.6

Use of reserve (1.3 ) (2.7 )

Currency translation 0.1 (0.3 )

Balance at end of period $ 7.3 $ 8.5

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Inventories Inventories are valued at the lower of cost or net realizable value. Finished goods and work-in-process inventories include material, labor and manufacturing overhead costs. The Company determines inventory value using the first-in, first-out method.

Business Combinations The Company accounts for business combinations under the acquisition method in accordance with Accounting Standards Codification ("ASC") Topic 805, Business Combinations ("Topic 805"). The acquisition method requires identifiable assets acquired and liabilities assumed and any non-controlling interest in the business acquired be recognized and measured at fair value on the acquisition date, which is the date that the Company obtains control of the acquired business. The amount by which the fair value of consideration transferred as the purchase price exceeds the net fair value of assets acquired and liabilities assumed is recorded as goodwill. The Company expenses transaction costs in a business combination.

Goodwill and Other Intangible Assets The Company accounts for goodwill and other intangible assets under the guidance of ASC Topic 350-10, “Intangibles — Goodwill and Other” ("Topic 350"). Under ASC Topic 350, goodwill is not amortized; instead, the Company performs an annual impairment review. The date for the annual impairment review is October 31, 2021 or more frequently if events or changes in circumstances indicate that the assets might be impaired. To perform its goodwill impairment review, the Company uses the income approach and market approach with a weighting of 70/30, respectively, to fair value each reporting unit. If the carrying amount exceeds the fair value, an impairment loss is recognized in an amount equal to that excess, not to exceed the carrying amount of the goodwill. In addition, goodwill of a reporting unit is tested for impairment between annual tests if an event occurs or circumstances change that would more-likely-than-not reduce the fair value of a reporting unit below its carrying value.

The Company’s other intangible assets with indefinite lives, are not amortized but are tested for impairment annually, or more frequently, as events dictate. For other indefinite lived intangible assets, the impairment test consists of a comparison of the fair value of the intangible assets to their carrying amount. See Note 10, “Goodwill and Other Intangible Assets,” for further details on our impairment assessments. The Company’s intangible assets subject to amortization are tested for impairment whenever events or changes in circumstances indicate that their carrying values may not be recoverable.

The Company’s other intangible assets subject to amortization are amortized straight-line over the following estimated useful lives:

Useful lives

Patents 20 years

Customer relationships 12-18 years

Trademarks and tradenames 5 years

Noncompetition agreements 5 years

Other intangibles 9 months

Property, Plant and Equipment Property, plant and equipment are stated at cost. Expenditures for maintenance, repairs and minor renewals are charged against earnings as incurred. Expenditures for major renewals and improvements that substantially extend the capacity or useful life of an asset are capitalized and depreciated over the remaining estimated useful life. The cost and accumulated depreciation for property, plant and equipment sold, retired or otherwise disposed of are relieved from the accounts, and resulting gains or losses are reflected in earnings. 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.

Property, plant and equipment are depreciated over the following estimated useful lives:

Years

Building and improvements 2 - 43

Machinery, equipment and tooling 3 - 18

Furniture and fixtures 3 - 10

Computer hardware and software 3 - 10

Rental cranes 5 - 15

Property, plant and equipment also includes cranes accounted for as operating leases. Equipment accounted for as operating leases includes rental cranes leased directly to the customer and cranes for which the Company has assisted in the financing arrangement, whereby the Company has made a buyback commitment in which the customer at the time of the order had a significant economic incentive to exercise. Equipment that is leased directly to the customer is accounted for as an operating

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lease with the related assets capitalized and depreciated over their estimated economic life. Equipment involved in a financing arrangement is depreciated over the life of the underlying arrangement to the buyback amount at the end of the lease period. The amount of buyback and rental equipment included in property, plant and equipment amounted to $119.5 million and $59.9 million, net of accumulated depreciation, as of December 31, 2021 and 2020, respectively.

