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Manitex International Reports Second Quarter 2023 Results

Manitex International, Inc. (Nasdaq: MNTX) ("Manitex" or the "Company"), a leading international provider of truck cranes, specialized industrial equipment, and construction equipment rental solutions to infrastructure and construction markets, today reported financial results for the three months ended June 30, 2023.

SECOND QUARTER 2023 RESULTS

(all comparisons versus the prior year period unless otherwise noted)

  • Net revenue of $73.5 million, +5.7%
  • Gross profit of $14.9 million +20.8%; gross margin of 20.3%, +254 basis points
  • GAAP Net Income of $0.5 million; Adjusted Net Income of $1.7 million, or $0.08 per diluted share
  • Adjusted EBITDA of $6.8 million, +31.6%, 9.3% of net revenue, +182 basis points
  • Backlog of $223.2 million, +4.4%
  • Net leverage of 3.3X, down from 3.9X at December 31, 2022; total liquidity of $31 million

MANAGEMENT COMMENTARY

“We are excited to have delivered another quarter of strong financial performance and continued progress against our Elevating Excellence business transformation strategy,” stated Michael Coffey, CEO of Manitex. “Our second quarter revenue increased by 6% driven by favorable lifting equipment segment end-market demand and strong growth in our rental equipment operations. We remain encouraged by the positive fundamentals in our key infrastructure, energy, and mining end markets, which combined with the promising customer response to our recent new product introductions, has resulted in continued momentum in our backlog.”

“While our recent financial performance has been encouraging, we are even more excited by the ongoing progress we have achieved on our strategic initiatives, which places the company on track to deliver on the long-term financial targets we outlined last quarter,” continued Coffey. “As a reminder, our Elevating Excellence value creation framework is based on three key pillars - generating commercial growth, enhancing operating performance, and disciplined capital allocation. We expect execution on these initiatives to enable us to achieve our 2025 financial targets, which include 25% organic revenue growth at the mid-point of the range, 65-110% Adjusted EBITDA growth, and 300-500 basis points of Adjusted EBITDA margin expansion.”

“Our priorities in the near-term are centered on enhancing the operational processes that are critical to support our long-term growth ambitions, so we were pleased with the successful implementation of our new ERP systems across the organization and another quarter of improved manufacturing throughput,” continued Coffey. “The early progress on our operational goals is evident in our second quarter Adjusted EBITDA margin, which increased 180 basis points on a year-over-year basis to 9.3%, despite lingering supply chain challenges and the recent spike in steel prices.”

“A key priority is reducing our net leverage ratio towards our short-term target of at-or-below 3.0x, so we were pleased to see our net debt to trailing twelve-month Adjusted EBITDA decline to 3.3x at the end of the second quarter, down from 3.9x at the end of 2022,” stated Joseph Doolan, Chief Financial Officer of Manitex. “Our total liquidity of $31 million, which includes total cash and availability under our credit facilities, provides us with ample financial flexibility to support our organic growth initiatives.”

"Momentum in our key end markets remains robust, and as we continue to execute on our Elevating Excellence strategy, we will further position the Company to benefit from these favorable trends,” continued Coffey. “Based on our solid first half results, sustained margin improvements, and continued new order momentum, including several large orders received subsequent to quarter end, we remain on track to achieve our 2023 financial guidance, which calls for low double-digit adjusted EBITDA growth in 2023.”

SECOND QUARTER 2023 PERFORMANCE

The Company reported net revenue of $73.5 million in the second quarter 2023, an increase of 5.7% versus the prior-year period, driven by growth in the lifting segment, as well as contribution from the Rabern Rentals acquisition completed in April 2022. Revenue growth was negatively impacted by $2.6 million, or approximately 3.7%, due to lower truck chassis sales, which are largely pass-through revenue items. The Company continues to expect lower chassis sales to be a headwind to reported sales growth and a benefit to reported gross margin in 2023.

