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

Kristine Kubacki - Avondale Partners Matt Koranda - ROTH Capital Amit Dayal - H. C. Wainwright Les Sulewski - Sidoti & Company James Lee - Potrero Capital.

Good day and welcome to the Manitex International, Inc. First Quarter 2015 Results Conference Call. There will a question-and-answer session at the end of today’s prepared remarks. [Operator Instructions] Today's conference is being recorded. At this time, I would like to turn the conference over to David Langevin, Chairman and CEO.

Please go ahead, sir..

Thank you, Amber. Good afternoon, ladies and gentlemen, and thank you for your interest in Manitex International. 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 18, 2015.

We will again be using slides in 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 be leading off by making a brief opening statement, followed by a review of our results by Andrew, and a closing statement by me. As mentioned, Andrew and I will then be happy to respond to any questions. So now please refer to slide number 3.

We started the year with quarterly results reflecting expected growth in our enterprise based on the transactions we consummated in late 2014 and early 2015.

As you will notice, this is the first quarter in which both ASV and PM are included in our Manitex consolidated results and our top line reached a quarterly record of $106 million, yet apples-to-apples [ph] first quarter revenues were slightly down. The equivalent markets globally have been soft.

Generally though, we can say as many others who have already reported their Q1 results, there have been some pockets of strength within the crane business such as in power line distribution. And also importantly, we are seeing steady improvement and expect more of the same throughout the year in the construction industry.

From a geography standpoint, we have seen improvements coming from our European companies balanced with the decline in the North American markets due primarily to a falloff in CapEx in the oil and gas area.

As we stated in our past, we estimate that our sales for our company in the energy markets in 2014 were in the range of $50 million to $75 million. And despite this short-term weakness, we know we have solid products with significant market positions, which will provide superior profits to our company over the longer-term.

As reported previously, we completed the PM transaction on January 15 of this year and we are making significant strides towards adding an assembly capacity for the PM product in our North American markets at our Georgetown, Texas facility.

This will lower our cost and improve on the delivery of parts, service, and PM products to our North American knuckle boom crane market, which as we’ve commented in the past is a growth part of this mobile crane market. Unit volume of knuckle booms has been consistently growing here in North America.

We are excited about our new found ability to participate and exploit this market and participate as we are the only domestic producers of knuckle boom cranes of which we believe we will be the most significant producer in North America among the competition.

To emphasize this to our shareholders, this acquisition allows us to participate in a growing market, produce at our most profitable facility, and use the strength of our North American distribution for parts and service, which represent a key aspect to future growth. The success of this strategy will be reflected in future profits.

Now with the transformative additions of the ASV joint venture and the acquisition of PM, our company has evolved to a size where we can strategically focus on our higher margin businesses and place our efforts on the products and companies where we have the most meaningful market share and economic opportunity.

During this coming year, we will concentrate on the integration of these new companies and direct our efforts to the optimization of businesses in our family of companies where our gross margins and EBITDA margins provide the most benefit to our shareholders.

Further, we will use our working capital generation and cash flow to retire debt and return our balance sheet ratios to our historical levels prior to our latest product additions.

We’ve adjusted our balance several times over the years that we’ve been public and now we’ve added companies which can bring very meaningful and positive growth to our shareholders, and we will concentrate our efforts in that regard specifically to that growth. And now, I’d like to turn over to Andrew to review the specific results of the quarter.

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 the markets we serve and relate the market environment to our specific operating performance.

I'll then move onto the comparative financials and I will close with some additional big picture remarks in terms of how we are managing the business from a strategic standpoint in terms of operations, corporate finance, and capital structure. So let's start with Slide 4.

Quarter one 2015 market conditions can best be described as variable with little growth in a number of our sectors and that were relatively flat when compared to the first quarter of 2014.

As is widely known, the energy sector has seen a dramatic decline since the end of the year, with a consequent negative impact on demand for our larger crane products in particular. Adverse weather in many parts of North America has also led to a slow start for crane and material handling equipment.

