David J. Langevin - Chairman and CEO Andrew M. Rooke - President and COO.

Matt Koranda - ROTH Capital Partners, LLC Thomas Finan - Avondale Partners, LLC Les Sulewski - Sidoti & Company, LLC Amit Dayal - H.C. Wainwright & Co..

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Manitex International Incorporated First Quarter 2014 Results Conference Call. During today's presentation all parties will be in a listen-only mode. Following the presentation the conference will be open for questions. (Operator Instructions).

This conference is being recorded today Thursday May 8, 2014. I would now like to turn the conference over to Mr. David Langevin, Chairman and CEO. Please go ahead..

Thank you, Damien. Good afternoon, ladies and gentlemen and thank you for your interest in Manitex International. As usual, on the call with me today is Andrew Rooke, our President and COO. Please see our website or our release for replay instructions for this call, which will be available until May 15, 2014.

We will again be using slides in this presentation, which are available through the webcast or directly from the Investor Relations section of our website. Refer to the first slide regarding the Safe Harbor statement. Please review this statement and refer to our SEC filings for further guidance on the risks associated with our company.

We've organized our call today, as in the past, with my leading off by making a brief opening statement, followed by a review of our results by Andrew, and a closing statement by me. Andrew and I will then be happy to respond to any questions. So please now refer to slide number three.

Before we begin to discuss the details for the quarter, I believe it's always good when we are starting the year to review again the strategic goals of our company. Our company is committed to profitable growth both through acquisitions and organically.

We believe our company and its shareholders will prosper from the economic benefits and marketplace recognition which come with critical mass. As you may recall we stated last year we had an objective to reach $350 million in annual sales for 2015.

We stated that this was not guidance, but rather was meant as a goal, which was not dependent on acquisitions, but was based on the assumption that we would have a slow but steady growth in the economies where we participate. We are well on our way to reaching this goal.

And notwithstanding the second half [strat] initiative last year we are encouraged by the increase in this year's first quarter orders. This acceleration in orders has translated to a return to production schedules, which we believe will allow us to accelerate our growth as we progress through this year.

As important as it is for us grow organically we believe that given the condition of the world economies we can add further benefit to our shareholders by continuing to work on opportunistic acquisitions, which will be accretive to our earnings and complementary to our existing product lines, particularly in the Liftking and crane categories.

With that brief strategic goal review I would like to turn to the specifics of the first quarter. We started the year as we have in previous years on a modest basis, but when compared to the first quarter of last year we have made an improvement in this year's first quarter on a number of fronts.

The most important is that we had a positive increase in backlog for the first time in over a year. Our belief is that this has set us up for a good year in 2014. Further it was very gratifying to see another navy order for our Liftking subsidiary.

Also as we have mentioned in our release and to be clear, this year's navy contract is separate from last year's contract and only a portion of last year's contract is in our backlog. As a reminder our backlog represents only orders to be delivered in the next 12 months.

Now going back to numbers and our results; we had several other ratios that while not as robust as we would have liked, they clearly represent a better start to this year as compared to the same quarter a year ago. A couple of key areas I would like to point out are for example, our EBITDA margin for the first quarter this year is 7.5%.

A year ago the same quarter we started out at 6.9%. We more importantly ended at 8.8% for the full year. With the production schedule we now have, we believe we will see a similar increase from last year, which could put us over 9% on a full current year basis.

Similarly, we started last year's first quarter with a gross margin of 17.2% and finished for the full year with a gross margin of 19%. We started this year with an 18.5% gross margin and as mentioned, with planned increases in production and with similar percentage increases we could end the full year closer to a 20% gross margin.

Finally, we believe we will make up the earnings per share reduction we took in the first quarter from ConExpo expenses and earn more than that over the rest of this year with orders deliveries from the many leads and contacts we developed at the convention.

I would also like to mention that we have experienced an increase in production for each consecutive month during the start of this year. And contra to last year so far there has been a follow through in orders.

In the short run we believe this order increase will result in our achieving over $70 million in sales for the first time in our history in the second quarter of this year. With those brief comments I'd like to turn over to Andrew for his review.

Andrew?.

Thanks David and good afternoon and welcome everyone. Following our usual format I'll start out by providing an update about the state of our markets we serve and make some remarks relating that to our performance, and then I'll get into the comparative financials. So let's start with slide four.

