Q1 2021 Manitex International Inc Earnings Call
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Greetings and welcome to the Manitex International incorporated first quarter 2021 results conference call. During the presentation, all participants will be in a listen only mode. Afterwards, we will conduct a question and answer session at that time, if you have a question.
The press the one followed by the for on your telephone.
If at any time during the conference you need to reach an operator, Please press star and zero as a reminder, this conference is being recorded.
I'd now like to turn the conference over to Steve Philip of Chief Executive Officer. Please go ahead.
Thank you operator, good afternoon, ladies and gentlemen, and thank you for your continued interest in Manitex International I.
I hope everyone is safe and healthy and appreciate everyone, taking the time to listen to our call.
Good day on the call of me I have Joe <unk>, our CFO, who will discuss in more detail our financial results.
Please see our website or our release for replay instructions for this call, which will be available until May 13 2021.
Moving to slide two is our safe Harbor statement and remind you that everything we discuss the subject to change and described in our SEC filings for further guidance, although many risk factors associated with our company.
I will begin with the business update for our first quarter, followed by Jos who will present, a financial summary, after which we will welcome your questions.
Now, let's begin on slide three.
The global Manitex team delivered another good quarter of improvement and I want to thank our team for continuing to keep focus on the fundamentals of safety quality cost and delivery.
Our revenue has trended in the right direction with a 4% improvement over the fourth quarter of 2020, and our third consecutive quarter of consistent EBITDA improvement.
With over $100 million of backlog, you're seeing seeing of healthy recovery in global markets and all businesses are ramping up to meet this demand.
Our transformation strategy to develop our growth businesses. The knuckle booms everywhere platforms in electric vehicles is starting to gain significant traction and with our North American straight mass business now starting to turnaround we see of positive trends the growth in 2021 and beyond.
From an operational perspective, we continue to strengthen our COVID-19 safety protocols and have seen minor periodic shutdowns, but overall, we're seeing the majority of our markets returned to growth.
We are ramping up to meet increased demand across all businesses and as we ramp we were dealing with the daily challenges of availability and pricing of components.
We have an experienced management team who has dealt with the challenges in the past and we are confident we will mitigate them as best we can.
Joe will comment further on our liquidity and balance sheet for $28 million in total cash and credit availability, we feel of Manitex is on solid ground for our future growth plans.
Please turn to slide four.
All of our businesses experienced improved performance in Q1, and most notably was the straight mast market, which was the main driver of sequential growth after several quarters of market deterioration.
Many if not all of our dealers in North America are seeing improved quote activity.
The rental fleet utilization is improving customer sentiment is that pre pandemic highs and all of these are positive signs of an expected improvement in the North American Crane market for 2021.
Anecdotally, we know the utilization rates at some of our dealers have gone from the lows of 40% the north of 70%, which is a healthy indicator of activity in the markets our products serve.
Our manitex articulated crane sales team in North America for Mac is also gaining traction starting with an additional order for a follow on the military customer, but most importantly, we're seeing the specialized lifting market growing and tree care utilities, forming and waste.
Management.
Our PM group management team continues to make the necessary improvements to grow our businesses globally.
Demand from European markets in North America has led the backlog and sales growth at P. M for the past few months, but with strong exposure to commodities were also seeing an increase in the band coming from Chile, and Argentina, which are trending in the right direction for us.
Each of our top 10 geographic markets show good growth this year.
Demand for oil in the field aerial products is mainly driven by the sales and distribution plans. We implemented in 2020 and we are now seeing these improvements take hold and our top European markets, with Italy, France, Spain, and the U K, all showing positive growth for us.
Last one of at least we remain very excited about our zero emission valla products as demand for cleaner lifting technology is grading gaining traction and our team continues to deliver new products to the market with the new three six ton crane losses this quarter.
Our large European rental customers, who received their first units and are now placing them in the market.
Our valid team in the U S is making excellent inroads with new customers in the nuclear industry.
The real manufacturing facilities, the warehousing applications, we have much more upside with this business and we'll be launching several new products. Later this year to meet these growing new market applications.
Let me now turn it over to Joe the discuss our financial performance Joe.
Thanks, Steve Good afternoon, everyone and thank you for joining the call today.
<unk> five and six reflect our financial performance for the quarter. Please.
Please turn to slide five and I'll address my comments from the slides.
Our revenues for the quarter were $47 2 million, an increase of $4 four per cent compared to the $45 2 million for the fourth quarter of 2020 the.
The increase was driven mainly by higher sales of our straight mast cranes, and our Manitex business sales.
Sales of knuckle boom cranes at RPM business in Q1 were consistent with sales in Q4.
Our first quarter net losses for 0.8 million, a $1 million improvement from the fourth quarter net loss of $1 8 million.
The improvement was driven by higher gross margin of $400000 due to increased sales of $2 million as I mentioned and lower income tax expense of $600000.
The loss per share was for cents for Q1 compared to a loss of nine cents per share in Q4.
The adjusted net loss was zero point of $1 million or one cents loss per share for Q1.
We're doing adjusted net loss of $1 3 million for.
