Manitex International Inc. Q1 2023 Earnings Call

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This call is being recorded on Thursday may 4th Street.

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Thank you.

Welcome to Manitex International's first quarter of 2023 results conference call we can.

Call today are C E O Michael copy and CFO Joseph.

We issued a press release earlier today detailing our first quarter operational and financial results.

[noise] release together with accompanying presentation materials are publicly available and the Investor Relations section of our corporate website at Www Dot Manitex International Dot com.

I would like to remind you that managements commentary and responses to questions on today's conference call May include forward looking statements.

Which by their nature are uncertain and outside of the companies control.

For a discussion of some of the factors that could cause results to differ please.

Please refer to the risk factor section of our latest filings with the SEC.

Additionally, please note that you can find reconciliations up historical non-GAAP financial measures and the press release issued earlier today and in the appendix of this presentation.

Today's call will begin with prepared remarks from CEO , Michael Coffee will provide a review of a recent business performance, including an update on the progress we have made on our new elevating excellence initiatives.

Followed by a financial update and outlook from our CFO Joseph.

At the conclusion of these prepared remarks, we will open the lines for questions with that I'll turn the call over to Mike.

Thank you Paul.

And good morning to everyone joining us a call today.

If you can turn your attention to page three of our presentation.

Guin with key highlights from our first quarter.

First quarter revenue and EBITDA came in ahead of expectations.

Highlighted by strong new order momentum.

Continued margin expansion and solid execution against are elevating excellence value creation initiatives.

During the first quarter sales momentum increased with each successive much.

New orders in the quarter contribute to a 16% year over year increase in quarter and backlog.

First quarter revenue increased 12% over last year, largely owing two year over year.

Addition of Grapevine rentals.

Manufacturing sales increased modestly in the quarter.

Whoever as Joe will discuss shortly.

First quarter revenue was impacted by a decline and pass through sales of truck chassis.

Which carry very low gross margins.

While this will modestly impede our top line growth during the rest of the year.

Anticipate gross margin improvements as a result.

We continue to experience strong demand and lifting equipment products in both North America, and Europe , driven by elevated activity levels across key in markets, such as transportation and infrastructure ups.

This improved and market demand and favorable customer reception was evident.

Customer interest in our full line of products is robust.

Which are not reflected in our first quarter closing backlog.

In fact, we sold every piece of equipment that we have on site Las Vegas.

This never happened before.

Grateful for the vote of confidence in our products.

A rental segment, which is represented by a rabid rentals.

Another strong resolved in the first quarter.

We benefited from the launch of our new Lubbock, Texas location.

Which opens at stores in March.

This represents our fourth rental location in northern Texas.

Where construction activities robust.

Rental focused equipment.

During the first quarter, we continued to make significant progress on our productivity and efficiency initiatives across the organization.

Which resulted in strong year over year margin improvement.

These actions include a focus on resource optimization.

Improvements to our procurement and supply chain management.

And increased fixed costs absorption.

These delays primarily affected north American manufacturing and were specifically impacted by our steel and fabricated product suppliers.

And up nearly 200 basis points from the fourth quarter.

This occurred despite normal seasonal headwinds typically are typical for the first quarter.

In addition.

To the margin benefits, resulting.

As our key in markets, such as infrastructure nonresidential construction energy and mining remain robust.

We are also seeing global demand for minerals, such as copper improve capital good spend.

Many of our vertical continued to see favorable demand tailwinds.

Which will be focused on company called lifting equipment product categories that can be marketed.

Pricing increases and our new Lubbock branch, which opened in March.

Translated into meaningful margin expansion.

At the same time, we still have considerable opportunities to further improve our operating performance.

And 2000 twenty-three R capital allocation strategy will continue to prioritise debt reduction.

Adjusted net income was $1.4 million or 70 per diluted share in the first quarter of 2003.

Up from adjusted net income of 900000 or five cents per diluted share in the same period last year.

Just at net income for the first quarter of 2003 excludes $800000 of stock compensation expense.

And approximately $700000 of other nonrecurring expenses.

Now turning to our balance sheet on slide 12.

As of March 31st 2023, total that was $96 $2 million.

Compared to $93 million at the end of the fourth quarter of 2002.

Going to normal seasonal working capital uses an increase purchases of rental fleet for the Rayburn business.

Cash and cash equivalents as of March 31, 10 $1 million <unk>.

Resulting in a net data of $86 million compared to $82.1 million at the end of the fourth quarter of 2002.

