Q1 2024 Manitex International Inc Earnings Call
Operator: Good morning, ladies and gentlemen. Welcome to Manitex International's first Quadrant 2024 results conference call. At this time, all lines are in listen only. While we're doing the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. And this call is being recorded on Thursday, May 2nd, 2024. I would now like to turn the conference over to Paul Bartolai from Ballum Advisors. Please go ahead.
Good morning, ladies and gentlemen, and welcome to the Manitex International first quarter 2024 results conference call.
Paul Bartolai: At this time all lines are in listen only mode.
Paul Bartolai: Following the presentation, we will conduct a question and answer session.
Paul Bartolai: Any time during this call you acquire immediate assistance. Please press star Zero 40, operator.
Paul Bartolai: And this call is being recorded on Thursday may 2nd 2024.
Paul Bartolai: I would now like to turn the conference over to Paul Paul I from Ballroom Advisors. Please go ahead.
Paul Bartolai: Thank you. Good morning, everyone, and welcome to Manitex International's first quarter 2024 results conference call. Leading the call today are CEO Michael Coffey and CFO Joseph Doolan. We issued a press release earlier today detailing our first quarter 2024 operational and financial results. This release, together with the accompanying presentation materials, is publicly available in the investor relations section of our corporate website at www.manitexinternational.com. I would like to remind you that management's 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 company's control.
Paul Bartolai: Thank you good morning, everyone and welcome to Manitex International's first quarter 2024 results conference call.
Paul Bartolai: Leading the call today are CEO, Michael coffee and CFO Joseph do it.
Paul Bartolai: We issued a press release earlier today detailing our first quarter 2020 for operational and financial results.
Paul Bartolai: This release together with the accompanying presentation materials.
Paul Bartolai: Available in the Investor Relations section of our corporate website at Www Dot Manitex International Dot com.
Paul Bartolai: Although these forward-looking statements are based on management's current expectations and beliefs, actual results could differ materially. For a discussion of some of the factors that could cause actual results to differ, please refer to the risk factors section of our latest filings with the SEC. Additionally, please note that you can find reconciliations of historical non-GAAP financial measures in a press release issued earlier today and in the appendix of this presentation. Today's call will begin with prepared remarks from CEO Michael Coffey, who will provide a review of our recent business performance, including an update on the progress we have made on our new Elevating Excellence Initiative, followed by a financial update and outlook from our CFO, Joseph Doolan. At the conclusion of these prepared remarks, we will open the line for your questions. With that, I'll turn the call over to Mike.
Paul Bartolai: I would like to remind you that management's 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 company's control.
Paul Bartolai: Although these forward looking statements are based on management's current expectations and beliefs actual results could differ materially.
Paul Bartolai: For a discussion of some of the factors that could cause actual results to differ.
Paul Bartolai: Please refer to the risk factors section of our latest filings with the SEC.
Paul Bartolai: Additionally, please note that you can find reconciliations of historical non-GAAP financial measures in our press release issued earlier today and in the appendix of this presentation.
Michael David Zabran: Today's call will begin with prepared remarks from CEO Michael coffee.
Michael David Zabran: We'll provide a review of our recent business performance, including an update on the progress we've made on our new elevating excellence initiative.
Paul Bartolai: Followed by a financial update and outlook of our CFO Joseph do it.
Michael David Zabran: At the conclusion of these prepared remarks, we will open the line for your questions with that I'll turn the call over to Mike.
Michael David Zabran: Thank you, Paul, and good morning to everyone joining us on the call today. I am very pleased with our strong start to the year as we delivered solid first quarter results, highlighted by an 8%... Organic Revenue Growth and Margin Expansion Owing to Operational Improvements Made Last Year. As a result... Our first quarter EBITDA increased 33% year over year. We are performing at a high level and building a track record of successful execution, consistent with the priorities outlined within our Elevating Excellence Value Creation Strategy.
Michael David Zabran: Thank you Paul and good morning to everyone joining us on the call today.
Michael David Zabran: I am very pleased with our strong start to the year as we delivered solid first quarter results.
Michael David Zabran: Highlighting highlighted by an 8% organic revenue growth and margin expansion owing to operational improvements made last year.
Michael David Zabran: As a result.
Michael David Zabran: Our first quarter EBITDA increased 33% year over year.
Michael David Zabran: We are performing at a high level and building a track record of successful execution.
Michael David Zabran: Consistent with the priorities outlined within our elevating excellence value creation strategy.
Michael David Zabran: With that, please turn your attention to page 3 of our presentation, where we will begin with a discussion of our first quarter performance. Despite macroeconomic uncertainty, we delivered strong organic growth during the first quarter. Our first quarter lifting equipment revenue increased 8%, driven by strong growth from our North American operations. The improved output is a result of new processes put in place during 2023, an important aspect to our commercial growth strategy to drive increased adoption of our PM group portfolio of articulated crane products in North America. We are in active discussions with several new dealer partners to adopt the PM knuckle boom cranes into their product offerings.
Speaker Change: With that please turn your attention to page three of our presentation.
Speaker Change: Well, we will begin with a discussion of our first quarter performance.
Michael David Zabran: Despite macroeconomic uncertainty we delivered strong organic growth during the first quarter.
Michael David Zabran: Our first quarter lifting equipment revenue increased 8%.
Michael David Zabran: Driven by strong growth from our North American operations.
Michael David Zabran: The improved output as a result of new processes put in place during 2023.
Michael David Zabran: An important aspect to our commercial growth strategy.
Michael David Zabran: Is to drive increased adoption of our PM group portfolio of articulating Crane products in North America.
Michael David Zabran: We are in active discussions with several new dealer partners to adopt the PM knuckle boom cranes into their product offering.