The Company reviews property, plant and equipment for impairment whenever events or changes in circumstances indicate that the assets’ carrying amount may not be recoverable. The Company conducts its impairment analyses in accordance with ASC Topic 360-10-5 “Property, Plant and Equipment” (“Topic 360”). Topic 360 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.If an impairment is determined to exist, any related impairment loss is calculated based upon comparison of the expected undiscounted future cash flows to the net book value of the assets.

Warranties Estimated manufacturing warranty costs are recorded in cost of sales at the time of sale of the warranted products based on historical warranty experience for the related product or estimates of projected costs due to specific warranty issues on new products. These estimates are reviewed periodically and are adjusted based on changes in facts, circumstances or actual experience. When a customer purchases an extended warranty, revenue associated with the extended warranty is deferred and recognized over the life of the extended warranty period. Costs during the extended warranty period are expensed as incurred.

Product Liabilities The Company records product liability reserves for its self-insured portion of any outstanding product liability cases when losses are probable and reasonably estimable. The reserve is based upon two estimates. First, the Company tracks the population of all outstanding product liability cases to determine an appropriate case reserve for each based upon the Company’s best judgment with the advice of legal counsel. These estimates are continually evaluated and adjusted based upon changes to facts and circumstances surrounding the case. Second, the Company determines the amount of additional reserve required to cover incurred, but not reported, product liability obligations and to account for possible adverse development of the established case reserves utilizing actuarially developed estimates.

Derivative Financial Instruments and Hedging Activities The Company has policies and procedures that place all financial instruments under the direction of corporate treasury and restrict all derivative transactions to those intended for hedging purposes. The use of financial instruments for trading purposes is strictly prohibited. The Company uses financial instruments to manage the market risk from changes in foreign exchange rates, commodities and interest rates. The Company follows the guidance in accordance with ASC Topic 815 “Derivatives and Hedging” (“Topic 815”). The fair values of all outstanding derivatives are recorded in the Consolidated Balance Sheets. The change in a derivative’s fair value is recorded each period in current earnings or accumulated other comprehensive income (loss) (“AOCI”) depending on whether the derivative is designated and qualifies as a cash flow hedge.

The Company selectively hedges anticipated transactions that are subject to foreign exchange exposure, commodity price exposure or variable interest rate exposure, primarily using foreign currency exchange contracts (“FX Forward Contracts”), commodity contracts and interest rate contracts, respectively. These instruments are designated as cash flow hedges in accordance with Topic 815 and are recorded in the Consolidated Balance Sheets at fair value. The effective portion of the contracts’ gains or losses due to changes in fair value are initially recorded as a component of AOCI and are subsequently reclassified into earnings when the hedged transactions, typically sales and costs related to sales and interest expense, occur and affect earnings. These contracts are highly effective in hedging the variability in future cash attributable to changes in currency exchange rates, commodity prices or interest rates.

The amount reported as derivative instrument fair market value adjustment in the AOCI account within the Consolidated Statements of Comprehensive Income (Loss) represents the net gain (loss) on foreign currency exchange contracts designated as cash flow hedges, net of income taxes.

Stock-Based Compensation The Company recognizes expense net of estimated future forfeitures for all stock-based compensation on a straight-line basis over the vesting period of the entire award. Estimated future forfeitures are based on the Company’s historical experience. Stock-based compensation plans are described more fully in Note 17, “Stock-Based Compensation.”

Research and Development Research and development costs are charged to expense as incurred and amounted to $29.1 million, $30.6 million and $31.1 million for the years ended December 31, 2021, 2020 and 2019, respectively. Research and development costs include salaries, materials, contractor fees and other administrative costs.

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Income Taxes The Company utilizes the liability method to recognize deferred tax assets and liabilities for the expected future income tax consequences of events that have been recognized in the Company’s financial statements. Under this method, deferred tax assets and liabilities are determined based on the temporary difference between financial statement carrying amounts and the tax basis of assets and liabilities using enacted tax rates in effect in the years in which the temporary differences are expected to reverse. Valuation allowances are provided for deferred tax assets where it is considered more likely than not that the Company will not realize the benefit of such assets. The Company evaluates its uncertain tax positions as new information becomes available. Tax benefits are recognized to the extent a position is more likely than not to be sustained upon examination by the taxing authority.

