David Langevin - Chairman and Chief Executive Officer Andrew Rooke - President and Chief Operating Officer.

Kristine Kubacki - Avondale Partners Matt Koranda - ROTH Capital Partners Les Sulewski - Sidoti & Company Amit Dayal - H. C. Wainwright & Co. Scott Blumenthal - Emerald Advisers Jeffrey Long - Tuxedo Road Associates.

Good day and welcome to the Manitex International Fourth Quarter 2014 Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to David Langevin, Chairman and CEO of Manitex International. Please go ahead, sir..

Thank you, Don. 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 March 12, 2015.

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

I will lead 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 now please refer to slide number 3.

We finished the year in line with our expectations, with sales of $66.9 million and earnings per share of $0.16 in the fourth quarter, which brought us the $264 million or $0.63 per share for the year.

We ran our plans during the past year in accordance with the demand in the market place and maintained our book-to-bill ratio at close to 1-to-1 level.

While we saw improvements in our margins in the fourth quarter, we know that with the continuation of product rotation in our end markets, we will need to continue to work very hard on the cost side to protect our margins.

And to ensure success in that process, we have put together a plan to reduce our cost by $4 million and a total of at least $15 million over the next three years. Andrew will provide more details on our cost reduction programs in his remarks.

With regard to our energy exposure and a rotation back to a more general GDP related company, which is our history, I would like to remind everyone that we saw the peak demand for our equipment in the energy markets during the first part of 2012, when our backlog reached an all-time high of $150 million in the second quarter of that year.

Since then, the market for energy equipment has been steady for our company in an estimated range of $50 million to $75 million in annual sales, primarily at our Manitex boom truck division. With reduction below those levels in the second half of 2014, as we experienced an acceleration in decline for energy products in the latter part of that year.

However, with the dramatic change in our corporation resulting from our closed acquisitions, we now enter 2015 as a much larger enterprise with pro forma revenues in the $490 million to $500 million range. We now also participate in a much broader arena of end markets, which significantly reduces the impact of any one market to our company.

Strategically since we started Manitex, we have worked to put together a specialized niche equipment provider with a diversified end market group and we now have nine branded products which serve many end markets such as construction, housing, ports, refineries, railroads, industrial industries, energy, utilities, military, infrastructure and many more unique market niches.

We believe we now have transformed our company with the closing of our two largest acquisitions, one at the end of 2014 and the other at the beginning of 2015, which I would now like to summarize.

ASV significantly diversifies our end customer base with the presence in the housing and construction industries and 2014 sales of approximately $130 million and EBITDA of approximately $15 million. Manitex has 51% control of the ASV joint venture with our JV partner Terex Corporation.

And as controlling partner, Manitex will consolidate ASV’s balance sheet and income statement as a separate reporting segment within Manitex financials. We will break out the 49% Terex portion of ASV as a separate line item on Manitex’s income statement for income attributable to the minority holder.

ASV’s products will continue to be sold through Terex distribution, while now also will be offered through Manitex distribution as well as through independent ASV distributors.

ASV manufactures a family of top-notch products with an excellent history and a best in class group of employees who we are very excited to welcome into the Manitex organization.

Our long-term goal for ASV is to expand the value of the company through the introduction of new products around ASV’s core products as well as an expansion of the distribution network available for ASV. Many of you on this call might recall that ASV was a separate public company with a valuation approaching $1 billion.

Notwithstanding that [indiscernible] number experienced in the years of the housing boom, we believe ASV will represent an excellent long-term investment and opportunity for our Manitex shareholders. We announced the agreement to purchase PM on July 1 of last year and took it through a pre-package debt restructuring in European courts.

We successfully completed the process and closed on January 15, 2015. PM is now properly financed with bank term loans of staggered maturity through 2023. It always was an exceptionally well run company that through unfortunate circumstances found itself burdened by a poor capital structure.