Although, underlying activity in the general construction sector appears steady. Our European markets have continued to show incremental progress. Those economic conditions and credit availability have improved and various international geographies served in particular by PM has shown some good demand.

The strengthening of the dollar although negatively impacting our top and bottom lines as we translate sales and foreign earnings to U.S. dollars has provided some inputs to euro zone competitiveness, which you anticipate may help sales volume in future numbers.

A significant demand to resources have been devoted to the new companies we acquired in December 2014 and January 2015. To recap, in December we acquired 51% of ASV, a Minnesota based manufacturer of compact tracked loaders and skid steers.

And in January we acquired a 100% of PM Group, an Italian based manufacturer of truck mounted knuckle boom cranes and aerial platforms. The ASV market is approximately 75% in North America where the product is sold through Terex construction dealers, independent rental, and a number of OEM private label agreements.

During the first quarter, we began to take steps to build-out the distribution for ASV with a re-launch of the ASV brand and identifying new independent dealers for the ASV product and we expect a number of new ASV dealers will be signed during the second quarter. With PM, the focus in North America has been two-fold.

First, we will be introducing the products to our existing network of dealers and to potential new dealer and the signing service and support centers and secondly implementing the manufacturing of the knuckle boom crane into our Texas facility.

With the North American growing for the knuckle boom product, we see this is a great way to provide USA made product and local support to an existing and a new customer base.

As we noted since first announcing our deal to acquire PM, in the North American markets unit volume sales in knuckle booms have shown consistent steady growth in the past several years and this is one of the pockets of strength that we see within our adjustable markets.

In its other markets, PM is seeing good growth in several European, South American, and Middle Eastern markets that have shown improved construction activity and as the PM product attains increasing visibility.

With regard to all this in our backlog at the end of the quarter, or backlog was $109.6 million, an increase of 2% from the $107.3 million that we entered the year with, including approximately $16 million from PM. For Q1 2015, our book to orders ratio to sales or book-to-bill ratio was 84%.

Now turning to the financial results, slide 5 shows the key figures for Q1 2015 with comparatives to the Q1 2014 and Q4 2014. The results shown in the slide are adjusted for the transaction related and other exceptional costs incurred in both Q4 2014 and Q1 2015 largely from the ASV and PM transactions.

Net revenues increased $43.3 million to $105.9 million for the three months ended March 31, 2015 from $62.6 million for the comparable period in 2014. Without the ASV and PM transactions, which had combined revenues of $48.6 million, revenues would have decreased $5.3 million of which $3.4 million resulted from the stronger U.S.

dollar currency translation compared to the first quarter of 2014. PM crane sales were encouraging in the quarter in most sales regions and particularly in the Americas and Europe where construction activity continued to show improvement.

Our ASV sales were substantially focused on the North American market and for the quarter were skewed more heavily towards the lower capacity units used in more general construction activity.

We experienced a reduction in the first quarter sales of the Manitex boom truck business in trucks having greater than 40 ton capacity, principally related to the decline in demand from the energy sector. The majority of this decline was offset by increased sales of material handling equipment, reflecting increased shipments of military equipment.

Sales in the Equipment Distribution segment were $1.2 million lower than in the comparable period of 2014.

Adjusted net income for the first quarter of 2015, excluding $3 million pretax of acquisition related and other costs related to the transactions for the newly acquired businesses of ASV and PM, was $1.5 million or $0.10 per share, compared to net income of $1.9 million and $0.14 per share for the first quarter of 2014.

Operating income adjusted for the acquisition expenses in the first quarter of 2015 was 4.9% of sales, compared to 5.8% for the three months ended March 31, 2014, resulting from an adverse sales mix of lower capacity product and lower crane sales that was only partially offset by $1 million of lower operating expenses, excluding the acquired businesses.