Net Income (Loss) Per Share Net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during each year or period. The calculation of diluted net income (loss) per share reflects the effect of all potential dilutive shares that were outstanding during the respective periods, unless the effect of doing so would be antidilutive. The Company uses the treasury stock method to calculate the effect of outstanding stock-based compensation awards.

Comprehensive Income (Loss) Comprehensive income (loss) includes, in addition to net income (loss), other items that are reported as direct adjustments to Manitowoc stockholders’ equity. These items are foreign currency translation adjustments, employee postretirement benefit adjustments and the change in fair value of certain derivative instruments.

Net Sales Sales are recognized when obligations under the terms of a contract with the Company’s customer are satisfied; generally this occurs with the transfer of control of the Company’s cranes or aftermarket parts or completion of performance of services. Sales are measured as the amount of consideration the Company expects to receive in exchange for transferring goods or providing services. The Company recognizes sales for extended warranties over the life of the extended warranty period.

Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, and are collected by the Company from a customer, are excluded from sales.

Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are categorized as a fulfillment cost and are included in cost of sales on the Consolidated Statement of Operations.

Performance Obligations

The following is a description of principle activities from which the Company generates sales.Disaggregation of the Company’s revenue sources are disclosed in Note 18, “Segments.”

Crane Sales

Crane sales are primarily generated through the sale of new and used cranes. Contracts with customers are generally in the form of a purchase order. Based on the nature of the Company’s contracts, the Company does not have any significant financing terms. Contracts may have variable consideration in the form of early pay discounts or rebates, however variable consideration is not material to the overall contract with the customer. Sales are earned under these contracts when control of the product is transferred to the customer. Control transfers to the customer generally upon delivery to the carrier or acceptance through an independent inspection company that acts as an agent of the customer.

From time to time, the Company enters into agreements where the customer has the right to exercise a put option requiring the Company to buyback a crane at an agreed upon price. The Company evaluates each agreement at inception to determine if the customer has a significant economic incentive to exercise that right. If it is determined that the customer has a significant economic incentive to exercise that right, 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 asset is transferred to the customer. Refer to Note 20, “Guarantees” for additional information.

Given the nature of the Company’s products, the customer may request that the product be held until a delivery location is identified. Under these “bill and hold” arrangements, sales are recognized when all of the following criteria are met: 1) the reason for the bill-and-hold arrangement is substantive, 2) the product is separately identified as belonging to the customer, 3) the product is ready for transfer to the customer, and 4) the Company does not have the ability to use the product or direct it to another customer.

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Aftermarket Part Sales

Aftermarket part sales are generated through the sale of new and used parts to end customers and distributors. Aftermarket part sales are recognized when control of the product is transferred to the customer. Control transfers to the customer generally upon delivery to the carrier. Customers generally have a right of return which the Company estimates using historical information. The amount of estimated returns is deducted from net sales.

Other Sales

The Company’s other sales consist primarily of sales from:

•

Repair and field service work;

•

Rental of cranes; and

•

Training and technical publications.

The Company’s performance obligations for other sales generally relates to performing specific agreed upon services. Sales are earned upon the completion of those services.

Practical Expedients and Exemptions

The Company expenses sales commissions when incurred because the amortization period would be one year or less. These costs are recorded within engineering, selling and administrative expenses in the Consolidated Statement of Operations.

The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which it recognizes revenue at the amount to which it has the right to invoice for services performed.

Recent Accounting Changes and Pronouncements

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12 “Income Taxes (Topic 740).” The amendments in this ASU simplify accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The standard is effective for annual periods beginning after December 15, 2020. The adoption of ASU 2019-02 did not have a material impact on the Company’s consolidated financial statements.