Michael David Zabran: This is part of our Elevating Excellence Strategy in 2024, and the discussions to date have been very promising. Last month, we announced the launch of our newest offering from the PM Group, the PM 70.5 Articulated Truck Mounted Crane.
Michael David Zabran: This is part of our elevating excellent strategy in 2024.
Michael David Zabran: And the discussions to date had been very promising.
Michael David Zabran: Last month, we announced the launch of our newest.
Michael David Zabran: Offering from the PM group.
Michael David Zabran: The PM 70.5 articulated truck mounted crane.
Michael David Zabran: The model was designed for global use, and we are looking forward to launching this innovative product in North America later this year. We expect that this product will be integral in expanding our distribution of PM groups, our PM group products in North America. We had another solid quarter in our rental segment as well. Revenues were up 9% in the first quarter as demand trends in North Texas and the associated markets remain robust.
Michael David Zabran: The model was designed for global use.
Michael David Zabran: But we are looking forward to launching this innovative product in North America later this year.
Michael David Zabran: We expect that this product will be integral in our expanding our distribution of PM groups, our PM group products in North America.
Michael David Zabran: Yeah.
Michael David Zabran: We had another solid quarter in our rental segment as well revenues were up 9% in the first quarter as demand trends in North Texas.
Michael David Zabran: And the associated markets remain robust.
Michael David Zabran: Our Lubbock location just finished its first full year of operation, and we are very pleased with the progress at this new location, as it pertains to elevating excellence, a three-year value creation strategy. You may recall that we labeled 2023, The Year of Process Improvement for our company because our company needed to update its systems and processes before considering capital expansion projects.
Michael David Zabran: Our Lubbock location just finished its first full year of operation.
Michael David Zabran: And we are very pleased with the progress at this newest location.
Michael David Zabran: As it pertains to elevating excellence.
Michael David Zabran: Alright, three year value creation strategy.
Michael David Zabran: Recall that we labeled 2023.
Michael David Zabran: The year of process improvement.
Michael David Zabran: Our company.
Michael David Zabran: Our company needed to update its systems and.
Michael David Zabran: And processes before considering capital expansion projects.
Michael David Zabran: We worked hard on this, upgrading two ERP systems, implementing Global Standards, a New Balance Scorecard, all while improving operating processes. These investments were designed to prepare Manitex for scale, improve our efficiency, and attain Margin Attainment. The results have been promised. First quarter gross margins were up nearly 180 basis points from the same period last year.
Michael David Zabran: We worked hard on this up.
Michael David Zabran: Upgrading to.
Michael David Zabran: ERP systems implementing global standards.
Michael David Zabran: A new balanced scorecard, all while improving operating processes.
Michael David Zabran: These investments were designed to prepare manitex for scale.
Michael David Zabran: Improve our efficiency.
Michael David Zabran: And margin attainment.
Michael David Zabran: The results have been promising.
Michael David Zabran: First quarter gross margins were up nearly 180 basis points from the same period last year.
Michael David Zabran: The progress made is a direct result of our Elevating Excellence Initiative, as well as business transformations that are underway. I am particularly excited by the cost reductions we are beginning to realize from our sourcing and supply chain measures. Cost increases from supply chain pressures have been a constant headwind for both Manitex and the industry. Last year, we reorganized our global supply chain structure.
Michael David Zabran: The progress made is a direct result of our elevating excellence initiatives as well as business transformations that are underway.
Michael David Zabran: I am, particularly excited by the cost reductions, we are beginning to realize from our sourcing and supply chain measures.
Michael David Zabran: Cost increases from the supply chain pressures had been a constant headwind for both manitex and the industry.
Michael David Zabran: Last year, we reorganized our global supply chain structure.
Michael David Zabran: We implemented new initiatives, and our team's work is now producing positive results. New suppliers have been added, and we are following a collaborative and coordinated approach. We began to see meaningful results in the first quarter, and we look forward to further efficiencies as the year progresses. Our balanced sales growth and operational improvements enabled us to generate first quarter adjusted EBITDA of $8.4 million, an increase of more than 33% from the same period last year. Our adjusted EBITDA margin was 11.4% during the first quarter, up nearly 220 basis points.
Michael David Zabran: We implemented new initiatives and our teams work are now producing positive results.
Michael David Zabran: New suppliers have been added and we are following the collaborative and coordinated approach.
Michael David Zabran: We began to see meaningful results in the first quarter.
Michael David Zabran: And look forward to further efficiencies as the year progresses.
Michael David Zabran: Our balanced sales growth and operational improvements enabled us to generate first quarter adjusted EBITDA.
Michael David Zabran: <unk> $8 4 million.
Michael David Zabran: An increase of more than 33% from the same period last year.
Michael David Zabran: Our adjusted EBITDA margin was 11, 4% during the first quarter up nearly 220 basis points.
Michael David Zabran: We are proud of this result, as it represents the second highest quarterly adjusted EBITDA margin performance in the past five years. This is particularly notable given that it came from the seasonally adjusted, slower first quarter. During the last few quarters, our backlog has declined, but the decline is coming from a historically high post-COVID level.
Michael David Zabran: We are proud of this result.
Michael David Zabran: As it represents the second highest quarterly adjusted EBITDA margin performance in the past five years.
Michael David Zabran: This is particularly notable given that it came from the seasonally adjusted slower first quarter.
Michael David Zabran: During the last few quarters, our backlog has declined.
Michael David Zabran: The decline is coming from a historically high post COVID-19 level.
Michael David Zabran: As we've reported previously, lower backlog is due to improved production velocity, as well as the elimination of certain lower-margin products from our portfolio. Our order-to-delivery timelines have shortened, a much-welcomed trend that has enabled us to improve customer satisfaction as well as margin attainment. However, the lower backlog is also the result of market unease. Dealers have been delaying new orders as they assess the impact of interest rates, as well as inflationary pressures facing their businesses and their customers.