Lifting Equipment Segment revenue was $66.3 million in the second quarter 2023, an increase of 4.6%, versus the prior-year period, or an increase of 8.7% when excluding the impact of truck chassis sales in the quarter. The increased output is a direct reflection of process centered improvements attained from our Elevating Excellence strategy and favorable demand trends in both domestic and international markets. In North America, strong project activity from energy and infrastructure markets is driving robust activity levels, while international markets are benefitting from infrastructure projects in Europe and continued strength from South American mining activity.

Rental Equipment Segment revenue was $7.3 million in the second quarter 2023, supported by strong end-market demand in key North Texas markets, including contribution from the Lubbock, Texas location that opened in March 2023. The Rabern business benefitted from the deployment of new rental fleet acquired in 2022, pricing gains, and a modest improvement in utilization.

Total gross profit was $14.9 million in the second quarter, an increase from $12.4 million in the prior-year period due to revenue growth, benefits from the Company’s operational improvement initiatives, and improved profitability in rental. As a result of these factors, gross profit margin increased 250 basis points to 20.3% during the second quarter 2023. These factors were partially offset by higher US-based steel prices, which were a headwind during the quarter as prices spiked during the first half of 2023. The Company has successfully implemented product surcharges and price increases in an effort to offset the rising price of steel, and these measures are expected to benefit margins beginning in the third quarter of 2023.

SG&A expense was $10.8 million for the second quarter, compared to $11.4 million for the comparable period last year. The decrease was primarily related to restructuring and other expenses included in last year’s results. R&D costs of $0.8 million were up modestly from $0.7 million last year.

Operating income was $3.3 million for the second quarter 2023, compared to an operating loss of ($1.7) million for the same period last year. Second quarter operating margin was 4.5%, an improvement from (2.4%) in the prior year period. The year-over-year improvement in operating income was driven by the strong operating performance, disciplined cost control, and Rabern transaction costs and other one-time expenses that were incurred in the second quarter last year.

The Company delivered GAAP Net Income of $0.5 million, or $0.02 per diluted share, for the second quarter 2023, compared to a net loss of ($2.1) million, or ($0.10) per diluted share, for the same period last year. Adjusted net income was $1.7 million, or $0.08 per diluted share in the second quarter 2023, an increase compared to adjusted net income of $0.9 million, or $0.05 per diluted share, for the same period last year. Adjusted net income excludes $0.6 million of stock compensation expense and $0.7 million of other non-recurring expenses in the second quarter of 2023.

Adjusted EBITDA was $6.8 million for the second quarter 2023, or 9.3% of sales, compared to $5.2 million, or 7.4% of sales, for the same period last year. See Non-GAAP reconciliations in the appendix of this release.

As of June 30, 2023, total backlog was $223.2 million, up 4.4% from the end of the second quarter 2022, driven by continued favorable trends in key end markets and the contribution from new product introductions in North America. Backlog was down 6.2% from the end of the first quarter of 2023 due primarily to improved manufacturing throughput, and the timing of orders, as the Company received several large orders in early July.

BALANCE SHEET AND LIQUIDITY

As of June 30, 2023, total debt was $95.1 million. Cash and cash equivalents as of June 30, 2023, were $7.3 million, resulting in net debt of $87.8 million. Net debt at the end of the second quarter 2023 was up modestly from the end of the first quarter due to seasonal working capital needs and modest inventory growth in Italy resulting from the transition of the ERP system. Net leverage was 3.3x at the end of second quarter 2023, down from 3.9x at the end of fourth quarter 2022. As of June 30, 2023, Manitex had total cash and availability of $31 million.

STRATEGIC UPDATE - ELEVATING EXCELLENCE INITIATIVE

In early 2023, Manitex formally launched its multi-year business transformation strategy, Elevating Excellence, which aims to drive sustained commercial growth and improved operating performance, ultimately resulting in long-term value creation for shareholders. The three main tenets of the business strategy include generating commercial growth (organic market share expansion, product innovation, expanded aftermarket focus), enhancing operating performance (optimized manufacturing resources, enhanced sourcing and procurement, product mix optimization), and disciplined capital allocation.