For <unk> seven per share in Q4.
Our gross margin was $8 8 million or $400000 higher than Q4, driven by the increased sales in Q1.
The increased gross margin is primarily due to the $2 million of higher sales of straight mast cranes, and our Manitex business unit.
The gross margin percentage was 18, 7% of sales for the quarter consistent with what we experienced in the fourth quarter.
The higher gross margin from the international sales was offset by higher cost of materials in the U S for the quarter and the mix of U S sales that was skewed to lower tonnage units, which typically have a lower gross margin.
As you can see from the chart, our gross margin continues to trend higher ASP.
The P M sales represent a growing portion of our total revenue.
As Steve mentioned and as has been noted throughout the industry.
Fly chain challenges, such as increasing steel costs and chassis availability for.
Situations that need to be monitored and we are doing that.
Our global purchasing sales and manufacturing teams are all doing an excellent job of managing through this environment.
As capacity starts to build again.
Operating expenses were $8 5 million for the quarter consistent with the expenses recorded in Q4 2020.
Operating expenses as a percentage of sales declined from 18, 8% for Q4 the.
The 18, 1% in Q1.
As we were able to leverage our existing expense base supporting the increased revenue for the quarter.
Increased insurance and incentive compensation expense during the quarter.
Were offset by lower consulting costs.
We will continue to take actions to maintain prudent expense control and.
And are targeting lower SG&A as a percentage of sales and our operating model.
Adjusted EBITDA was $1 9 million or three 9% of sales.
This is an increase of 24% of <unk> 4 million from the fourth quarter, which reported adjusted EBITDA of $1 5 million or three three percentage of sales.
The increase was driven by increased sales in our straight mast crane business.
Our backlog was approximately $84 million as of March 31.
An increased order activity in April took that backlog to $107 million.
This represents more than of 57% increase compared to December 31.
This increase was driven by higher orders across most business units.
Straight mast Crane, and articulating crane backlogs increased by nearly 70% for.
From December <unk>.
Backlog for aerial work platforms has increased by nearly 40% from December 31.
Now moving to slide seven for a net of net debt update for Q1 2021.
Net debt was approximately 31 million at quarter end, representing a $1 million increase from year end, consisting of traditional bank debt and our revolver.
The small increase was driven by an increase in short term financing from foreign currency movements.
The team is confident that the company will have the liquidity through cash and other credit lines open to meet each of these obligations.
Any others that are scheduled over the next 12 months.
We remain in compliance with all debt covenants.
At March 31 of the company had available liquidity of approximately $28 million consisting of $16 million of cash $10 million on the revolver and $2 million and working capital facilities.
With that I will now turn the call back to Steve.
Thanks, Joe Please turn to slide eight and let's turn our attention for our outlook for Q2 2021.
COVID-19 will continue to be top of mind for all of us of Manitex and while vaccination rates continue to show progress globally, we still have a long way to go and we will remain vigilant about our team's health and safety for the future.
As we've commented several times today, a record backlog of over $100 million gives us confidence and visibility of what we expect to be much improved financial results and 2021 over 2020, and we're excited to see that this demand is coming from all markets and across all <unk>.
Businesses.
We still have challenges to overcome as we ramp up to meet the growing demand, but I'm confident our management team is taking the right steps to mitigate any supply chain issues that arise.
We're also working with our customers and our dealers the deal with the current volatility in component pricing and taking the necessary actions to not dilute our margins.
We will turn challenges the opportunities and keep focused on delivering the best products for the market and making manitex of larger more diversified and more profitable company going forward.
With that operator could you. Please open the lines for the Q&A session.
Thank you.
Like most of your question. Please press the one followed by the for in a telephone you will hear is for you Tom prompted technology of request David.
The question has been answered anyway to withdraw the registration. Please press the one followed by the free.
One of them are pleased for the first question, which comes from the line of Mike Slutzky with Collyer of security. Please go ahead.
Good afternoon, guys good afternoon, Mike.
Question about the backlog looks great those quarter end in April 30th.
Yeah.
A big topic has been.
For the backlogs due to really strong demand for our there are are there a handful of unshipped cranes you wish you could have had but you couldn't you.
You couldn't ship by the.
At the end of the quarter because of chassis availability of other issues with the supply chain.
There any way you can kind of break out what you may have missed in the quarter from a revenue for us because it will come eventually, but just you know just still stuck in the backlog there.
Sure sure Mike Yeah, I mean, it's demand driven I'd say across the board there really.
Was it much of our that we missed from a production perspective in the first quarter.
And sitting here in the middle of the second quarter, you know, we're dealing daily with the supply chain challenges, but to be honest with you. Yeah. There are some areas that are getting better.
We're managing through them.
And demand still is strong across the board I think the the numbers that.
We mentioned, whether it's knuckle booms boom trucks aerials and even valla are all still today.
And of high demand. So I tried to talk a little bit about the markets, which are driving those and you know North America utility markets are strong the true.
Free care market is still very strong.
Obviously, a residential housing.
Of which continues to go up as strong so.