We fixed that structure and it’s now a wholly-owned subsidiary of Manitex International. More importantly, PM cranes with a large range of truck modeled cranes are an extension of our most profitable business group, that being our crane products.

PM puts us in the knuckle boom category of cranes with further diversification and product applications and end product customers. The primary competitors in this crane segment are European based and European produced.

This segment participates in a market that has been growing in North America, however, PM has not participated to any great degree in the North American growth due to lack of distribution by PM in North America. Approximately 90% of PM sales have come from areas outside of the North American area.

Obviously, our strength, Manitex’s strength of distribution is almost exclusively in areas where PM is weak. Also, our crane production facilities are located in Minnesota and Texas, where PM’s crane production facilities are in Northern Italy and Romania.

Our plans are to expand PM in markets where Manitex has strength and introduce Manitex’s products to PM in many markets around the world. Also, we will eventually coordinate production for our crane products in plants geographically located consistent to where the products are sold.

Finally, our long-term goal is to make PM a market leader in the North American market, with sales for PM in this market comparable to our Manitex product line. We believe this will result in the long run with excellent increase in value for the shareholders of Manitex.

I now would like to turn over to Andrew to review the quarter and 2014 yearly results..

Thanks, David, and good afternoon and welcome everyone. Following our usual format, I'll start out by providing an update about the state of the markets we serve and make some remarks relating that to our performance, and then I'll get on to the comparative financials. So let's start with slide 4.

While the results showed that 2014 was another year of growth for us and we’re able to report record revenues, I think it’s also fair to say that 2014 markets on the whole fell short of expectation and the promise that existed at the beginning of the year [indiscernible] steam coming out of what we and many of our contenders felt at that time is a very positive CONEXPO Conference in Las Vegas back in March.

So while we will get on to the positives of the year and there are certainly plenty of them which will hopefully communicate with the same level of enthusiasm that we have internally, it’s only fair to acknowledge and address the challenges we faced during the year as well.

Rather than our markets pushing on from 2013 with faster growth in demand, characterized by the flat year, it came to be dominated by the slow oil and gas sector that largely overshadowed an improvement in the general construction environment.

Our principal market for boom and truck cranes ended the year down approximately 8% from the prior year and also reflected the change in sales mix with increasing demand for the lower tonnage units in general construction and lower demand for the higher capacity unit, particularly from oil and gas.

The challenges with slow economic growth and lack of credit in Europe persisted throughout the year and our international markets showed very good activity.

Our CVS operation, however, did benefit from changes in the competitive environment that allowed it to secure improve and wider distribution internationally and also secured good growth in its domestic market. For most of the year the euro was relatively stable.

But during the fourth quarter and continuing into 2015, it slipped significantly against the US dollar. Our exposure to this is limited to the effect of translating European profit at a lower rate to US dollar, since we invoice in Europe and from Europe in the euro.

Of course, this currency movement does bring in opportunity for margin improvement and pricing. As previously mentioned, softness in the energy sector continued and accelerated towards the end of the year.

The North American rig counts, although ending the year ahead of the prior year, February of 2015 they have fallen to approximately 90% of December 2013 level. We believe this sector remains a source of significant growth potential for our products in the future, but it is currently not showing any significant growth for us in 2015.

Our exposure to this market is also reduced as the additions of the PM and ASV product lines provide more diversity and access to the general construction sector at a time when this is showing incremental growth. Nevertheless, the oil and gas sector’s performance will impact that of our crane operations in 2015.

With regard to the market in quarter four of 2014, this was relatively consistent with the religious three quarters of the year, although from our sales perspective we were be able to commence some shipments of military material handling equipment and larger crane units that we had in our backlog.

With regard to our backlog, at the end of the year, it was $107.3 million, an increase of 39% from the $77.3 million that we entered the year with. Excluding approximately $9 million from the ASV joint venture we entered into on December 19, our year over year backlog growth was 27%.