Key progress achieved during the second quarter against the strategy are as follows:

  • Commercial Growth. A key component of Manitex’s targeted commercial expansion strategy is market share growth, as the Company focuses on leveraging its strong market share in straight mast cranes to grow articulated cranes, industrial lifting, and aerial work platforms in North America. An important driver of this initiative, and Manitex’s growth strategy overall, is the support and partnership of the Company’s dealer network. One of these dealers is ABM Equipment, LLC (“ABM”) of Hopkins, Minnesota, which recently joined Manitex as a new dealer in June of 2022 and provides services to customers in Minnesota, North and South Dakota, Iowa, Nebraska and the upper peninsula of Michigan. ABM has quickly made significant investments in the Company’s products, including an order for ten 50-ton TC500 truck-mounted cranes. Manitex looks forward to continuing to partner with ABM and its entire dealer network to continue to execute on its commercial growth strategy.
  • Enhanced Operating Performance. Second quarter Adjusted EBITDA margin benefited from continued improvements in manufacturing throughput and strong incremental margins in rental. The recent ERP system launch has thus far been seamlessly integrated and is expected to result in additional efficiency benefits in the coming years. Supply chain pressures have continued to ease in Italy; however, the Company continues to experience some supply chain challenges, particularly in the United States.
  • Disciplined Capital Allocation. Manitex’s primary capital allocation priorities will focus on debt reduction, operational improvements, and organic growth investments in 2023. As of June 30, 2023, Manitex’s net leverage ratio was 3.3x, down from 3.9x at year-end. The Company continues to target a net leverage ratio of at-or-below 3.0x, consistent with its mandate to optimize balance sheet flexibility.

LONG-TERM FINANCIAL TARGETS

Manitex introduced long-term financial targets as part of its Elevating Excellence initiative. The full-year 2025 financial targets reflect the underlying strength of the Company’s end markets and expected commercial and operational benefits from the Elevating Excellence initiatives. The Company’s financial targets are unchanged, as detailed in the following table.

($ in millions)

 

Full-Year

 

Full Year 2025

 

2022 Actual

 

Low-Case

Base-Case

High-Case

Total Revenue

$273.9

 

$325

$342

$360

Total Adjusted EBITDA

$21.3

 

$35

$40

$45

Total Adjusted EBITDA Margin

7.8%

 

10.8%

11.8%

12.8%

These targets are current as of the time provided and subject to change, given markets conditions.

SECOND QUARTER 2023 RESULTS CONFERENCE CALL

Manitex will host a conference call today at 9:00 AM ET to discuss the Company’s second quarter 2023 results and updated corporate strategy.

A webcast of the conference call and accompanying presentation materials will be available in the Investor Relations section of the Manitex website at https://www.manitexinternational.com/eventspresentations.aspx, and a replay of the webcast will be available at the same time shortly after the webcast is complete.

To participate in the live teleconference:

Domestic Live:

(877) 407-0792

International Live:

(201) 689-8263

To listen to a replay of the teleconference, which will be available through August 17, 2023:

Domestic Replay:

(844) 512-2921

International Replay:

(412) 317-6671

Passcode:

13740069

NON-GAAP FINANCIAL MEASURES AND OTHER ITEMS

In this press release, we refer to various non-GAAP (U.S. generally accepted accounting principles) financial measures which management uses to evaluate operating performance, to establish internal budgets and targets, and to compare the Company's financial performance against such budgets and targets. These non-GAAP measures, as defined by the Company, may not be comparable to similarly titled measures being disclosed by other companies. While adjusted financial measures are not intended to replace any presentation included in our consolidated financial statements under generally accepted accounting principles (GAAP) and should not be considered an alternative to operating performance or an alternative to cash flow as a measure of liquidity, we believe these measures are useful to investors in assessing our operating results, capital expenditure and working capital requirements and the ongoing performance of its underlying businesses. A reconciliation of Adjusted GAAP financial measures is included with this press release. All per share amounts are on a fully diluted basis. The quarterly amounts described below are unaudited, are reported in thousands of U.S. dollars, and are as of the dates indicated.