As we commented in March we saw a very sharp increase in orders in this quarter, which took our backlog back up to a $100 million. This trend which has additionally continued into the second quarter resulted in the first quarter 2014 book-to-bill ratio of a 136%, our strongest order performance since quarter one of 2012.

This is indicative of improving customer confidence here in North America. We should particularly note (inaudible) at the ConExpo show that occurred in early March and which is now translating into orders. Energy demand for rig count growth is flattish, tracking at the growth rates of 1.1% compared to this time last year from 1.6% from year-end 2013.

Expectations continue however for a modest recovery in this sector. We are anticipating overall the North American market will continue to grow compared to last year.

They are still much below the peaks of 2007 and 2008 with certain geographies such as Mexico where recently there has been a significant pick-up in activity experiencing stronger demand than the average. European markets remained fairly constant at year-end though positive compared to first quarter 2013.

Our product revenue profile has remained relatively consistent with healthy levels of demand for a higher capacity shipment occurrence. Shipments of 40 ton capacity and above were more than double those of lower capacity units in the first quarter.

Commercial and energy related material handling equipment has been slower, while container handling equipment was steady in the quarter compared to last year. It is now showing an improved mix of products and future orders.

Subsequent to the end of the quarter we announced receipt of a second major military contract in the space of 12 months, for specialized material handling equipment through our manufacturing Liftking subsidiary.

The order has initial value of $26 million and with options exercised, this could increase to $38 million over the next five years the term of the contract. Deliveries will commence in 2015 and orders from this contract are not yet reflected in our backlog as deliveries are expected not to be within the next 12 months. Together with the existing U.S.

navy contract of similar value we'll have a healthy level of shipments for this attractive military business from 2015.

With regard to our backlog although we referenced the increase to $100 million at the end of the quarter, which was a 29.4% increase since December 31, 2013, this was a very fairly broad-based mix increase but Manitex truck and energy cranes strongly represented.

With this improved visibility as we've already mentioned we have initiated production increases to match our activity levels with current demand and our financial results in the coming quarters should reflect higher volumes and higher margins.

Now turning to the financial results, slide five shows the key figures for quarter one 2013 compared with comparatives with quarter one 2013 and quarter four 2013. First quarter 2014 revenues increased $3 million or 5.1% from the first quarter of 2013 to $62.6 million.

Excluding the benefits of $7.8 million from acquisitions, revenues decreased 8.1% due to decreased material handling revenues while crane, container handling and equipment distribution revenues were flat year-over-year.

Sales activity in the quarter reflected lower quarter one production schedules derived from the broad based lower backlog with which we entered 2014.

Net income for the quarter of $1.9 million was unchanged from the first quarter of 2013 with increased revenue and gross profit offset by SG&A costs from the businesses acquired in 2013, an $0.7 million of costs incurred for the ConExpo show and an increase in interest and tax expense, an increase in gross profit of $1.4 million derived from improvements in the industrial crane operations will improve mix and production cost and the favorable impact in the product mix from the acquired business revenues.

SG&A expenses, excluding the costs for ConExpo were 10.6% of sales compared to 10.4% of sales for the first quarter of 2013 and remained controlled within our target range. Earnings per share after the negative impact of approximately $0.03 per share from ConExpo cost was $0.14 per share compared to $0.16 per share for the first quarter of 2013.

EBITDA for the quarter was $4.7 million equal to 7.5% of sales was an increase of 14.6% from the $4.1 million in the first quarter of 2013. Slide six is a bridge for the net income from quarter one 2013 to net income for quarter one 2014 of $1.9 million.

Moving to the reconciliation table, a $3 million improvements in revenue resulted in gross profit benefits of 0.5 million, which was increased by $0.9 million, the effect of a 130 basis points improvement in the gross margin percent from 17.3% in quarter one of 2013 to 18.5% in quarter one of 2014.

The combination of volume and mix provided a net gross profit increase of $1.4 million.

Three principal factors influenced operating expenses; the first being $0.7 million of expenses relation to participation at ConExpo the top industrial trade show held once every three years and the second being SG&A cost within companies acquired since the first quarter of 2013.

As discussed previously we experienced a very positive reaction to our attendance of ConExpo show and expect to recover this expense in orders and leads in the future.