As a result of the strong operating results net leverage improved to three five times at the end of the first quarter of 2003.

Compared to three nine times at the end of the fourth quarter of 2002.

As of March 31st total liquidity was $36 $6 million.

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As Mike detailed during 2023, we expect to grow adjusted EBITDA and the low double digit percentage range compared to $21.3 million and adjusted EBITDA that we reported in 2022.

Our target is supported by continued new order momentum.

Optimism on and market trends.

Well as expected margin improvements, resulting from our elevating excellence initiatives.

That completes our prepared remarks, operator, we are now ready for the question and answer portion of our call.

Thank you.

The same gentleman, who will now begin the question and answer session. Sure you have a question. Please press star one if you want to withdraw your question. Please press start to.

Your questions will be fault indoors or they are received.

You are you seeing a speaker phone please.

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Police for your first question.

Your first question comes from macro Rhonda from Brooklyn, Mmk him. Please go ahead.

Hey, guys, it's magazine burnt onto Matt.

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Hey, Joe I guess, just the first one bargains so gross margins surprised nicely the upside I believe we called out Martin your benefits from operational improvements in <unk>.

<unk> higher pricing now obviously, we're <unk>. We're also running off the higher revenue base, but could you just maybe quantify or a stack rank those inputs in regards to this.

This this quarter's gross margin growth.

Yeah. Thanks I appreciate the question. This is my coffee so.

I think.

The production revenue in.

In units did not increase drastically in the first quarter based on mix and seasonal activity, which is.

Common to the business so the big inputs were really the.

The relative.

Lack of chassis, which are low margin contributors.

Pricing improvement is.

Number one it's the it's the weighted average influence on margin improvement, where we're actually working off of improve pricing.

And.

Margins are improving as a result, and then I would say the process and supply chain initiatives are beginning to have positive influences on the margins.

Got it that's great great to hear and and given give them a nice surprise and gross margins. This quarter, how do we feel about Martin cadence for the rest of the year.

Holding fly from here I I assume we dip a little bit in Q3 due to the <unk> European shutdowns, but just how should we think about how gross margin ramps throughout the rest of the year.

Well, we're still we're still facing supply chain headwinds that are normal for every manufacturer, we're making some victories there but last quarter's we mentioned in the press release, we had a tremendous difficulty with suppliers of steel and fabricated products.

And if you look at the commoditize.

Cost of steel it's increased a lot in the first quarter. So we are we are optimistic about our ability to improve margins it'll be a little bit of a roller coaster, but.

We're not we're still looking at a three to five point improvement.

From where we closed last year. So historically, if you think about the business before Covid. This is a business that was performing at about 19% gross profit margin.

And the acquisition of Rayburn helped us to return to historic margins quicker.

And manufacturing has been improving steadily quarter over quarter. Its margin performance. So we're looking at continuing to improve our gross margin profit profitability through the year and with pricing and these initiatives taking hold we feel we.

We feel good about our potential to do that.

Got it makes sense said <unk> last one from you guys great to hear the positive feedback from Carnac style on that 85 County electric <unk>. The press release cause that's a record new orders that are entirely reflected in the backlog could.

Could you just maybe clarify exactly what we mean here are the non reflected orders for are those just for the 85 ton and electric rain and just in general when do we expect to those orders to reflect on the backlog.

We're working on production schedules and so there's two things that.

We're trying to balance firstly, we want to make certain that.

These new products can be distributed throughout our dealer base.

And we had a few dealers that.

Placed significant orders that we haven't confirmed yet because we feel like.

There should be a distribution of the products amongst our dealers.

So I'm expecting that these will be confirmed before the next quarter call, but we are really really thrilled with the positive feedback.

Both of these products head.

Got it that's helpful I'm glad to hear that's all from you guys. Thanks.

Alright, thanks, so much.

Thank you.

There are no further questions at this time.

Remembers to ask her questions. Please first or one.

You May proceed.

Operator did we have another question or.

No <unk> no further <unk>, giving you may proceed very okay very good well. Thank you very much for hosting the call and we'd like to thank everyone for participating.

Joe and I will be participating in several investor invents in the coming months.

Including the Sidoti small cap conference, which is scheduled made attempt.

If we don't get a chance to connect during the quarter, we hope and look forward to meeting with you during our next quarterly call.

As always we want to thank everyone for your time and interest in Manitex and this will conclude our call. Thank you very much.

Yeah.

Ladies and gentlemen, this concludes your questions call for today, we thank you for participating and ask that you. Please disconnect your lines.