ABOUT MANITEX INTERNATIONAL

Manitex International is a leading provider of mobile truck cranes, industrial lifting solutions, aerial work platforms, construction equipment and rental solutions that serve general construction, crane companies, and heavy industry. The company engineers and manufactures its products in North America and Europe, distributing through independent dealers worldwide. Our brands include Manitex, PM, Oil & Steel, Valla, and Rabern Rentals.

FORWARD-LOOKING STATEMENTS

Safe Harbor Statement under the U.S. Private Securities Litigation Reform Act of 1995: This release contains statements that are forward-looking in nature which express the beliefs and expectations of management including statements regarding the Company's expected results of operations or liquidity; statements concerning projections, predictions, expectations, estimates or forecasts as to our business, financial and operational results and future economic performance; and statements of management's goals and objectives and other similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by terminology such as "anticipate," "estimate," "plan," "project," "continuing," "ongoing," "expect," "we believe," "we intend," "may," "will," "should," "could," and similar expressions. Such statements are based on current plans, estimates and expectations and involve a number of known and unknown risks, uncertainties and other factors that could cause the Company's future results, performance or achievements to differ significantly from the results, performance or achievements expressed or implied by such forward-looking statements. These factors and additional information are discussed in the Company's filings with the Securities and Exchange Commission and statements in this release should be evaluated in light of these important factors. Although we believe that these statements are based upon reasonable assumptions, we cannot guarantee future results. Forward-looking statements speak only as of the date on which they are made, and the Company undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

MANITEX INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(Unaudited)

June 30, 2023

December 31, 2022

ASSETS

Current assets

Cash

$

7,092

 

$

7,973

 

Cash – restricted

 

210

 

 

217

 

Trade receivables (net)

 

48,828

 

 

43,856

 

Other receivables

 

1,087

 

 

1,750

 

Related party receivables

 

9

 

 

-

 

Inventory (net)

 

83,309

 

 

69,801

 

Prepaid expense and other current assets

 

3,694

 

 

3,907

 

Total current assets

 

144,229

 

 

127,504

 

Total fixed assets, net of accumulated depreciation of $26,291 and $22,441

at June 30, 2023 and December 31, 2022, respectively

 

49,929

 

 

51,697

 

Operating lease assets

 

8,010

 

 

5,667

 

Intangible assets (net)

 

13,696

 

 

14,367

 

Goodwill

 

37,075

 

 

36,916

 

Deferred tax assets

 

452

 

 

452

 

Total assets

$

253,391

 

$

236,603

 

LIABILITIES AND EQUITY

Current liabilities

Accounts payable

$

53,016

 

$

45,682

 

Accrued expenses

 

14,234

 

 

12,379

 

Related party payables

 

36

 

 

60

 

Notes payable

 

23,857

 

 

22,666

 

Current portion of finance lease obligations

 

555

 

 

509

 

Current portion of operating lease obligations

 

2,167

 

 

1,758

 

Customer deposits

 

2,653

 

 

3,407

 

Total current liabilities

 

96,518

 

 

86,461

 

Long-term liabilities

Revolving term credit facilities (net)

 

45,982

 

 

41,479

 

Notes payable (net)

 

21,585

 

 

22,261

 

Finance lease obligations (net of current portion)

 

3,092

 

 

3,382

 

Operating lease obligations (net of current portion)

 

5,843

 

 

3,909

 

Deferred gain on sale of property

 

387

 

 

427

 

Deferred tax liability

 

4,393

 

 

5,151

 

Other long-term liabilities

 

5,125

 

 

5,572

 

Total long-term liabilities

 