Michael David Zabran: As we've reported previously lower backlog is due to improved production velocity.
Michael David Zabran: As well as the elimination of certain lower margin products from our portfolio.
Michael David Zabran: Our order to delivery timelines have shortened a much welcome trend.
Michael David Zabran: That has enabled us to improve customer satisfaction as well as margin attainment.
Michael David Zabran: However.
Michael David Zabran: The lower backlog is also the result of market on knees.
Michael David Zabran: Dealers had been delaying new orders as they assess the impact of interest rates.
Michael David Zabran: As well as inflationary pressures facing their businesses and their customers.
Michael David Zabran: While we are seeing these near-term headwinds, this is offset by powerful spending drivers in infrastructure, power generation, and government works, which are now just being let into the market. For example, just last week, we delivered a series of new cranes to a southwestern U.S. utility company, as they are preparing for system-wide updates as well as service expansion. We do expect infrastructure projects, in particular, to bolster demand as government works projects begin. However, we have witnessed a decline in new order intake.
Michael David Zabran: Well, we are seeing these near term headwinds. This is offset by powerful spending drivers in infrastructure power generation and government works, which are now just being let into the market.
Michael David Zabran: For example, just last week, we delivered a series of new cranes to southwestern U S utility company.
Michael David Zabran: As they are preparing for system wide updates as well as service expansion.
Michael David Zabran: We do expect infrastructure projects in particular to bolster demand as government works projects begin.
Michael David Zabran: We have witnessed a decline in new order intake.
Michael David Zabran: But we are expecting this tool to correct itself as dealer inventories remain low and overall rental utilization has been healthy. In the meantime, Manitex is taking an aggressive position on our overall market. We are aiming to grow our share through 2025, and we will continue to improve our operations, supply chain, efficiency, and margins in keeping with our strategy. The current backlog ranges between six and eight months, depending on the product category.
Michael David Zabran: But we are expecting this tool correct itself as dealer inventories remain low and overall rental utilization has been healthy.
Michael David Zabran: In the meantime, Manitex is taking an aggressive position on our overall market.
Michael David Zabran: We're aiming to grow share through 2025.
Michael David Zabran: And we will continue to improve our operations supply chain efficiency and margins and keeping with elevating excellence and our strategy.
Michael David Zabran: Current backlog ranges between six and eight months, depending on the product category.
Michael David Zabran: This is a healthy level of backlog providing ample work to fill capacity at our plant while providing us with visibility well through the end of the year. In 2023, we released Elevating Excellence, and it's becoming clear that this is proving to be the right strategy for Manitou.
Michael David Zabran: It is a healthy level of backlog, providing ample work to fill capacity at our plants.
Michael David Zabran: We're all providing us visibility well through the end of the year.
Michael David Zabran: In 2023, we released elevating excellence.
Michael David Zabran: And it is becoming clear that this is proving to be the right strategy for manitex.
Michael David Zabran: We are tracking ahead of schedule, and our work last year directly contributed to our first quarter results. We are very pleased with our first quarter adjusted EBITDA margin of 11.4%, which brings our trailing 12-month adjusted EBITDA margins to nearly 11%. This is putting us nicely on track to achieve our 2025 target. I'm very proud of the management team at Manitex and its employees, and their work last year and this year has been exceptional.
Michael David Zabran: We are tracking ahead of schedule and our work last year directly contributed to our first quarter results.
Michael David Zabran: We are very pleased with our first quarter adjusted EBITDA margin of 11, 4%.
Michael David Zabran: Which brings our trailing 12 months adjusted EBITDA margins to nearly 11%.
Michael David Zabran: This is putting us nicely on track to achieve our 2025 targets.
Michael David Zabran: I'm very proud of the management team at Manitex and its employees and their work last year and this year, it's been exceptional.
Michael David Zabran: Joe will provide some more detail regarding our capital allocation strategy, but suffice it to say, we are very pleased that our leverage ratio of 2.7 times remains below our targeted range. We are positioned for a strong year of cash flow conversion as we expect to reduce our working capital levels, allowing us to drive further reduction in net leverage. Looking to the remainder of the year, conditions remain solid across our key end markets.
Michael David Zabran: Joe will provide some more detail regarding our capital allocation strategy.
Michael David Zabran: Suffice it to say we are very pleased that our leverage ratio of two seven times remains below our targeted range.
Michael David Zabran: We are positioned for a strong year of cash flow conversion.
Michael David Zabran: As we expect to reduce our working capital levels, allowing us to drive further reduction in net leverage.
Michael David Zabran: Looking to the remainder of the year conditions remains solid across our key end markets our products and solutions are resonating with our customers.
Michael David Zabran: Our products and solutions are responding to our customers, and we see opportunity to further reduce costs within our business, supporting profitable growth. To that end, we are reiterating our full year 2024 financial guidance. And with that, I'd like to turn it over to Joe.
Michael David Zabran: And we see opportunity to further reduce costs within our business supporting profitable growth.
Joe: To that end, we are reiterating our full year 2024 financial guidance.
Michael David Zabran: And with that I'd like to turn it over to Joe.
Joseph R. Doolan: Thank you, Mike, and good morning, everyone. I will provide some additional details on the quarter, give an update on our liquidity and balance sheet, and conclude with commentary around our outlook for 2024. Turning to slide 9, net revenue for the first quarter of 24 was $73.3 million, an increase of 8.1% compared to the same period last year. The growth during the first quarter was all organic and was driven by solid growth from the U.S. operations, as well as continued strength in our rental operation. As expected, truck chassis sales were down only modestly from last year and had a negligible impact on the revenue comparison during the first quarter, and we expect this to be the case moving forward throughout 2024.
Joe: Thank you, Mike and good morning, everyone I will provide some additional details on the quarter give an update on our liquidity and balance sheet and conclude with commentary around our outlook for 2024.