I think the demand is there now.
Obviously lead times now are getting a little bit longer. So people are getting ahead of.
Our customers are getting ahead of that but we feel pretty good about that backlog.
Of the continues to be strong.
And then just.
You mentioned, Joe that you're kind of monitoring the supply chain story.
Yeah, but you have not actually have faced any major challenges yet.
Does that is that a fair statement came out is the Sunday, we should definitely be concerned about for the second of third quarter here or just more of a.
Theoretical thing to watch for.
Sure no.
I would say Mike you.
In the first quarter, we talked about the steel volatility availability of B.
The you know an issue I would say you know we took the opportunity to buy forward on a at least from our steel steel suppliers.
And now I would say you know of skill is actually not been too bad from a delivery perspective from the suppliers.
I'll tell you I was on the operations call yesterday, and we had one of our suppliers of delivered two days early so.
That's a positive thing.
I would say you know that there there's always you know something missing today versus 12 months ago and are managing we're managing through that and as I said you know the the management team. We have in place is doing a great job to manage.
Our our our parts supply and I think we feel pretty good about where we are and I think the first quarter.
It demonstrates that even in that turmoil that we talked about we didn't do too bad you know the sequential revenues up 4% you know the EBITDA is up in the backlog is up but I think those are all leading indicators that give us confidence that 2021 shouldn't be all of that back.
Got it.
It's harder to hop on the backlog again, but one of my question in the backlog.
The five year high here as of April 30th.
Yeah, that's that's apples to apples the backlog that you're talking about on April 30th is obviously, just mainly straight mast and knuckle boom.
The history has you know a S V and low king of other companies that used to own in the past you're saying, it's the five year high just for the current line of today or is it based on the old copies of you also used to own.
When you look back over the last five years.
No I would say, it's like for like rate. So the product line. We just we're just comparing the product lines that we have.
The five you know we went back five years ago to your point the company was much different.
After that so we thought that was a good comparison, yeah. That's exactly right. Yeah, we we compared to the same product lines now that we had back then exactly.
But as you know.
Just making sure and maybe the last one for me.
You asked two of you had mentioned, Steve you know potential for positive growth in 2020, one and beyond some of it.
The a kind of a multi year story here.
What gives you the confidence that there is a multi year of tailwind across both of the businesses.
Well I think you know the.
The obviously the backlog.
Substantiates you know the the markets that we're in the products that we build and the customers you know that the end markets I should say the we deliver two are pretty strong right now and that gives us the confidence that you know not only in 2021, but in 'twenty 'twenty two we see positive growth.
I remember that we talk about our knuckle boom market globally. That's 50000 units is growing we're gaining share in some markets and we're ramping up there's a lot more opportunity for us to grow the knuckle booms of we as we've mentioned before.
The boom truck business in the North America, and North America is coming from a pretty low base. So that is going to continue to grow and as I've mentioned before we feel that that business should stabilize between 1000 to 200 units in North America coming off of a low of 700 or so.
Or so units then you have the aerials business, which we mentioned.
It was up significantly in the backlog and we're growing share in that business and launching new products of Valla is in our mind really just with zero emissions and everything going on around ESG is really just in its infancy and we're already seeing good.
Traction there so I'm pretty confident the 2021 is going to be better than 2020 in 2020 two should be better than 2021 at least that's the the focus of we have today.
Excellent. Thanks, so much I will pass it along.
Great I appreciate it Mike.
As a reminder to register for the question now. Please first the one followed by the for on your telephone keypad.
Yeah.
Is there anything further there operator questions.
Well, we do have a follow up question from the line of Mike. So the ski with colony of Securities. Please go ahead.
Hey, guys. If it's just me I'll keep going while we're on the phone here I'm. Just curious how you can can you update us on how its going over in Asia.
What's the Dino and efforts to kind of grow there.
Yeah, Mike I'd say you know.
Were down year over year on revenue with Toronto, because we had a big of shipment, which we I think mentioned in the first quarter last year to the middle East obviously.
The the the Asian markets have been open and closed the <unk>.
Past six to eight months, so I would say, it's still a it's okay, but we.
We need a little bit more runway there to see how these markets are going to take off and you know I mentioned about moving into Australia with the Toronto team you know, we're still working on the plans for that so you know we're going to keep working it at the end of the day, our Europe North America Latin and.
Erica.
Middle East of certain extent are the real focus markets for for us and we see those gaining ground again in the knuckle boom.
Business.
Okay got it well that was it thanks guys I appreciate it.
Thanks, Mike.
Okay.
Okay.
There are no further questions of this time I will now turn the call back to you. Please continue with the presentation and the closing remarks.
Okay. Thank you very much operator, and the thank you everyone for your interest in <unk>.
The Manitex. We appreciate your time today and again, we feel good about where we are of the complex.
Business environment, but we feel like we've got a strong backlog of over $100 billion and confident that we'll be able to deliver growth in 2021 and beyond so thank you all very much we appreciate it.
Yeah.
That does conclude the conference call for today, we thank you for your participation and ask you to please disconnect your line.
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