On an adjusted basis, gross margin was 20% and SG&A as a percentage of sales was 14% for the quarter, compared to 18.5% and 11.6%, respectively for the three months ended March 31, 2014.

This reflects some of the structural changes of the recent acquisitions, including additional operations, both sales and manufacturing, in a number of overseas locations. Adjusted EBITDA for the Q1 2015 was $8 million or 7.6% of sales. This of course only includes 75 days of performance from PM from the date of acquisition.

Moving to slide 6, this is a bridge movement in sales and adjusted net income for the first quarter of 2015, compared to the first quarter of 2014. I would like to discuss some of the key items briefly.

The sales reconciliations shows the build-up of the $43.3 million increase in revenues quarter-over-quarter, with acquisitions revenues of $48.6 million, a volume reduction of $1.9 million and a negative currency translation impact of $3.4 million.

With regard to net income the $43.3 million improvement in revenue generated the gross profits benefits of $9.6 million.

Additional operating expenses from the acquired businesses of $9 million were partially offset by $1 million of reduced operating expenses in the rest of the business, principally the effect of the absence incurred for CONEXPO in Q1 2014 together with reduced R&D expenditures.

Interest expense increased $2.1 million of which $0.5 million is rated to the increase in debt associated with financing the PM and ASV acquisitions. An interest cost of approximately $1.6 million directly attributable to a non-recourse term and working capital financing debt in ASV and PM.

To finance the transactions, the company issued convertible debt instruments with the basic value of $22.5 million and entered into a $14 million term loan with the bank interest on this debt to cancel substantially all of the $0.5 million increase in interest charges in the current year quarter.

For the three months ended March 31, 2015 foreign currency gains were $0.9 million, all related to the PM operation, the results of currency gains from the depreciation of the euro. For the remainder of the operations, foreign exchange gains and losses were insignificant.

Finally, our tax cost increased $0.1 million, with the 2015 effective tax rate of 32.8%, compared to 32.5% to quarter one of 2014. Slide 7 shows that working capital has increased from $89.5 million at December 31, 2014 to $98.9 million at March 31, 2015, including the acquisition of PM.

Working capital ratios now reflect a higher proportion of international activity. Looking solely at North American based operations, our DSO is 66 days and our DPO is 45 days, very much in line with prior comparisons.

Our current ratio of 1.8 for the current quarter is lower than prior comparisons, due to the addition of PM working capital facilities in current liabilities, since these are transactional based. This compares to the North American term loans that are treated as long term finance. Slide 8 shows our capitalization and liquidity position.

And of course shows significant change from the year end of 2014, substantially driven by the PM acquisition in January 2015. Debt of $200.4 million has increased $88.1 million with the assumed non-recourse debt of PM and the financing debt in the form of the term loan and convertible note. And I will review this is more detail on the next slide.

During the first quarter, we made debt principle payments of $2.8 million, including a $1.5 million advance payments in March to satisfy all of 2015 principle payments on the PM acquisition term loan. Slide 9 provides a breakout of the total debt of the company.

At March 31, 2015 and identifies the total, $112 million of debt relates to ASV and PM and is non-recourse to Manitex. Additionally, $83 million is related to working capital financing and is either transactional or collateral-based, and $21 million is in the form of convertible notes.

Also show on the slide for reference is the interest cost of the first quarter, indicating that the average cost of the debt is 6%. Our objective is to continue to pay off debt through working capital improvements during 2015 and beyond with the objective of returning our balance sheet ratios in time back to our normalized levels.

Having looked at the quarter-over-quarter comparison, I’d like to briefly comment upon the cost reduction activities we announced on our last call. With major additions to organization of the PM Group and ASV, we stated that 2015 will be a year to focus on integration.

Towards the end of the 2014, as part of this activity, we initiated a specific senior management resource plan to review and attack our cost base across the organization and it identified cost reductions that approximate $4 million in 2014 and $15 million beyond.