Joseph R. Doolan: Lifting equipment segment revenue was $66.0 million during the first quarter, an increase of 7.9% versus the prior year period, with growth driven by the U.S. operation. Rental equipment segment revenue was $7.4 million in the first quarter of 2024, driven by continued positive momentum in our North Texas markets, including contribution from our Lubbock, Texas location, which opened in March of 2023. In the year since we opened LUTIC, we continue to see activity in our facility grow, and volumes have remained strong. As we have discussed, we took a pause in fleet expansion in 2023.
Joseph R. Doolan: Turning to slide nine net revenue for the first quarter of 2004 was $73 3 million an increase of eight 1% compared to the same period last year.
Joseph R. Doolan: The growth during the first quarter was all organic and was driven by solid growth from the U S operations as well as continued strength in our rental operations.
Joseph R. Doolan: As expected truck chassis sales were down only modestly from last year.
Joseph R. Doolan: <unk> had a negligible impact on the revenue comparison during the first quarter and we expect this to be the case moving forward throughout 2024.
Joseph R. Doolan: Lifting equipment segment revenue was $66 million during the first quarter, an increase of seven 9% versus the prior year period with growth driven by the U S operations.
Joseph R. Doolan: Rental equipment segment revenue was $7 4 million in the first quarter of 'twenty four driven.
Joseph R. Doolan: Driven by continued positive momentum in our north, Texas markets, including contribution from our Lubbock, Texas location, which opened in March of 'twenty three.
Joseph R. Doolan: In a year since we opened Lubbock, we continue to see activity in our facility grow and volumes have remained strong.
Joseph R. Doolan: As we have discussed we took a pause in fleet expansion in 2023. However.
Joseph R. Doolan: However, we expect to invest in growth capital to expand our rental fleet in 2024, and, based on the favorable market trend, we have pulled forward much of our expected capital spending for the full year of 24 into the first half of the year. As of March 31st, our total backlog was $154 million, down from $170 million at the end of 2023. Our backlog ended the quarter with North America representing approximately 53% of the total, with International the remaining 47%.
Joseph R. Doolan: However, we expect to invest in growth capital to expand our rental fleet in 2024.
Joseph R. Doolan: In fact based on the favorable market trends, we have pulled forward much of our expected capital spending for the full year of 24 into the first half of the year.
Joseph R. Doolan: As of March 31, our total backlog was $154 million down from $170 million at the end of 2023.
Joseph R. Doolan: Our backlog ended the quarter with North America, representing approximately 53% of the total with international the remaining 47%.
Joseph R. Doolan: Gross profit was $16.9 million during the first quarter of 2004, up from $14.4 million during the prior year period, or an increase of 17%. The increase in gross profit was driven by the sales increase, while increased pricing improved material costs in Europe in a more favorable manner.
Joseph R. Doolan: Gross profit was $16 $9 million during the first quarter of <unk> 24 up from $14 4 million during the prior year period or an increase of 17%.
Joseph R. Doolan: The increase in gross profit was driven by the sales increase increase.
Joseph R. Doolan: Increased pricing.
Joseph R. Doolan: Improved material costs in Europe, and a more favorable mix.
Joseph R. Doolan: As a result of these factors, gross profit margin increased nearly 180 basis points to 23.0% in the first quarter. SG&A expense for the first quarter was $11.1 million, essentially unchanged from the same period last year. R&D expense was $0.9 million during the quarter, up very modestly from the prior year period. We have been able to hold our operating expense levels basically flat in recent quarters despite the revenue growth and investments we are making in the business, and we expect this trend to continue moving forward, driving continued margin benefits.
Joseph R. Doolan: As a result of these factors gross profit margin increased nearly 180 basis points to 23, 8% in the first quarter.
Joseph R. Doolan: SG&A expense for the first quarter was $11 1 million essentially unchanged from the same period last year.
Joseph R. Doolan: R&D expense was <unk> 9 million during the quarter.
Joseph R. Doolan: Up very modestly from the prior year period.
Joseph R. Doolan: We have been able to hold our operating expense levels basically flat in recent quarters. Despite the revenue growth and investments we are making in the business and we expect this trend to continue moving forward driving continued margin benefits.
Joseph R. Doolan: Operating income was $4.9 million during the quarter, up meaningfully compared to $2.6 million for the same period last year. Operating margin in the first quarter was 6.7 percent, up nearly 300 basis points from last year. The year-over-year improvement in operating income and operating margin was driven by improved gross margin performance and operating leverage. Adjusted EBITDA was $8.4 million in the first quarter, or 11.4% of sales, up from $6.3 million, or 9.3% of sales, from the same period last year.
Joseph R. Doolan: Operating income was $4 $9 million during the quarter up meaningfully compared to $2 6 million for the same period last year.
Joseph R. Doolan: Operating margin in the first quarter was six 7% up nearly 300 basis points from last year.
Joseph R. Doolan: The year over year improvement in operating income and operating margin was driven by the improved gross margin performance and operating leverage.
Joseph R. Doolan: Adjusted EBITDA was $8 4 million in the first quarter or 11, 4% of sales up from $6 3 million or nine 3% of sales from the same period last year.
Joseph R. Doolan: Net income was $2.3 million, or $0.11 per diluted share, for the first quarter compared to essentially break-even profitability for the same period last year. Adjusted net income was $3.4 million, or $0.17 per diluted share, in the first quarter, up from adjusted net income of $1.5 million, or $0.07 per diluted share for the same period last year. Adjusted net income for the first quarter of 2024 excludes $600,000 of stock compensation expense and half a million of other non-recurring expenses.
Joseph R. Doolan: Net income was $2 3 million or <unk> 11 per diluted share for the first quarter compared to essentially breakeven profitability for the same period last year.
Joseph R. Doolan: Adjusted net income was $3 4 million or <unk> 17 per diluted share in the first quarter.