This growth came substantially from the military orders we received under new and existing contracts, but also from our crane, container handling, and material handling operations. For 2014 as a whole, our book to orders ratio to sales or book-to-bill was 108% and for the fourth quarter it was approximately 100%.

Now turning to the financial results, slide five shows the key figures for 2014 with comparatives for 2013 and 2012. We’re showing here 2014 results as adjusted for the transaction related and other exceptional costs incurred in quarter four of 2014, largely from the ASV and PM transactions.

2014 revenues increased $19 million or 7.8% from 2013 to $264.1 million, including $2.3 million from the ASV joint venture that commenced operations in mid-December of 2014.

Excluding ASV, 2014 revenues increased 6.8%, driven substantially by growth in container handling equipment, material handling equipment and equipment distribution revenues that grew year over year by 20%, 14% and 24% respectively.

Crane revenues decreased in line with the reduction in our largest market, the boom and truck crane market that was down almost 8% year over year and shipments of larger tonnage cranes being down almost 19% reflecting a softer oil and gas market.

Our CVS container handling products benefited from a modest strengthening in Europe as well as expansion and improved distribution into overseas markets.

Gross profit of $48.3 million was equal to 18.3% of sales, a slight reduction from the 19% gross profit percent for 2013, principally a result of changes in product mix in sales, particularly from the reduction in higher tonnage crane sales.

Adjusted net income for 2014 of $8.8 million or $0.63 per share was a decrease of $1.4 million, or $0.17 per share, over 2013. Adjusted net income excludes $2.5 million pre-tax of acquisition related and other costs.

Included in these costs is approximately $0.5 million of costs related to the PM Group acquisition that was completed in January of 2015. Additional PM and ASV acquisition related costs are expected to be charged in the first quarter of 2015, approximating $1.3 million. Adjusted EBITDA for the year was $20.9 million, or 7.9% of sales.

This of course only includes 12 days of performance in ASV. Slide 6 shows the key figures for quarter four 2014 with comparatives of quarter four 2013 and quarter four 2012, again using as adjusted results.

In the fourth quarter of 2014, revenues were $66.9 million, including $2.3 million of revenues from the previously referenced ASV joint venture, and were an increase year over year of $1.5 million or 2.3%.

Container handling increased approximately 2% year over year but both cranes and material handling equipment showed year over year reductions of 3% to 4%. Partially offsetting the reduction in the material handling equipment was an increase in shipments of military material handling equipment.

Equipment distribution sales were up almost 70% from a relatively low level in the fourth quarter of 2013. Gross profit was equal to 18.9% of sales, an increase from 2014 quarter three of 240 basis points and a decrease from 2013 quarter four of 60 basis points, resulting from mix in sales.

The improvement compared to quarter three of 2014 came from the benefits of improved mix and sales, the shipments of larger capacity cranes increased and we also shipped a number of military material handling units in the quarter.

Excluding $2.5 million pretax of acquisition related and other costs, adjusted net income for the fourth quarter of 2014 was $2.2 million or $0.16 per share compared to net income of $3 million and $0.22 per share for the fourth quarter of 2013.

Slide 7 is a bridge movement in adjusted net income for both the full year and fourth quarter 2014 comparisons with 2013.

Moving to the reconciliation table for the full year, a $19 million improvement in revenues resulted in a gross profit benefit of $3.6 million which was reduced by $1.8 million, the effects of a reduction in the gross margin percent from 19% in 2013 to 18.3% in 2014. This was principally a result of changes in product mix and sales.

The combination of the volume and mix provided a net gross profit increase of $1.8 million. R&D expenses reduced in 2014 by $0.4 million as we launched a number of products to the market that have been in development in 2013.

The impact of businesses acquired being ASV and the full year of Sabre and Valla added $2.9 9 million in SG&A cost and the year over year increase in operating expense was $0.5 million, including $0.7 million of expenses related to the CONEXPO show in March of 2014.