3. Business Combinations

Acquisition of Aspen Equipment Company

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 $50.2 million. The acquisition of Aspen was funded from existing cash resources and expands 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.

Included in the purchase price was $12.9 million of net working capital, $6.0 million of property, plant and equipment, $19.3 million of rental fleet, $0.4 million of other assets, $6.2 million of goodwill and $5.4 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. The purchase price allocation is subject to the completion of final valuation of the net assets acquired.

The financial results of Aspen from September 1, 2021 are included in the Company's 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 December 31, 2021 did not have a material impact on the consolidated financial statements. Pro-forma financial information has not been provided as the acquisition did not have a material impact on the Consolidated Statements of Operations.

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Acquisition of H&E Crane Business

On October 1, 2021, the Company completed the acquisition of substantially all of the assets and certain liabilities of the crane business of H&E Equipment Services, Inc. (“H&E”) for a transaction price of approximately $139.1 million which is inclusive of the purchase price of $130.0 million, working capital and other adjustments of $5.9 million and settlement of outstanding balances between the Company and the acquired company of $3.2 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 funded from existing cash resources, including the use of the ABL revolver of which $100.0 million was outstanding as of December 31, 2021. The H&E crane business operates with ten full-service branch locations under the Company's new wholly owned subsidiary, MGX Equipment Services, LLC ("MGX"), and expands Manitowoc’s ability to provide new sales, used sales, aftermarket parts, service and crane financing options to a variety of end market customers.

The purchase price was allocated to underlying assets acquired and liabilities assumed based upon their estimated fair values at the date of the combination as follows:

Net working capital $ 50.0

Property, plant and equipment 13.1

Rental fleet 48.2

Goodwill 8.9

Noncompetition agreement intangible 3.8

Customer relationships intangible 15.1

Total fair value consideration $ 139.1

The financial results of the H&E crane business from October 1, 2021 are included in the Company's consolidated financial statements and are reported in the Americas segment. The amount of revenue on a standalone basis generated by the acquisition from October 1, 2021 to December 31, 2021 was $50.6 million, $7.6 million net of previously recorded third-party sales. The amount of earnings associated with the acquisition from October 1, 2021 through December 31, 2021 was immaterial to the Company's Consolidated Statement of Operations. Pro-forma financial information has not been provided as the acquisition did not have a material impact on the Consolidated Statements of Operations.

4. Net Sales

The Company defers revenue when cash payments are received in advance of satisfying the related performance obligation. The amounts are recorded as customer advances in the Consolidated Balance Sheets. The table below shows the change in the customer advances balance for the year ended December 31, 2021 and 2020.

Balance at beginning of period $ 25.5 $ 25.8

Cash received in advance of satisfying performance obligations 128.4 108.0

Currency translation (0.7 ) 0.2

Balance at end of period $ 28.7 $ 25.5

Disaggregation of the Company's revenue sources are disclosed in Note 18, "Segments."

5. Fair Value of Financial Instruments

ASC Topic 820-10 ("ASC 820") 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 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

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Level 3 Unobservable inputs for the asset or liability

The following tables sets forth the Company’s financial assets and liabilities related to FX Forward Contracts that were accounted for at fair value as of December 31, 2021 and 2020. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

Fair Value as of December 31, 2021

Level 1 Level 2 Level 3 Total Recognized Location

FX Forward Contracts $ — $ 0.3 $ — $ 0.3 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

The fair value of the senior secured second lien notes due on April 1, 2026, with an annual coupon rate of 9.000% (the “2026 Notes”), was approximately $317.8 million as of December 31, 2021. See Note 12, "Debt," for a description of the 2026 Notes and the related carrying value.

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 2026 Notes based on quoted market prices of the instruments; because these markets are typically actively traded, the liabilities are classified as Level 1 within the valuation hierarchy. The carrying values of cash and cash equivalents, accounts receivable, accounts payable and short-term variable debt, including any amounts outstanding under the Company's revolving credit facility, approximate fair value, without being discounted as of December 31, 2021 due to the short-term nature of these instruments.