The other factors influencing operating income, were $0.2 million of higher interest costs arising from working capital financing and $0.2 million of increased tax expense attributable to an increase in the effective tax rate to 32.5% from 26.4% for the first quarter of 2014.

The principal factors accounting for the increase in the effective tax rate was the absence of R&D credits which provision provide expired as of December 31, 2013.

Slide seven shows our working capital margin increase from $74 million at December 31, 2013 to $75.2 million at March 31, 2014, with the principal movements being the reduction in cash used to reduce debt and pay accrued expense and an increase in receivables arising from the timing of shipments and a mix of sales that included a higher proportion to international customers.

Slide eight shows our capitalization and liquidity positions. Total debt at the end of the quarter was $52.7 million, a reduction from $54.2 million at December 31, 2013.

The key movements being a reduction in working capital and [flow fund] debt of $1.1 million, and in capital leases of $0.2 million and a reduction in acquisition-related debt of $0.3 million.

With 12 months trailing EBITDA increasing to $22.1 million our debt-to trailing 12 months EBITDA ratio was relatively stable at 2.4 times compared to 2.5 times at December 31, 2013. I'd now like to hand back to David for his final summary..

Thank you, Andrew. As mentioned in our year-end call, in general, increases in production do not occur in the same quarter in which we receive the orders. We usually we have a one or two quarter lag from booking the quarter to building the unit. Therefore we are planning for increases in production for the second and third quarters for this year.

We have executed on this strategy well in the past and we expect no less from ourselves now. We also expect that our increase in sales will also lead to an increase in all our other important performance metrics.

Finally for the full year, excluding any impact for any potential acquisitions, we should see another solid increase in our results, which should translate to a good return for our shareholders. With that Damien we would like to open it up for questions..

Thank you Mr. Langevin. Ladies and gentlemen we will now begin the question-and-answer session. (Operator Instructions). Our first question is from the line of Philip Shen with ROTH Capital Partners. .

Good afternoon guys. This is Matt on for Phil. Thanks for taking our questions..

Hello Matt..

I want to start out with backlog I think that your -- how much of the $100 million in current backlog do you guys expect to recognize as revenue in 2014?.

I would take the majority of it would be Matt, we might have -- it kind of depends too obviously when people want delivery of things but as far as I am aware, most of it is in the next three to six months, would you concur Andrew, what's your feelings on that?.

Yes I would. I think that's a fair comment. .

Okay, great. That’s helpful.

And then in terms of the orders it looks really healthy I am getting to book-to-bill of almost 1.4 here, can you give us a sense of what drove the strength in the new order flow during the quarter?.

Well, personally we started the year pretty dismally at the end of the last year. We did not see people pulling the trigger from working on projects to making orders, but in January started -- but then February started to really pickup, so just things like the psychology and people.

So I believe then the market started to really take hold and started to get the orders and it continued modestly in March and better and more -- and higher again in April..

Okay, great. That's helpful as well.

And then can you guys sustain the book-to--bill rate going forward and could you comment a little bit on the trend seen during Q2?.

Well as, I mentioned in April we receive more orders than we produced and we have increased our production.

So that was very positive and we hope to see follow through, if you remember last year we started modestly and then increased in second quarter and we were thinking that we are going to have quarter-over-quarter sequential increases like we did in 2012 and 2012 has started in the low 40s and then increased quarter-by-quarter but last year we didn’t and we went the first quarter, second quarter up and then down significantly in the third and then up in the fourth.

So it was very a choppy year last year. But hopefully this year the way it's starting we would anticipate having a much better run of increases quarter-over-quarter this year..

Okay, great.

Then shifting gears a little bit, talking about some of the products, can you just give us an update on the interest level for the 70 ton crane, what's the current pace of quoting activity and what does order flow look like there and when could you begin deliveries and what does this mean in terms of revenues?.

So we are very pleased, we had some deliveries in the first quarter, a few. Some of those that have gone and especially we received I don't know if it's, if all the book if everything is in the books, Andrew, but I know I heard about a significant order up in Canada for some units at 70 ton unit that had gone up there.

And so we were very encouraged by their early indications and we will get more units out in the second quarter and those are fairly significant priced units as they should be..

Okay, that's great.