Other increases related principally to sales volume and the sales organization improvements during the year, partially offset by reduced performance compensation. In total, SG&A as a percent of revenue increased marginally to 11.1% of sales from 10.6% in 2013, still within our targeted range.

Finally, our tax cost increased $0.2 million from an increase in pre-tax foreign income and the effective tax rate of 34.6% compared to 29.5% for 2013. Having looked to the year over year comparison for 2014, I’d like to briefly comment on certain actions that we have implemented on a prospective basis related to cost reduction activities.

With the major additions to the organization of the PM Group and ASV, we have stated that 2015 will be a year to focus on integration. Towards the end of 2014, as part of this activity, we initiated a specific senior management resource plan to review and attack our cost base across the organization.

At this stage, this project has identified cost reductions with a total of approximately $4 million in 2015 and $15 million beyond from a 2014 cost base that we expect to flow into our financial results. As we move forward through 2015 and beyond, we expect to provide updates on our progress towards this goal.

Slide 8 shows our working capital has increased from $73.9 million at December 31, 2013 to $89.5 million at December 31, 2014. Of the total $15.6 million increase, the ASV transaction account for $12.4 million of that increase. And without ASV, our working capital ratios were largely in line with prior year.

Slide 9 shows our capitalization and liquidity position. This slide, of course, shows significant change from the year end of 2013, substantially driven by the ASV acquisition in mid-December of 2014. Total debt of $112.3 million includes $43.6 million of non-recourse debt at ASV and debt of $8.2 million was part of the purchase.

Our debt to adjusted EBITDA ratio, if we included the ASV full year adjusted EBITDA for 2014 on a pro forma basis, is 3.2 times for the year. Our average debt cost is approximately 6%. And now I would like to hand back to David for his final summary..

Thank you, Andrew. In summary, the closing of the two transactions which I summarized earlier significantly changed the product profile and the end markets served by Manitex International. Therefore, the successful integration of these two companies into our group will be the primary goal for our company in 2015.

It is important for us to execute and implement and demonstrate the earnings power of the new Manitex. This will not happen overnight, but we are now better positioned with broader diversification in our products and in our geographical footprint.

In addition, we will drive our company in 2015 to use our newly created size and scale to bring down our material and operating costs.

Finally, we expect only modest growth in our markets for 2015, which will allow for additional cash flow from operations as we saw in the third and fourth quarters of 2014, so our working capital improvements and operating cash flow will be used to retire debt in 2015. With that, Don, we would like to open it up for any questions..

[Operator Instructions] We’ll take our first question from Kristine Kubacki with Avondale Partners..

I appreciate the discussion on the cost savings, and so I was just wondering, Andrew, if you could give us just a little bit more kind of where that’s going to come from, headcount reductions, manufacturing sourcing or is it a combination of all those things?.

I was going to say, David, that Kristine, it is a combination of cost of goods sold, expense and SG&A expense across the patch, a variety of savings whether it’s from our supply chain and internal reductions in efficiencies which obviously relate to labor cost at the end of the day.

Principally of course material costs are the most significant part of our cost structure and so we anticipate the majority of the savings will come through in that arena..

Just a little more, Kristine, I think with material cost being such a big component obviously with our process being variable, that’s an area that we’re really as we get the size that we have really trying to concentrate on where we have our best purchasing practices and try to put that throughout the organization..

And then I was just wondering a little bit more on the – it sounds like you have meaningful opportunity on the cross selling opportunities, realistically is that something you can begin to execute in 2015 or is it a longer term vision that you have?.

Realistically, obviously it is a longer term goal and a longer-term plan, but you will see specially between PM and our crane group, primarily in North America, you will see that as you know from looking at our charts and the detail that we provided on PM, that had very little penetration into the North American market.

We’ll expand that and start accelerating that in 2015. So you will see some growth there. But obviously, to make those type of long-term plans, it takes time. But you will start to see some incremental benefit in 2015 from especially the PM acquisition..