From 2014 cost base, the program picked up steam during the quarter and had a positive impact in the quarter, helping to offset the gross margin effect, some adverse sales mix and we believe we are on track to achieve the full moon goal set for 2015. And now, I’d like to hand back to David for his final summary..

Thank you, Andrew. In summary, we recognized that we cannot control the markets; however, we can improve shareholder value through improving efficiencies and retiring debt.

This year, we will concentrate on executing our plans for the integration and growth of the significant additions of PM cranes and the ASV joint venture as we move our products through our expanded systems.

We are also making progress in the cost saving initiatives, as Andrew summarized, which we’ve estimate will give Manitex $15 million in cost savings through 2017.

Finally, we are placing an emphasis on decreasing our overall working capital and improving our working capital ratios back to historical levels with the cash flow generated being used to retire outstanding debt.

Our shareholders saw some of this in the first quarter and should expect more on the second with consistent sources of cash from operations for the remainder of this year. We are operating in especially challenging economic environment, while we are very excited about the position and opportunities for our company.

The execution and implementation of our strategy and the rationalization of our companies and products we expect will have a significant positive impact going forward for the benefit of our shareholders. Andrew and I would now welcome any questions..

Good afternoon..

Hi, Kristine..

My question is around kind of how we think about the balance sheet by the end of this year? And I was hoping you could give a little bit more color on discussing – you talked a little bit about addition by subtraction and rationalizing, exactly what does that look like as we go through the rest of the year? And then I guess from both the working capital standpoint and from that perhaps maybe divestitures or what you are thinking – how much cash you think you could generate by the end of the year through kind of those two targeted areas to repay debt?.

Thanks, Kristine. Thanks for your questions. I will try to see if I get these responded to. I think the chart that we prepared that Andrew summarized on the debt does a nice job of showing that we kind of have pockets that belong in certain areas we have obviously PM debt that is non-recourse to Manitex was sitting in Europe with the European banks.

We have the ASV debt, which is in the joint venture that’s also – basically the two of those are roughly about the same $55 million, $56 million, total up to about $112 million of our $200 million debt.

So we are concentrating on the $88 million, which is directly attributable to the Manitex shareholders’ and controllable by the – I guess more or less the former companies that were – that made up Manitex prior to the addition PM and ASV.

Importantly, obviously, we will grow this cash flow available to that debt through putting operations from the international businesses to the Texas facility and growing our business in North America, so we will grow our cash flow and our profits through that mechanism.

And where do we want to return to, if you look at last year’s EBITDA and say that – that doesn’t have the other entities involved, it’s roughly $21 million and the $88 million that is on that chart, includes $22 million in convertible debt, but even if you use the entire amount – to get back to 3.5, somewhere in that ratio of debt to EBITDA, you have to get into the low-$70 million.

So clearly the first thing that we will retire and we have started to retire and continue to the second quarter is the term debt, which is the unsecured debt to our – all of our debt other than convertible debt banks or related parties.

So we have a very comfortable structure and positions with – we don’t have any kind of bonds of outside of convertible bond. So we are in a good position from that standpoint. So that’s again – the purpose in the short-term is to retire the term debt.

That’s not going to require a lot of effort, it will just continue to took it away as we know our working capital is a very large working capital and we will be having – we don’t anticipate as we had in our last few years where we’ve had a significant use of our cash to grow the working capital to grow the sales, we will growth the sales through acquisitions, which we’ve already done, not through growth in the markets in the near-term.

Obviously, these will snap back from the near-term growth to the long-term growth. In the near-term, we will use that cash and decrease the working capital retire that back into the low-70s.

As far as product rationalization, we’ve just started that process and we wanted to make sure that our shareholders are aware of that, but that will be something that we will be doing more work as we go-forward. It will not require or not involve material difference in our company.

We just want to – we’ve said many times over the years, we have products that – we have margins that are greater than our average and we have products that are less than our average. We want to concentrate on the products that are greater than our average because we have a good presence.