And then one more here if I may, in terms of acquisitions you have mentioned it in the prepared remarks, what's your latest thinking on acquisitions, are you targeting any specific geographies or end markets, are you currently in any discussions with any potential targets, just a little color on your thought process there?.

We have made it as a complement to our organic growth if you look historically we obviously stress the first thing is new products and organic growth but it's always been a part of our strategy and we gauge it based on how we see the economies going in the world because if we believe that we are coming to an end of the cycle or there is some reason why we should hold back at this point we will do that and we have in the past.

But as we stated publicly we feel that we are in a good stage in the obviously early stages of the cycle, a good period to add some more businesses there, add some more depth to our company and we're concentrating in the crane area..

Great, that's very helpful guys and I'll jump back in queue here. Thank you..

Thank you, Matt..

Our next question is from the line of Tom Finan with Avondale Partners. Please go ahead..

Good afternoon guy. This is Finan for Christine.

So I know you said that demand was pretty broad based in the incoming orders, but just specifically for oil and gas end markets if you just give any color there would be helpful?.

Sure, after experiencing a fairly strong oil and gas markets for equipments in 2011 and 2012 as we all know 2013 was not strong and I don't think 2014 will be as strong as possibly 2015 but it's starting to look like equipment purchases are coming back and we are certainly doing a lot of quoting and from discussions that we've had with our customers being our dealers, it seems like that market is starting to resurrect itself which is great because it's complementing our commercial market, our power line construction market and all the other markets we serve..

Okay. Great. That's helpful.

And then could you just give an update on how Sabre is performing?.

Sabre had a nice quarter, we mentioned acquisition sales, Sabre was certainly the majority of those and it's performing fine..

Okay, and then the last one, could you just give a little color on commodity cost, we have heard of few companies those have started to increase a little bit?.

I haven't seen an indication that and our expectations are that it will be under control for the near term. I don't know Andrew you are closer to that than me, have you seen anything there..

I would say what we have seen, is a sort of normal rational movement in pricing, as you saw there's nothing extreme taking place. I mean everybody taking the opportunity to process sort of on the small side. It's a low single digit increases in prices and that goes to people selling to bigger volumes and that's a market that we….

Thank you, Tom..

Okay, great. Thank you..

Thank you. Our next question is from the line of Ryan [Castle] with Global Hunter Securities. Please go ahead..

Hi guys.

How you doing?.

Hi Ryan..

Just to start out on shipments, did you guys have any weather-related or customer-related delays on shipments or did things how you guys saw it internally?.

Weather was certainly a disturbance during the quarter, that's not bad about that, but we tried to make up there, everywhere we could. We have plants that were shut down from period-to-period, especially in the north obviously, we had plants in South Dakota, Minnesota, Indiana, Illinois, Toronto.

So we had a number of plants which were in areas that were affected, but generally speaking I think we tried to make up any delays that would have occurred during the quarter..

Okay, sounds good.

And just thinking back to the last call you guys have talked about strongly coming out of ConExpo, did those play out as you expected or have they gotten delayed a little bit where you stand versus your previous expectations on that?.

I would say that we are still very bullish on what occurred at ConExpo, we received some tangible orders in the March and April time period directly related to discussions and meetings at ConExpo.

So I would say it's still playing out and it's turned out to be -- it was a very good year for ConExpo this year compared to three years ago as we stated in our last call..

Okay. All right. Thanks guys, appreciate it..

Thanks Ryan. .

Our next question is from the line of Les Sulewski with Sidoti & Company. Please go ahead..

Good evening guys..

David J. Langevin :.

Hi Les.:.

Hi.

So can you talk about how this navy order came onto your plate, was this pure bidding action or was it just a follow on order?.

Well, this is from our Manitex Liftking subsidiary which has been dealing in military areas for over 40 years. So they really have a very good network and we have obviously good contacts with a number of the military organizations around the world. So this is something that they work on a regular steady basis.

They have for many years, they are well respected within the organizations, but these are long difficult processes there obviously we are making specialized material handling equipment and a lot of cases, it's so much the bidding process, these are just the qualifications that they've learned over the years from dealing with our company. .

Thank you. That's helpful. And now you are talking about increasing production levels to get your lead time little bit higher.

What's going to take, I mean are there going to extra cost involved are you capable of doing this in the short term, can you talk a little bit more about that?.