And my last question, I just was wondering from a backlog, your backlog was impressive given what’s going on in the macro, but I was just wondering if you could give us a little signal on the oil and gas sector, have you seen any cancellations or push outs of deliveries anything to that nature?.

We haven’t seen cancellations, but we have seen some push outs and we are obviously watching that very closely.

But I would say that, again, because of us going forward at a much larger company, I mean we think about the exposure that we’ve had historically and obviously something that we are happy to be in the area, we want to be – continue to grow in the area going forward, but at the present time it is just a small percentage of obviously our total business now.

But we are seeing some push outs, but not cancellations..

We will take our next question from Walt Liptak with Global Hunter Securities..

[indiscernible] on for Walt.

I wanted to ask about the ASV distribution, in this year you’re going to expand in there, to not only going to territories of dealers as well as independent dealers and also your own dealers, how underpenetrated was ASV before, I mean, is there any kind of – is this extending into your own dealerships a material source of growth going forward?.

I think obviously and thanks Mike for the question. Obviously ASV was a substantial company historically and it has gone through the depths of the change in the housing industry and now is coming out obviously a very valuable company.

And it had its own distribution historically, but clearly that became – with the Terex organization, it was a significant player in the Terex construction products group, so was dominated by the Terex distribution and that will continue as we go forward.

But more importantly, Andrew and the team are all working together with the ASV folks to introduce it to previous ASV distributors who now will have the opportunity to pick up an ASV branded product again as well as through our own Manitex distribution and throughout the organization, whether it’d be crane dealer, material handling dealer, wherever it might step around the world.

So we are trying to introduce that now and of course that takes some time, Andrew I don’t know you’re closer to it, maybe if you want to add any color to that?.

No, I think you are right. I think it’s just to add, there is considerable geography where significant distribution is not in place and obviously that gives us the opportunity to go back into those areas without impacting that distribution and secure some growth opportunity..

The other question is about savings program, you’ve got $4 million of savings here, I just want to make sure are there any major cash out lend that has to happen upfront to get those savings or basically going to be just savings off cost as you go along here?.

As we mentioned with Kristine, the primary area that we are focused on now is the biggest source of our expense which is the material costs and efficiencies in our various plants from the opportunity to make sure we are producing in the most efficient manner and so really isn’t going to require – we’re not talking about a lot of redundancy costs or other costs that we’re going to have to book..

We’ll go next to Matt Koranda with ROTH Capital Partners..

Just wanted to start off with the level of drop in demand that you’re seeing in 2015 for cranes, David, could you perhaps maybe break out in the backlog of that $107.3 million, what was Manitex boom truck specifically and what’s kind of the mix, if you could comment generally on just the higher versus lower tonnage cranes in that mix?.

We’ve maintained our production, as Andrew mentioned, in a 1 to 1 book to bill level and so therefore our backlog has stayed constant and we’re going to stay that way as we go forward for the near term, because obviously we want to be as efficient as possible, not have generations that our quarterly numbers would like to have some consistency and hopefully we are much better off at projecting future growth than we were a year ago when we were – when after we came out of the winter doldrums, we had a great March and everybody thought that this was going to be the year, but it just didn’t materialize.

So this year we’ll have to wait and see. As we come out of the fall this year seems to be another year of a real winter, we’ll have to see how – if the optimism and the order start to come in again in March and April, we’ll obviously expand our production. But the percentage is fairly consistent.

Andrew and I were actually looking at that this morning, it’s fairly consistent between large units and smaller units in our backlog to what it’s been over the last year.

But clearly it is going to different sectors, because as I mentioned in my prepared remarks, we historically have been a construction or GDP related company and just in the last few years that – as all of us did in the equipment world experienced the benefit of receiving large orders from energy business.

But clearly, I don’t think that’s to be expected for the near future..

And could you speak to the bookings cadence during Q4, how did that trend from October through December and if you could give us some color on how bookings faired in January and February that’d be helpful..