Joseph R. Doolan: Up from adjusted net income of $1 5 million or <unk> <unk> per diluted share for the same period last year.
Joseph R. Doolan: Adjusted net income for the first quarter of 'twenty, four excludes $600000 of stock compensation expense and $5 million of other nonrecurring expenses.
Joseph R. Doolan: Now turning to our balance sheet on slide 10. As of March 31st, net debt was $86.4 million, which is up modestly from the end of the fourth quarter due to the timing of working capital payments and the pull-forward of some capital spending. As a result of the strong operating results, net leverage improved to 2.7 times at the end of the first quarter of 24, compared to 2.9 times at the end of the fourth quarter of 23.
Joseph R. Doolan: Now turning to our balance sheet on slide 10.
Joseph R. Doolan: We continue to expect our working capital usage to normalize in the coming quarters, which could result in a reduction in inventory levels, leading to improved free cash flow conversion and even further reduced leverage levels by year end. As of March 31st, total cash and available liquidity was approximately $30 million.
Joseph R. Doolan: As of March 31.
Joseph R. Doolan: Net debt was $86 4 million, which.
Joseph R. Doolan: Which is up modestly from the end of the fourth quarter due to the timing of working capital payments and the pull forward of some capital spending.
Joseph R. Doolan: As a result of the strong operating results net leverage improved to two seven times at the end of the first quarter of 24 <unk>.
Joseph R. Doolan: Compared to two nine times at the end of the first fourth quarter of 'twenty three.
Joseph R. Doolan: We continue to expect our working capital usage that normalize in the coming quarters, which could result in a reduction in inventory levels.
Joseph R. Doolan: Leading to improved free cash flow conversion and even further reduced.
Joseph R. Doolan: Leverage levels by year end.
Joseph R. Doolan: As of March 31, total cash and available liquidity was approximately $30 million.
Joseph R. Doolan: Now turning to our outline, based on the continued momentum in our end markets and our expectation for ongoing execution against our strategic goals, we are reiterating our full year 2024 outlook. As we detail on slide 11, we expect 2024 revenue in a range of $300 million to $310 million and adjusted EBITDA in a range of $30 to $34 million. That completes our prepared remarks. Operator, we are now ready for the question and answer portion of our call.
Speaker Change: Now turning to our outlook.
Joseph R. Doolan: Based on the continued momentum in our end markets and our expectation for ongoing execution against our strategic goals.
Joseph R. Doolan: We are reiterating our full year 2020 for outlook.
Joseph R. Doolan: As we detail on slide 11, we expect 2000 22020 for revenue in a range of $300 million to $310 million and adjusted EBITDA in a range of 30% to $34 million.
Joseph R. Doolan: That completes our prepared remarks, operator, we are now ready for the question and answer portion of our call.
Speaker Change: Thank you Bruce.
Operator: Thank you, Priscilla. And thank you, ladies and gentlemen.
Speaker Change: And thank you ladies and gentlemen, you will now begin the question and answer session should you have a question. Please press the star followed by the number one on your Touchtone phone, you'll hear a prompt that you had has been raised and should you wish to decline from the polling process. Please press the star followed by the number two if you're using a speaker phone. Please lift the handset before.
Operator: We will now begin the question and answer session. Should you have a question, please press the star, followed by the number one on your touchtone phone. You will hear a prompt that your hand has been raised, and should you wish to decline from the polling process, please press the star followed by the number two. If you're using a speakerphone, please lift the handset before pressing any key. And one moment, please, for your first question. Your first question comes from the line of Matt Koranda of Roth.
Operator: Passing any keys and one moment. Please for your first question.
Operator: Your first question comes from the line of Matt Koranda with Roth.
Matthew Butler Koranda: Your line is now open.
Matthew Butler Koranda: Hey, good morning, guys. I wanted to start on the bookings. I guess book-to-bill has been under one for a couple quarters now, and I know, Mike, you referenced the hesitance at dealers to take on a lot of inventory in this environment. But just curious, in your view, if you could just unpack the factors that push that book-to-bill back above one and maybe the timing in your view in terms of when we might see that and the order flow turn back on And then what's a healthy level of backlog, in your view, that gives you visibility into the year but also the ability to deliver within sort of a reasonable lead time?
Matthew Butler Koranda: Hey, good morning, guys.
Matthew Butler Koranda: Wanted to start on the bookings I guess book to Bill's been under.
Matthew Butler Koranda: One for a couple of quarters now and I know, Mike you referenced.
Matthew Butler Koranda: The hesitance.
Matthew Butler Koranda: At dealers to take on a lot of inventory.
Matthew Butler Koranda: In this environment, but just curious in your view if you could just unpack the factors that push that book to bill back above one.
Matthew Butler Koranda: And maybe the timing in your view in terms of when we might see that in the order flow turn back on.
Matthew Butler Koranda: And a more robust way and then what's a healthy level of backlog and your view that gives you visibility into the year, but also the ability to deliver within sort of reasonable lead times.
Michael David Zabran: Yeah, yeah, Matt, a really good question. Good morning.
Matthew Butler Koranda: Yes.
Mike: Really good question good morning, good to hear your voice.
Michael David Zabran: Good to hear your voice. So it's complex. There's hesitancy with regard to commercial construction and smaller businesses in both Europe and North America that is directly related to interest costs, and that's really not a surprise. We're just seeing generalized hesitancy in those areas. There's a bit of an offset there, and that is...
Mike: So its complex.
Michael David Zabran: There is a hesitancy with regard to.
Michael David Zabran: Commercial construction and smaller businesses in both Europe, and North America that is directly related to.
Michael David Zabran: Inflation and interest costs, and Thats really not a surprise.
Michael David Zabran: We're just seeing.