Sure, of course. We have been, we flexed our production up and down over the years depending on what we see in our backlog and fortunately it's much better to have to chart an increase in your production and decrease it or keep it flat like we did in the first quarter. So this is a good problem.

And we have in the past increased I mean if you look in previous years we have gone as much higher up in the quarter as much as $10 million. We certainly have the financial capability; remember our process; we for most purposes are assemblers.

So in most cases we have to buy our components from our suppliers around the world, get those components in our shop and then assemble the product, for most purposes, obviously there are exceptions to all that. But generally speaking the process which is getting the order, getting the components, assembling the product and that just takes time.

So that’s why we say we get an order in one quarter, we build it in the next couple of quarters, that's the way it works..

Okay. Thank you.

And one more from me and what about the R&D tax credits, what could be an assumed tax rate moving forward?.

I don't think Andrew we are going to see -- I think I hope we don't see, this is a sore spot for me, Les, sore issue for me, but hopefully we won't see any greater percentages than what we've seen in the first quarter, do you concur with that Andrew..

Definitely, yeah the rate is based on a full year expectation, right. The specific comments on the R&D protocol that's out of our control, that's over to Washington, I am afraid. .

So Les, I would expect the 32% of the range kind that we will be using for the future, foreseeable future..

Okay, great. Thank you..

Thank you..

Our next question is from the line of [Jeffrey Lum] with Tuxedo Road Associates. Please go ahead..

Hi Dave..

Hey Jeffrey. Good to hear from you..

Good to hear from me, good to listen to you guys as well. A couple of questions.

The first one is kind of off the [world], do we own trucks down there?.

No, we do not, we lease them, we continue to lease trucks, yeah..

Okay. Second can you give me some color on CVS, as we recall, CVS of one point was on a $1 million business.

I am wondering what we're doing there, new product wise was to try to regain significant revenues out of CVS or is the marketplace just not ready to accept significantly larger orders in that arena?.

I am really glad you brought it up, Jeff because this was really a shining star for us. First thing is CVS obviously as you correctly stated was a $100 million a year before it went bankrupt in 2009 and then we bought it in 2010.

And it's really been doing very well through a very difficult period, always profitable I don't think Andrew we ever had an unprofitable, I don't think we had a unprofitable month as far as I can recall. So these guys have done a really good job, all the people there have, and they are really doing, really growing now.

We mentioned in our release or prepared remarks that CVS and Manitex are really driving us forward and they have goals and aspirations. They have their own separate goals and aspirations to get back $100 million and not that far down the road.

So they are doing very well, they are clicking along if you kind of a 10million quarterly clip right now and that they are working on some very significant orders, the marketplace is cooperating, that equipment wears off very quickly because it's used so much. So there is some real need for that equipment around the world as we go forward.

So I am very encouraged by CVS and very hopeful for the results as we go forward..

That's great for them and my congratulations to Mark. .

Yeah. He deserves..

He has driven it and he's doing well..

He is, thanks Jeff..

Our next question is from the Amit Dayal with H.C. Wainwright. Please go ahead..

Congrats David.

Just one question on the margin side of things, you stated that margin started lower last year and the trend should follow this year, what's going to drive this margin improvement?.

I mean we obviously rent things at a lower level in the first quarter and the good thing is the lower level is now in the 60s whereas not too long ago our lower level was in the 40s. So we're moving up in the world.

But just as we get more production a better mix, more efficiencies just as we have in the past we should see a steady, as we go into we mentioned that we will be, our goal is to get in to 70s in the second quarter. We are clearly if we are producing in the 70s we should have a higher margin than where we are now.

So that's what our expectations are and that's what our models show for production with the units that we have going through the facilities now..

And is CVS your highest margin business right now?.

No, no, our highest margin business would be Manitex..

Okay, I guess most of my other questions have been asked but I will get back with you afterwards. Thank you..

Thank you Amit. Take care..

(Operator Instructions). .

No further questions, Damien are we…?.

Yeah, no further questions please continue with closing remarks..

Thank you Damien and thank you everyone, appreciate your interest in Manitex international and look forward to have further calls. Take care..

Ladies and gentlemen, this concludes the Manitex International Incorporated first quarter 2014 results conference call. Thank you for your participation. You may now disconnect..