As a percentage of bookings, Andrew, I saw some information where we were getting a really strong percentage of the bookings that were coming through in the small sectors that we participated in cranes in the fourth quarter, especially obviously in October when we announced that we got some large orders which we produced in the fourth quarter and carrying over into the first quarter.

So it seems like we’re, as a percentage, we’re doing very well, as a percentage of the total bookings. But I wouldn’t say that they’re robust or strong, but they weren’t robust or strong last year either and then it started to pick up. So we’ll have to wait and see..

And one more from me here, if I could, with the acquisitions now in integration mode here and you guys have talked about savings, could you just maybe give us a sense for what OpEx at the corporate level looks like going forward, now that you’ve integrated ASV and PM?.

I want to make sure I understand, Matt, the operations expense at the corporate level?.

Just in general, the overall company level, what can we expect in terms of OpEx in 2015, can you just give us a directional sense?.

Andrew help me out, is it like a G&A question or....

I think Matt didn’t interpret properly, well, I hope properly, I think Matt is looking for a percentage of sales of basically our operating expenses?.

I think the SG&A expenses will stay in line with where we were in the fourth quarter for 2015..

We’ll take our next question from Les Sulewski from Sidoti & Company..

Actually just to build up on that, you had about $2.4 million or so in acquisition expense taken on during the fourth quarter.

Are you building that into your model for 2015, what else can we expect in some of the expenses that are left behind?.

I think Andrew mentioned that he had another $1.3 million, was that right?.

$1.3 million is what we....

$1.3 million in the first quarter, so of the total of what we had in PM expenses and ASV expenses in the fourth quarter, those one-time acquisition cost, there will be an additional $1.3 million in the first quarter of this year.

And then obviously we don’t have any more acquisition costs related to PM and – or nothing materially that I would know of. Hopefully there will be no more attorney bills coming up, we also get their bills on closing..

Andrew, perhaps maybe can you give us little bit more color on the currency impact, you talked about it how it’s affecting on the euro side, but talk a little bit more, if you could, give a high level highlight on that?.

Yeah, I was going to say that if we think of the euro and I’ll use sort of relatively round numbers, but the average rate for 2014 was probably around about 1.35, 65 something like that.

In quarter four that rate dropped to around about 1.25, which is something like an 8% deterioration and again as we all know, up until recently it’s deteriorated probably another 8% or 9%, it’s around about 1.15. So what’s the impact of that on us, well, we fortunately are making net income in Europe in our European subsidiaries.

That gets translated not into US dollars, not at 1.35 or had it been in the past sometimes 1.38 or 1.40, but we’re translating that at 1.15. So from a US dollar perspective, we obviously see a smaller number of dollar profit coming out of our European markets, although from a euro perspective of course it’s operating the same.

With respect to transaction adjustments, we don’t see any in particular, does that because of our hedging activity.

If you look at our detailed income statement, we call out on the income statement foreign exchange gains and losses, which were pretty much – certainly 2014 and 2013 were being relatively small and I think it’s around about $80,000 less for the year, maybe $100,000 less for 2014 and about the same for 2013, largely because if we invoice in a non-US dollar currency we can hedge out straightaway, contract that straightaway to offset any potential movement in that currency.

So that’s the approach that we have with regard to transaction exposure to currency.

And large speaking, it’s just those two currencies, the European operations invoice in euro and from Europe in the euro, obviously US we use the US dollar, Canada some of the – and it’s mainly on the military side [indiscernible] certain amount of other product into US and that will be on US dollar as well.

But those are the only currencies that we’re dealing with from a transactional basis..

I guess the last one from me, looking at the free cash flow, any outlook you have for 2016, 2017 let’s say looking out as next year?.

I think if we have – obviously we’ve used cash in the past because of the growth in the business and the building up our working capital again around the model that we use, which is assembly variable cost model. So we buy components from all over the world so we build up our inventory.