Most of our products that are in the crane group are greater than our average and that’s where we want to go. I don’t know if that answers your Kristine. I tried to summarize them..

That’s very good. That’s helpful. And then I guess a little bit on the cross-selling opportunity. And you started so much, you started to bring the production over to Georgetown here..

Right..

I guess what’s the biggest impediment we should think about, is it the production ramp up, is it dealer ramp up, or is it the service ability, customer acceptance, can you kind of walk us through kind of how this plays out in North America for PM?.

Sure. Very good question. Thanks, Kristine. The fact is that PM has been a somewhat of disadvantage amongst some of other competitors because they were larger with more resources, now with the hookup with us, obviously we have the resources in North America to introduce our product, but to do that you need parts and services.

That’s the key, key element of growing the business because somebody puts a crane somewhere, they want to make sure that there is someone in the area to service it and someone in the area to provide parts to it when it goes down because as we all know that’s part of the strength of what you are providing to your customer and that drives the profits for our company and the dealers, the parts and the service business for our dealer.

So we have dealers obviously all across North America, PM did not, PM has some very good dealers, which we will continue to work with very effectively, but we will overlay that with a much larger branch and much larger network and we’ve already started to establish that and set that up.

That’s a big deal to the end customer because they want to know there is somebody behind supporting it so that if the crane goes down at 4 o’clock in the afternoon, there is not anyone in Europe to talk to. So we want to make sure that 24 hours a day they have somebody to respond to their needs. And so that’s being developed now.

Secondly, on the production and the plants, that’s a process.

So first what we are doing now is, we’re mounting cranes on chassis in Texas and studying the – as you know, we are assemblers, so we’re just studying the assembly process, getting the build material, making sure that we have the components lined up, the products lined up that are necessary for the markets and that will take several quarters.

So we will see – we will see growth this year, the markets for PM fortunately are very good. So we are very lucky in that regard, the markets in Europe, the markets in Middle East, they are up all over the place.

So in North America, so we are very fortunate to have PM as part of the company to counter balance some of the weakness that we have obviously in our straight-mast cranes because of the energy aspects that I mentioned earlier..

Okay. That’s very helpful. I will get back in queue..

Thank you, Kristine, and thank you..

And we will go next to Matt Koranda with ROTH Capital..

Hi, Matt..

Hi.

So in terms of gross margins, it came in a bit stronger than expected this quarter and just I was wondering if you could help us understand what drove the strength in gross margins especially because you guys had less of a mix of the high capacity boom trucks, so was it material handling that drove a lot of the strength and can that be sustained throughout 2015, if you kind of tie it in with some commentary on 2015 going forward, what to expect that will be great..

Sure, Matt. Thank you very much for your question. And a very good point, obviously, we did have – we did see improvements in our gross margins and it’s – in pockets PM has higher gross margins that’s something we’ve commented on several occasions. Andrew mentioned that ASV did not have particularly a high gross margin this quarter because of its mix.

Certainly Manitex did not because of its mix. We did do some more. We did start to increase the lifting military business in the first quarter, so that’s obviously margins that are better than normal.

So it just feels like the ups and downs of the various products with the companies that we have, we continue to make improvements on all the companies, all the companies profits are growing, it’s just not relative state of where they are, they maybe growing from 12% to 14% gross margins, but that all adds benefit.

Overall, we are obviously from the 18% range or the 20% range..

Okay. Great. And in terms of OpEx, at least on the SG&A line, it looks like – maybe it was a touch higher than expected there.

Just even after adjusting for the transaction cost, could you just talk about what we can expect on the SG&A line going forward as we move through 2015?.

Exactly right, Matt. We had an improvement and a nice improvement on the gross margin line and we’ve had increases on the cost line and that’s – that’s basically a function as Andrew summarized of the fact that we have.

The opportunity now much more international businesses, we haven’t had those in the history of Manitex, but with those international businesses comes some more cost. So what’s the challenge for us now is we have branches in Middle East, in South America, and obviously throughout Europe.