FX Forward Contracts are valued through an independent valuation source 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 6, “Derivative Financial Instruments” for additional information.

6. Derivative Financial Instruments

The Company’s risk management objective is to ensure that business exposures to risks are minimized using the most effective and 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 AOCI. 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 years ended December 31, 2021, 2020 and 2019.

The Company had FX Forward Contracts with an aggregate notional amount of $11.3 million and $9.3 million outstanding as of December 31, 2021 and 2020, respectively. The aggregate notional amount outstanding as of December 31, 2021 is scheduled to mature within one year. The FX Forward Contracts purchased are denominated in various foreign currencies. As of December 31, 2021 and 2020, the net fair value of these contracts was a net short term liability of $0.3 million and zero, respectively. Net unrealized gains (losses), net of income tax, recorded in AOCI were zero as of December 31, 2021 and 2020.

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The gains (losses) recorded in the Consolidated Statement of Operations for FX Forward Contracts for the years ended December 31, 2021 and 2020 are summarized as follows:

Designated Cost of sales $ (1.1 ) $ (0.3 ) $ (3.1 )

Non-Designated Other income (expense) - net 0.4 0.6 3.9

7. Inventories

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

8. 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 in the Consolidated Balance Sheet. 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. In 2021, the Company recorded $3.6 million of expense in engineering, selling and administrative expenses in the Consolidated Statement of Operations to fully reserve for the remaining net value of the note with Manitowoc Dong Yue. As of December 31, 2021, the Company had current and long-term notes receivable in the amounts of $16.7 million and $5.2 million, respectively. As of December 31, 2020, the Company had current and long-term notes receivable in the amounts of $13.6 million and $12.7 million, respectively.

9. Property, Plant and Equipment

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

Machinery, equipment and tooling 298.9 292.6

Furniture and fixtures 14.5 21.0

Computer hardware and software 125.6 119.3

Construction in progress 15.1 9.0

Less accumulated depreciation (462.3 ) (461.8 )

Property, plant and equipment — net $ 358.8 $ 294.3

Assets Held for Sale

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

Asset Impairment

During the year ended December 31, 2021, the Company recorded an asset impairment of $1.9 million to write-down the value of one of the Company's Brazil entities to its expected sale price.The Company recorded no asset impairment charges for the year ended December 31, 2020.

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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. The Company will continue to monitor changes in circumstances and test more frequently if those changes indicate that assets might be impaired.

A considerable amount of management judgment and assumptions are required in performing the impairment tests as it relates to revenue growth rates and projected operating income. While the Company believes the judgments and assumptions are reasonable, different assumptions could change the estimated fair value and, therefore, additional impairment charges could be required. Weakening industry or economic trends, disruptions to our 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 Consolidated Balance Sheets and Results of Operations.

The Company has four reporting units, Americas - Manufacturing, Americas - Distribution, EURAF and MEAP.

The changes in carrying amount of goodwill for the years ended December 31, 2021 and 2020 are as follows:

Americas - Manufacturing Americas - Distribution MEAP Consolidated

Foreign currency impact — — 2.6 2.6

Foreign currency impact — — (0.5 ) (0.5 )

During the year, the Company recorded goodwill of approximately $6.2million from the acquisition of Aspen and $8.9million from the acquisition of H&E's crane business. Management determined the goodwill represents the assembled workforce and synergies between the acquired companies and Manitowoc that are not individually identified and separately recognized. Goodwill related to the acquisitions are subject to change as part of the completion of acquisition accounting. The total goodwill related to the acquisitions is deductible for tax purposes over 15 years. Refer to Note 3, "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 December 31, 2021 and 2020 are summarized as follows:

Definite lived intangible assets:

Noncompetition agreements 4.2 (0.4 ) 3.8 — — —

Trademarks and tradenames 2.2 (0.1 ) 2.1 — — —

Other intangibles 0.6 (0.2 ) 0.4 — — —