86,407

 

 

82,181

 

Total liabilities

 

182,925

 

 

168,642

 

Commitments and contingencies

Equity

Preferred Stock—Authorized 150,000 shares, no shares issued or outstanding at

June 30, 2023 and December 31, 2022

 

 

 

 

Common Stock—no par value 25,000,000 shares authorized, 20,243,756 and 20,107,014

shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively

 

134,239

 

 

133,289

 

Paid-in capital

 

4,621

 

 

4,266

 

Retained deficit

 

(72,882

)

 

(73,338

)

Accumulated other comprehensive loss

 

(5,127

)

 

(5,822

)

Equity attributable to shareholders of Manitex International

 

60,851

 

 

58,395

 

Equity attributed to noncontrolling interest

 

9,615

 

 

9,566

 

Total equity

 

70,466

 

 

67,961

 

Total liabilities and equity

$

253,391

 

$

236,603

 

MANITEX INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except for share and per share amounts)

(Unaudited)

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Net revenues

$

73,534

 

$

69,577

 

$

141,405

 

$

129,997

 

Cost of sales

 

58,599

 

 

57,210

 

 

112,060

 

 

107,505

 

Gross profit

 

14,935

 

 

12,367

 

 

29,345

 

 

22,492

 

Operating expenses

Research and development costs

 

837

 

 

720

 

 

1,651

 

 

1,436

 

Selling, general and administrative expenses

 

10,766

 

 

11,431

 

 

21,797

 

 

19,877

 

Transaction costs

 

-

 

 

1,886

 

 

-

 

 

2,199

 

Total operating expenses

 

11,603

 

 

14,037

 

 

23,448

 

 

23,512

 

Operating income (loss)

 

3,332

 

 

(1,670

)

 

5,897

 

 

(1,020

)

Other income (expense)

Interest expense

 

(1,896

)

 

(1,068

)

 

(3,661

)

 

(1,573

)

Interest income

 

-

 

 

1

 

 

-

 

 

3

 

Foreign currency transaction gain (loss)

 

(718

)

 

142

 

 

(773

)

 

93

 

Other income (expense)

 

21

 

 

724

 

 

(737

)

 

988

 

Total other income (expense)

 

(2,593

)

 

(201

)

 

(5,171

)

 

(489

)

Income (loss) before income taxes

 

739

 

 

(1,871

)

 

726

 

 

(1,509

)

Income tax expense (benefit)

 

207

 

 

232

 

 

220

 

 

364

 

Net income (loss)

 

532

 

 

(2,103

)

 

506

 

 

(1,873

)

Net income (loss) attributable to noncontrolling interest

 

128

 

 

154

 

 

49

 

 

154

 

Net income (loss) attributable to shareholders of Manitex International, Inc.

$

404

 

$

(2,257

)

$

457

 

$

(2,027

)

Income (loss) per share

 

Basic

$

0.02

 

$

(0.10

)

$

0.02

 

$

(0.09

)

Diluted

$

0.02

 

$

(0.10

)

$

0.02

 

$

(0.09

)

Weighted average common shares outstanding

Basic

 

20,206,919

 

 

20,058,966

 

 

20,164,486

 

 

20,012,735

 

Diluted

 

20,209,959

 

 

20,058,966

 

 

20,166,968

 

 

20,012,735

 

Net Sales and Gross Margin

Three Months Ended

June 30, 2023

March 31, 2023

June 30, 2022

As Reported

As Adjusted

As Reported

As Adjusted

As Reported

As Adjusted

Net sales

$

73,534

 

$

73,534

 

$

67,871

 

$

67,871

 

$

69,577

 

$

69,577

 

% change Vs Q1 2023

 

8.3

%

 

8.3

%

% change Vs Q2 2022

 

5.7

%

 

5.7

%

 

Gross margin

 

14,935

 

 

14,935

 

 

14,410

 

 

14,257

 

 

12,367

 

 

12,367

 