We would expect this year that would not happen, so we would generate cash as we did in the third and fourth quarter of last year and it’s really hard to predict beyond that at this point. Hopefully we will be building working capital again because we will be in such a growth state..

We’ll go next to Amit Dayal with H. C. Wainwright..

Just really quickly on the energy side, you commented that [indiscernible] higher margin business volume, which segment on which subsidiary do you see stepping up now over the next one or two years, and take over from where maybe energy is now stronger, just on the contribution on the margin side of things, I mean, maybe you’re seeing a small excitement, if you will, in terms of higher margin subsidiaries that you have..

I think in the near term, so for this year, obviously as we know how – and Andrew mentioned it several times, we have a good backlog of military business, very specialized equipment with energy would expect because of the specialization of the equipment, it would have a good margin.

And then as we expand the ASV and PM products, both of those have run historically good operating margins and margins that in some cases have exceeded our standard at the Manitex – former Manitex Group.

So I think it’s just a combination of a several different sources, I don’t know if there is anything else that comes to mind to you, Andrew?.

No, I think, David, it clearly can fluctuate depending on what shifted any particular time and what’s in that order book. But you’ve described the variation in margins appropriately..

Maybe the only other thing that I would mention, Amit, is that the parts business is very strong at ASV, it has been very strong historically at ASV and as we all know parts businesses drives the margin that’s far greater than anything that you have on the whole goods side. So that strength will also support us as we go forward..

And then on the backlog side, sorry if I missed this, does the backlog include ASV and PM?.

It includes ASV and I believe, Andrew, you said around 9% of the backlog, is that right?.

About $9 million..

$9 million, okay, $9 million of $107 million was ASV. So we didn’t close PM until January 15, so we’ll have that in the first quarter numbers..

We’ll take our next question from Scott Blumenthal with Emerald Advisers..

David, could you – I think the comment was made, we plan to expand and accelerate PM into the North American market, can you talk about maybe what we should expect regarding the timeframe and how you expect the cadence of moving or starting manufacturing over here?.

It’s really hard to give very specific information, because obviously it’s a function of – the first thing what we’ll do this first quarter is start to transfer some of the product that’s already been sold in North America through the PM network by kits coming into the US and then mounting some of those, if they’re not done at the dealer, then they’d be done at some of our plants, some of the plants have already started to that historically, but will accelerate that process into the North American market.

And then obviously eventually we will assemble those products, it looks like we could theoretically assemble our Manitex products which would be more suitable around the world in some of our international plants as we go forward.

But the first thing that we will start is, because the North American market is a growing, knuckle crane market and it’s one where we can pick up sales quickly, we want to concentrate on that first.

But I can’t – at this point, it’s in the early stages since we disclosed on January 15, I hate to say it, but we have publicly put out that PM did $11 million in sales last year in the North American market and I certainly would expect that to be more than that this year..

Are you going to need to do a lot of engineering at least upfront because I would suspect that a lot of that is metric and you may need to convert it to standard and those types of issues?.

We’ve done that historically, we’ve produced product in the metric and in standards that we’ve done it all, already done that in all of our plants.

And again, we’re assembler, so clearly, I would, as I always do, when it comes to manufacturing, minimize the complexity of the transfer, but I do expect it’s not going to be – certainly we don’t do fabrications, we don’t do a lot of the heavy manufacturing, we’re just assemblers. So I would assume that it will go along at a steady pace..

Should be also expect a little bit of inventory, working capital, I suspect, should grow as you build out a manufacturing or an assembly operation here in North America and how much do you suspect that – obviously it’s going to be a function of sales, but maybe you can give us an idea as to what that would have been on a $11 million sales base compared to sales base of last year?.

At that point it’s not going to be significant number, obviously, because it transferred from European operations and we will be – overall our expectations are that we will be increasing inventory turns and decreasing inventory this year at a number of our operations because we are going to discuss trading on integration and implementation.