Michael David Zabran: Generalized hesitancy in those areas, there's a bit of an offset there and that as it pertains to the infrastructure projects that.
Michael David Zabran: It pertains to infrastructure projects that were funded years ago, but they're just coming online right now. And that's happening in both Europe and North America, though North America is a little more pronounced.
Speaker Change: We're funding.
Michael David Zabran: Bruce ago, but they are just coming online right now.
Michael David Zabran: And that's.
Michael David Zabran: That's happening in both Europe, and North America in North America, It's a little more pronounced.
Michael David Zabran: That has not driven New Order's uptick yet, but we're expecting it to. I can't honestly tell you when.
Michael David Zabran: That has not driven.
Michael David Zabran: New order uptick yet.
Michael David Zabran: We're expecting it to I can't honestly tell you when.
Michael David Zabran: That will happen, but if you look at the dynamics of leading indicators, concrete.., asphalt construction materials, and then also what's happening with vocational trucks, that are used in concrete delivery and all and or asphalt and construction material delivery. That part of the industry is very robust and it all speaks to, an anticipated uptick in infrastructure and when we speak of infrastructure for Manitex What we're looking at is generalized infrastructure that most people, think about highways, bridges, the things that we see when we're driving around town that are very visible, but the other classification of infrastructure that we're anticipating is going to be significant and actually... We're, you know, we're delivering on some of those orders and that that pertains to PowerGen, and Transmission, and those activities are substantial.
Michael David Zabran: That will happen, but if you look at the dynamics of leading indicators concrete.
Michael David Zabran: As for construction materials and then.
Michael David Zabran: Also what's happening with vocational trucks that are you.
Michael David Zabran: Concrete delivery and all <unk>.
Michael David Zabran: Fault and construction material delivery.
Michael David Zabran: That part of the industry is very robust and it's it all speaks to.
Michael David Zabran: An anticipated uptick in infrastructure and when we speak of infrastructure for Manitex.
Michael David Zabran: What we're looking at.
Michael David Zabran: Is generalized infrastructure that most people.
Michael David Zabran: Think about <unk>.
Michael David Zabran: <unk> bridges, the things that we see when we're when we're driving around town that are very visible.
Michael David Zabran: But the other classification of infrastructure that.
Michael David Zabran: We're anticipating is.
Michael David Zabran: Going to be significant and actually.
Michael David Zabran: We're delivering on some of those orders and that that pertains to power Gen.
Michael David Zabran: And transmission.
Michael David Zabran: And those activities are substantial theres a lot of maintenance.
Michael David Zabran: There's a lot of maintenance that's happening to the grid. And quite frankly, our grid is, is aged, you know, going back, you know, 50, 60, 70 years. So that is a bit of an offset, and there's a dance that's being played back and forth.
Michael David Zabran: That's happening to the grid and quite frankly, our greatest is aged.
Michael David Zabran: Going back you know 50, 60 70 years.
Michael David Zabran: So that is a bit of an offset.
Michael David Zabran: And there's a dance that's being played back and forth too we have the proper inventory.
Michael David Zabran: Do we have the proper inventory that's in the rental fleets and that is outstanding to meet that demand? We don't know when that will turn, but you're correct. We've seen several quarters of decline, and we're anticipating that will turn around when, I don't know. The last part of your question is... you know, what we might expect as far as a healthy level.
Michael David Zabran: That's in the rental fleets and that is outstanding to meet that demand.
Michael David Zabran: We don't know when that will turn but you are correct we've seen.
Michael David Zabran: Several quarters of decline and we're anticipating.
Michael David Zabran: That that will turn around when I don't I don't know.
Michael David Zabran:
Michael David Zabran: The last part of your question is.
Michael David Zabran: You know what.
Michael David Zabran: What we might expect as far as a healthy level.
Michael David Zabran: And, you know, part of the reason that our backlog grew was because of supply chain delays that slowed our ability to deliver, which has sped up considerably in the last year. It also scared many of our customers with regard to when they could get orders, and there was just a mounting delay that was exacerbated by post-COVID supply chain issues. Those issues are still affecting the business, but to a much lesser degree.
Michael David Zabran: And you know part of the reason that.
Michael David Zabran: Our backlog grew.
Michael David Zabran: Was because of supply chain delays that that slowed our ability to deliver which has sped up considerably in the last year.
Michael David Zabran: It also.
Michael David Zabran: Scared many of our customers with regard to <unk>.
Michael David Zabran: When they could get orders and there.
Michael David Zabran: It was just a.
Michael David Zabran: Amounting delay.
Michael David Zabran: That was exacerbated by post COVID-19 supply chain issues.
Michael David Zabran: Those issues are full.
Michael David Zabran: Affecting the business, but to a much lesser degree.
Michael David Zabran: No.
Michael David Zabran: I think, you know, a healthy backlog is going to range between four and eight months of backlog. We're moving into that healthy range right now. And what we're seeing dynamically is that we're able to fill orders faster than we have been in the last two years. That's good for customer satisfaction. Frankly, it's also good for just keeping our stated standard margin. And that, as you know, that has been a huge headwind for us in the last two years, booking an order and then trying to manage costs to fill it within the projected margin. That's improving, and I think we're seeing that in the Q1 results.
Michael David Zabran: I think healthy backlog is going to range between <unk>.
Michael David Zabran: Four and eight months of backlog, we're moving into that healthy range right now.
Michael David Zabran: And what we're seeing dynamically as we're able to fill orders faster than we had been in the last two years.
Michael David Zabran: That's good for customer satisfaction.
Michael David Zabran: It's also good for.
Michael David Zabran: Just keeping our standard stated standard margin.
Michael David Zabran: And as you know that has been.
Michael David Zabran: A huge headwind for us in the last two years booking an order and then trying to manage cost to fill it within the projected margins.
Michael David Zabran: That's improving and I think we're seeing that in the Q1 results.