And what our challenges is to make sure that we make use of those branches for all of our products, grow our sales and decrease the percentage of cost associated with the sales, because we don’t want to add bodies, we just want to put more flow through – through those branches.

But that will be a challenge that we have and clearly PM is relatively new for us and we will be working right along with all of the other things that we are doing. But that’s [indiscernible] even after expenses as you say..

Yeah, okay.

So it would be reasonable to assume that this level – the current quarter would kind of continue as a run rate going forward then on the…?.

You might have some adjustments Andrew was talking about where we had improvements in our core Manitex cost because of cost savings that we are running through. We might have some of that as we go through the rest of the year.

But generally speaking we are going to have a higher – somewhat higher SG&A number than what we’ve experienced in the past as being a pure North American company..

Okay. Got it. And then last one from me, was curious to get your take in Q1 at least, if there was any weather impact on deliveries and if there was would it be reasonable to expect any bounce back in Q2 in any of your segments in any material way..

I would think that it had some influence, but I don’t really think it was material, I don’t know how you feel Andrew, but I think we were able to weather the storm so to speak, but it clearly on a day to day basis, we had bottlenecks all over the place as far as delivery of supplies and deliver of products, but it was something that I don’t want to try to make too much of a excuse for.

.

Okay great, I’ll jump back in queue, thanks guys..

Thanks, Matt..

And we will go next to Mike Switzky [ph] with Global Hunter Securities..

Good afternoon..

Hi Mike..

Wanted to touch briefly on your oil and gas exposure here, you had mentioned in the past it’s been pretty steadily at $15 million to maybe $25 million in previous years it is down a bit, it sounds like this year, but you just paid that business going outside of that range in 2015, [indiscernible] today?.

If I understand the question right Mike, thanks again for the question then it is the - what we commented on was we estimated and again as you know, we sell through dealers, so it is a little bit of guess work, but we estimated that our energy exposure last year was in the $50 million to $75 million range and it really has multiple consequences for business this year because with the energy business being down, you certainly are going to see a lot of new purchases in that arena.

And you will also see some of the newer product that you sold over the last couple of years going into alternative areas because a 40 ton crane a lot o times is a 40 ton crane, so it is can be used for multiple purposes.

And so what’s happening now is you have inventory that is not necessarily at the dealer, but in the marketplace, so, you’ve had some very significant auctions in the last six months in specifically or more importantly in the last three months, in areas where they are energy related, so that equipment is just coming back into the market.

And we have to let that flow through, which is happening and then you’ll start to see a step as that is saturated into the markets and then we will start growing again, but again the crane business for us obviously is a driver, a company and it has historically been a construction oriented company, but as in everyone in our space, any equipment company from the tops of Caterpillar down to the bottoms of Manitex have all been affected by the renaissance of the energy business in North America.

So it’s been a great driver for us over the last couple of years. .

Great, that’s good a color. Can I have you go back to PM and ASV quickly, is something that - various moving parts on both of those in both directions, you’ve got ASV is more a housing market type of – while PM certainly is growing, I guess thanks to your efforts to roll the footprint, as well as deepen markets in Europe..

Well I think it’s more of the market. So, I don’t want to give too much to our efforts yet. I wanted to make sure that our shareholders and the rest of the parties to know we are moving in that direction, so I expect to see more of that in the future, but the real growth for PM has been the markets..

Okay well, I mean, I guess my question is could those two businesses see growth in 2015 from the prior year? Excluding foreign exchange for PM..

Absolutely, I don’t know how you feel Andrew, but I think those two areas are signing starts for 2015, net and probably lifting because of the multi business. Those areas are really where I can’t emphasis enough we’re lucky that we put them together last year and now we have markets that are very receptive for their products around the world..

And let me just squeeze in one last one here, in the quarter the accretion from PM and ASV, I don’t know if you would tell us that number, but can you tell us whether the equation was in-line you’re your initial thoughts and whether you might see different or better accretion in the second half?.