So I don’t expect to have increases in inventory during the year at all. I don’t know Andrew if you have a better feel for that, but I – the plans..

Since we are on the inventory issue, Andrew, maybe this is a better question for you, did we and if so how much inventory write off related to the acquisition?.

The ASV acquisition, it’s not that significant actually in terms of the step up. The impact in certainly in the fourth quarter was very marginal, certainly than $100,000 in the fourth quarter. So it was not a huge write up..

Are we expecting a similar situation with PM?.

PM is still work in process, I’m afraid, so that purchase price fair value adjustment is still being calculated, I really wouldn’t comment on it. Those guys have spent lots of time and charged lots of money to do that, so they got to take a little time. Otherwise, their work is excellent, obviously, I’m just kidding around..

[Operator Instructions] We’ll go next to Jeffrey Long with Tuxedo Road Associates..

I’ve got a number of questions.

First of all, Dave, you opportunistically as I have known you for a long time, moved into the construction space to get you to the promise land, what gives you the confidence that now is the time?.

I think it’s a tough question because trying to look into those crystal balls is very difficult.

All you can try to do, I think, is look at where we’ve been, what they’ve gone through, they’ve downsized a company obviously, it was multiple plants and multiple locations, when I was in a trade day of 2005, 2006, 2007 and now it’s profitable, it’s running profitable at these levels and you’re a better man and I to be able to predict what the housing starts are in the future, but we are hoping that we’re on a slow but steady increase and have the opportunity to expand the distribution and bring this company to a point where it has the significant value to Manitex..

PM’s margins significantly or maybe significantly is a wrong word, incrementally increase what we have historically known as a low margin business or Manitex’s construction crane activity, can they get that out in the 15%, 16% kind of gross margins up towards corporate standards,.

I think most importantly because what we did publicly state and you’ll see obviously this as we go forward, because that will be a separate segment of Manitex, is that it has $130 million trailing sales approximately and $15 million approximately of EBITDA, so that’s a 11% plus percentage which is, as you know, several hundred basis points better than what we typically have done at Manitex.

Primarily the reason there is because and this is always interesting because we are primarily in the air as you know and ASV is primarily in the dirt. And so being in the dirt, they generate a higher parts percentage, as I alluded to, and that results in a much better EBITDA margin and operating margin.

So I would think that as for earnings per share and EBITDA calculations there will be a nice addition to our business..

My last question is organizationally I am making an assumption from afar that there is a change required in order to be able to market to this new emphasized construction industry versus the energy industry and the you feel confident that you’ve got the horses in place to be able to pick up the challenge?.

A couple of points on that question. Obviously, historically prior to 2009, 2010, we were all in the construction business because as you know better than I when a barrel of oil was $6 a barrel, it wasn’t much exploration happening in the United States and Canada or Canada than the US obviously.

So it’s all of our dealers and our distributors, it’s kind of their roots, and then fortunately we all experienced and all want to experience again the benefits of the exploration that we’ve had in North America, we think that will happen, it’s not a question of if, it’s just when.

And so people have to eat, people have to do things and people are – and fortunately we have a market that is growing in the non-energy space and we’re well equipped to handle that market.

Secondly, we have diligently over the last 12 months, as Andrew alluded to in his comments, expanded and broadened out our sales group, so that we could take advantage of what we knew is, because as I mentioned, we peaked out in the energy space in the first quarter of 2012 and so we knew that we had to divest and diversify and that’s what we’ve done.

So we’ve diversified ourselves into other markets, we’ve added sales people that will give us that benefit and we’ve added dealers and we’ll have more to come. So I think we’ve understood and appreciated the change in the rotation in the market and we’re ready to serve any and all of the areas as we go forward..

It appears there are no further questions at this time. I’d like to turn the conference back to management for any closing remarks..

Thank you, Don, thank you everyone. We appreciate your interest in Manitex International. We look forward to future calls. Thank you..

This concludes today's conference. Thank you for your participation..