Matthew Butler Koranda: Okay, very detailed. Appreciate that, Mike. And then maybe just to follow up on that, which is what are the implications for product mix if we see more of the incremental order flow coming from the infrastructure side and less from the commercial construction side? Are there any implications for the lifting mix that would either be positive or negative for margins and just general pricing?
Michael David Zabran: Okay.
Speaker Change: Super detailed I appreciate that Mike.
Michael David Zabran: And then.
Michael David Zabran: Maybe just to follow up on that which is.
Matthew Butler Koranda: What are the implications for product mix, if we see more of the incremental order flow coming from that infrastructure side and less from the commercial construction side are there any implications for the lifting Mitch.
Speaker Change: Mix that would either be positive or negative for margins and just general pricing.
Michael David Zabran: Yeah, so we don't think the mix will change terribly from what we've had in the last two years. Things that we did with regard to our strategy. We have had to make a couple, a few difficult decisions to mothball or terminate a few products that did not have margin profiles that favored the business. In some cases, we were able to substitute the product with another product in our portfolio that had acceptable margins. In some cases, we just had to stop taking orders in a few classes, and so that part has been done.
Speaker Change: Yes, so so.
Speaker Change: We don't think the mix will change over a terribly over what we've had in the last two years.
Michael David Zabran: Things that we did with regard to our strategy, we have had to make a couple a few difficult decisions too.
Michael David Zabran: Mothball or terminate a few products that did not have margin profiles that favorite the business.
Michael David Zabran: In some cases, we were able to substitute.
Michael David Zabran: The product.
Michael David Zabran: Need with another product.
Michael David Zabran: Products in our portfolio that had acceptable margins in some cases, we just had to stop taking orders.
Michael David Zabran: And a few classes and.
Michael David Zabran: So that part has been done.
Michael David Zabran: You know, what we're expecting is that heavier class straight boom orders will continue, and the demand for that product will be strong, and what we'll see over the next 12 to 24 months. It's a layering in of the articulated cranes that we specifically want to bring into North America. And that this is a very healthy story. It's a story that we're excited about. And as we said in the, A couple quarters ago, and then we reiterated it in this earnings release, we've had some very positive discussions with new distribution partners in North America.
Michael David Zabran: You know what we're expecting is heavier class straight boom orders will continue and the demand for that product will be strong.
Michael David Zabran: What we'll see over the next 12 months to 24 months is a layering in.
Michael David Zabran: Of the articulated cranes.
Michael David Zabran: At we specifically want to bring into North America.
Michael David Zabran: And that that is a very healthy story, it's a story that we're excited about.
Michael David Zabran: And what we said did not.
Michael David Zabran: The.
Michael David Zabran: A couple of quarters ago, and then we reiterated it in this earnings release, we've had.
Michael David Zabran: Some very positive discussions with new distribution partners in North America.
Michael David Zabran: We're not prepared to announce those yet, but those are directly correlated to bringing the articulated product into North America in a meaningful way, and that's going to favor our margin profile as well, so we're pretty excited about that.
Michael David Zabran: We're not prepared to announce those yet, but those are directly correlated to bringing.
Michael David Zabran: The articulated product into North America in a meaningful way.
Michael David Zabran: And that's going to favor our margin profile as well so we're pretty excited about that.
Matthew Butler Koranda: Okay, great. That dovetails well with another question I had, and maybe Joe can address this one as well, but the adjusted EBITDA for this quarter, I guess, is actually above the high end of your guidance range for the full year. So, maybe just.
Speaker Change: Okay, great. It dovetails well with another question I had them.
Michael David Zabran: Maybe Joe can address this one as well but.
Speaker Change: The adjusted EBITDA for this quarter I guess is actually above the high end of your guidance range for the full year.
Joe: So maybe just.
Joseph R. Doolan: Why the conservatism in the guide? I know we're only in Q1, so it's probably fair, but just maybe, why can't we sustain these levels of margin performance for the remainder of the year? Maybe just talk about seasonality, if you could, for the year in terms of EBITDA or even margin, and just address sort of how it fits into the outlook.
Joe: Why the conservatism in the guide I know, we're only in Q1. So you know its probably fair, but just maybe why can't we sustain these levels of margin performance for the remainder of the year, maybe just talk about seasonality because for the year in terms of EBITDA margin.
Joseph R. Doolan: And just address sort of how it fits into the outlook.
Joseph R. Doolan: Yeah, Matt, you're right. There are a couple of things with it, right? It's kind of early in the year to start taking up our guidance. You know, for the trailing 12-months, our adjusted EBITDA is 10.7%, so it's still a little bit below the 11 to 13 that we've been targeting. We do see seasonality in the third quarter, particularly coming out of Europe, so that's typically been a down quarter for us. This quarter was a significantly improved quarter for us over the prior year, but we will have some seasonality in the third quarter, and we know that's going to affect us. So I think it's just a little early to start changing our guidance at this point. We really want to kind of see how Q2 plays out.
Speaker Change: Yes, Matt you're right a couple of things with it right. It's kind of early in the year to start taking up our guidance on our trailing 12 month, our adjusted EBITDA as is 10, 7%. So it's still a little bit below the.
Joseph R. Doolan: The 11% to 13 that we've been targeting we do see seasonality in the third quarter, particularly coming out of Europe.
Joseph R. Doolan: So that's typically been a down quarter for us this quarter was a significantly improved quarter for us over the prior year, but.
Joseph R. Doolan: But we will have some seasonality in the third quarter, we know thats going to affect us. So.
Joseph R. Doolan: I think it's just a little early to start changing our guidance at this point, we really want to kind of see.
Joseph R. Doolan: Hum.
Joseph R. Doolan: Plays out.
Joseph R. Doolan: Yeah, and Matt, we're
Speaker Change: Yes, Matt.