Gross margin % of net sales

 

20.3

%

 

20.3

%

 

21.2

%

 

21.0

%

 

17.8

%

 

17.8

%

Backlog

Jun 30, 2023

Mar 31, 2023

Dec 31, 2022

Sep 30, 2022

Jun 30, 2022

 

Backlog from continuing operations

$

223,236

$

238,096

 

$

230,206

 

$

207,032

 

$

213,810

 

Change Versus Current Period

 

(6.2

%)

 

(3.0

%)

 

7.8

%

 

4.4

%

 

Backlog is defined as orders for equipment which have not yet shipped as well as orders by foreign subsidiaries for international deliveries. The disclosure of backlog aids in the analysis the Company's customers' demand for product, as well as the ability of the Company to meet that demand.

 

Backlog is not necessarily indicative of sales to be recognized in a specified future period.

Reconciliation of Net Income (Loss) Attributable to Shareholders of Manitex International, Inc. to Adjusted Net Income

 

Three Months Ended

June 30, 2023

March 31, 2023

June 30, 2022

 

Net income (loss) attributable to shareholders of Manitex International Inc.

$

404

$

53

$

(2,257

)

Adjustments, including net tax impact

 

1,307

 

1,436

 

3,180

 

Adjusted net income (loss) attributable to shareholders of Manitex International Inc.

$

1,711

$

1,489

$

923

 

 

Weighted diluted shares outstanding

 

20,209,959

 

20,122,054

 

20,058,966

 

 

Diluted earnings (loss) per share as reported

$

0.02

$

-

$

(0.10

)

Total EPS effect

$

0.06

$

0.07

$

0.15

 

Adjusted diluted earnings (loss) per share

$

0.08

$

0.07

$

0.05

 

 

Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA

 

Three Months Ended

June 30, 2023

March 31, 2023

June 30, 2022

 

Net Income (loss)

$

532

 

$

(26

)

$

(2,103

)

Interest expense

 

1,896

 

 

1 ,765

 

 

1,068

 

Tax expense

 

207

 

 

13

 

 

232

 

Depreciation and amortization expense

 

2,869

 

 

3,052

 

 

2,772

 

EBITDA

$

5,504

 

$

4,804

 

$

1,969

 

 

Adjustments:

Stock compensation

$

589

 

$

766

 

$

582

 

FX

 

718

 

 

55

 

 

(142

)

Pension settlement

 

-

 

 

487

 

 

-

 

Litigation / legal settlement

 

-

 

 

324

 

 

351

 

Severance / restructuring costs

 

-

 

 

-

 

 

1,223

 

Gain on sale of building

 

-

 

 

-

 

 

(672

)

Rabern transaction costs

 

-

 

 

-

 

 

1,886

 

Valla Earnout

 

-

 

 

-

 

 

(33

)

Other

 

-

 

 

(153

)

 

12

 

 

Total Adjustments

$

1,307

 

$

1,479

 

$

3,207

 

 

Adjusted EBITDA

$

6,811

 

$

6,283

 

$

5,176

 

 

Adjusted EBITDA as % of sales

 

9.3

%

 

9.3

%

 

7.4

%

Net Debt

June 30, 2023

March 31, 2023

June 30, 2022

Total cash & cash equivalents

$

7,302

$

10,135

$

16,795

 

Notes payable - short term

$

23,857

$

21,237

$

20,373

Current portion of finance leases

 

555

 

532

 

470

Notes payable - long term

 

21,585

 

21,970

 

24,317

Finance lease obligations - LT

 

3,093

 

3,239

 

3,656

Revolver, net

 

45,982

 

49,190

 

46,645

Total debt

$

95,072

$

96,168

$

95,461

 

Net debt

$

87,770

$

86,033

$

78,666

Net debt is calculated using the Consolidated Balance Sheet amounts for current and long-term portion of long-term debt, capital lease obligations, notes payable, and revolving credit facilities minus cash and cash equivalents.

 

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