Michael David Zabran: But we're, you know, we do not want to disappoint our investors, but, you know, in the last two years, we've been grateful to be able to beat our forecast. So I don't want that to be read as a... a cavalier level of optimism. There's a lot of good work to be done, but we are just being, we're being routinely cautious and if we're going to... If we're going to disappoint, we want to disappoint by over-delivering.
Joseph R. Doolan: So where we are.
Joseph R. Doolan: We do not want to disappoint our investors.
Michael David Zabran: But.
Michael David Zabran: You know in the last two years we've.
Michael David Zabran: Been grateful to be able to beat our forecast so I don't want that to be read as a.
Michael David Zabran: A cavalier level of optimism there is a lot of good work to be done.
Michael David Zabran: But.
Michael David Zabran: We're just being we're being routinely cautious and if we're going to.
Michael David Zabran: If we're going to disappoint you want to disappoint.
Michael David Zabran: By over delivering.
Matthew Butler Koranda: Okay, I've got to respect the conservatism there. And then, maybe just one last one. You mentioned growth capital for the rental fleet and expansion there and pulling some of that into the first half. Could you just quantify for us what you spent in the first quarter on growth capital for the rental fleet and then maybe just your plan versus kind of what you're spending in the first half and what that does for expansion capabilities and revenue there? So,
Speaker Change: Okay got it respect the conservatism there.
Speaker Change: And then maybe just one last one.
Matthew Butler Koranda: You mentioned growth capital for the rental fleet and expansion there and pulling some of that into the first half could you just quantify for us what you spend in the first quarter and growth capital in our rental fleet and then maybe just full year plan versus kind of what you're spending in the first half and what that does for expansion.
Matthew Butler Koranda: <unk> and revenue there so so.
Michael David Zabran: So the expansion number in North Texas for the rental fleet is $7 million, and the bulk of it is coming in during the first two quarters. And that's by design to take advantage of the market dynamics in that area and what's happening in Lubbock. You know, we've had the Lubbock branch, our fourth branch open now for a full year, full 12 months, and we're a little bit late in getting that branch open due to construction delays, but it's performing very well.
Matthew Butler Koranda: So the expansion number.
Matthew Butler Koranda: In North, Texas for the rental fleet is $7 million in the bulk of it is coming in in the first two quarters.
Michael David Zabran:
Michael David Zabran: And that's by design to take advantage of.
Michael David Zabran: The market dynamics in that area and what's happening in Lubbock.
Michael David Zabran: We've.
Michael David Zabran: We've had the Lubbock, our fourth branch open now for a full year.
Michael David Zabran: Full 12 months, so we get a little bit late in getting that branch opened due to construction delays.
Michael David Zabran: We're happy with utilization curves. We're happy with our ability to price into the market and deliver results, and we're very happy with how Lubbock is growing ahead of our expectations. So, Joe made the comment correctly that we've pulled those capital budget items forward to take advantage of how the market's performing and how our customers are treating us at Rayburn.
Michael David Zabran: But it is performing very well, we're happy with utilization curves, we're happy with.
Michael David Zabran: Our ability to price into the market and to deliver results and we're very happy with how Lubbock is.
Michael David Zabran: Growing ahead of our expectations so.
Michael David Zabran: Joe made the comment.
Michael David Zabran: Correctly that we.
Michael David Zabran: We've pulled.
Michael David Zabran: Those capital budget items forward.
Michael David Zabran: To take advantage of how the market's performing and how our customers are treating us.
Michael David Zabran: At Raeburn.
Matthew Butler Koranda: Okay, excellent. I'll take the rest of mine offline, guys. Thank you.
Speaker Change: Okay excellent I'll take the rest of mine offline guys. Thank you.
Speaker Change: Alright, Thanks, Matt.
Michael David Zabran: Thanks, Matt. Thanks, Matt.
Michael David Zabran: Yes.
Operator: Thank you so much. And again, if you wish to ask a question, please do so now. Thank you.
Speaker Change: Thank you so much.
Operator: And again, if you wish to ask a question, please press star 1 on your touchtone. And if there are no further questions at this time, I would like to turn the call back to Michael Kofi for closing remarks.
Speaker Change: And again, if you wish to ask a question. Please press star one on your Touchtone phone.
Michael David Zabran: And there are no further questions at this time I would like to turn the call back to Michael Kauffman for closing remarks.
Michael David Zabran: Thank you, operator, and thank you to our investors for your faithfulness to Manitex; we really appreciate that. During the second quarter, we will be attending the Sidoti Small Cap Conference. Our attendance will be on May the 8th. And we're also fortunate to be attending the Northland Investor Conference, which is scheduled for June 25th. So hopefully, we will connect with you there, but if we don't this quarter, we look forward to meeting with you during our next quarterly call. And with that, we want to thank you for your interest in Manitex and conclude our call.
Michael David Zabran: Thank you operator, and thank you to our investors for.
Michael David Zabran: Your faithfulness with Manitex, we really appreciate that.
Michael David Zabran: During the second quarter, we will be attending the Sidoti small cap conference.
Michael David Zabran: Our attendance will be on may the eighth.
Michael David Zabran: And we're also fortunate to be attending the Northland Investor Conference, which is scheduled for June 25th.
Michael David Zabran: So hopefully we will connect with you there, but if we don't this quarter, we look forward to meeting with you during our next quarterly call.
Michael David Zabran: And at that we want to thank you for your interest in Manitex and conclude our call.
Operator: Thank you, presenters, and thank you, ladies and gentlemen. This concludes today's conference call. Thank you for your participation, and you may now disconnect.
Speaker Change: Thank you presenters and thank you ladies and gentlemen. This concludes today's conference call. Thank you for your participation and you may now disconnect have a good day.
Operator: [noise].
Operator: Yes.
Operator: Yeah.
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Operator: Sure.
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