Well, I think I can tell you what we’ve reported, with ASV if you look on the income statement how is a separate line, actually, you can see it is accretive in the first quarter and I think, Andrew mentioned – I know Andrew mentioned in his comments, but it wasn’t exactly a stellar quarter for ASV, but it was a good start.

I mean that will be a separate segment that we reported in our queue, which will be filed or has been filed already and there I think it was in the 30s, right, Andrew for sales?.

32 million, yeah sure..

32 million for the quarter and obviously it was profitable and you can see the accretion there..

Great..

Thanks Mike, I really appreciate it..

Alright guys, thank you..

Thank you..

And we will go next to Amit Dayal with H. C. Wainwright..

Hi, Amit..

Hi, Dave, how are you?.

Fine, thank you..

In regards to your backlog, could you walk us through what the backlog of prices are today, given the new acquisitions? You were relatively flat compared to the last quarter, so if you could give us some color on what the backlog was. .

Sure of course. Thank you very much, good question. So, Andrew do you want to summarize, you had a summary, you want to just review that again, the summary of the backlog because you reported on that, why don’t you resummarize that. .

Sure, if you just [indiscernible] if wanted to go to slide 4, you will see the summary there of what the backlog was. So, we finished with just under 110 million, which was up from the 107.3 million at the end of December, obviously that’s a growth of just around 2%.

The composition of that backlog as you can see, it comprises approximately 10% ASV, 15% PM and about 75% if you like the core Manitex business though acquisition of PM and ASV. .

And Amit as you expect as we go forward, ASV is not a real large backlog type company because obviously it’s [indiscernible], so it can be turned pretty quickly and they are geared for that.

PM also has especially in their smaller end of equipment is also of quickly turn product, where as we know historically especially military business, large port business, and a large cranes have some very long lead times.

So, I wouldn’t expect – I mean backlog is something that can be watched, certainly something is very important, clearly in our Manitex, which is a driver of our company, there will be something to watch, but on the acquisitions it has some less impact than our other businesses..

Alright thank you. In your press release, I just got this one sentence around the ASV, you talked about re-launching the ASV brand in the market.

Could you clarify what that means? Are we – was this missing a little bit in terms of when you got your hands on it, are you...?.

Well, I think it’s a great opportunity for us and thank you Amit, thank you for the question, I think it is a great opportunity for us and I think Andrew who is much more involved with that then I am, I think you should respond to that one Andrew..

Sure. ASV for the last few years Amit has been a wholly-owned subsidiary of Terex. When Terex acquired that business, which prior to that should have been an independent business showing as ASV into the marketplace. Terex obviously has simulated the business and started to move the product through the Terex distribution under the Terex brand.

So, they had a complete line of construction equipments to what they have today, selling under the Terex brand.

One of the opportunities for us becoming involved in acquiring the majority share of that business is that we obviously don’t have to go through the Terex distribution, we still want to, it’s a very important part of the composition of ASV and we are very grateful and thankful that we have a very strong network in that respect.

Nonetheless, there are significant parts of North America where an independent brand and by that I mean the ASV naming its own right can be utilized to sell the product or indeed under the Manitex brand.

So, we’re now starting and have we launched the branding of the ASV product as it originally was in its independent format and we will start to establish in appropriate distribution areas, dealers selling the ASV product as opposed to selling the Terex product. That’s essentially what we have been talking about.

And that gives us the opportunity to setup the same number of dealers in territories where there isn’t representation where Terex may not have distribution. So that’s a very exciting part of the growth story really for ASV, but we feel that we can bring to the party now that there has been a change in the structure of ownership..

And Amit I might just add one minor point that obviously when ASV had its glory as an independent company, it’s ASVs independent distribution was what drove that not only for products of course and to market, so just wanted to take advantage again of having the ASV brand into the marketplace..

Understandable. Thank you. In terms of the Forex exposure now, are we doing anything more actively to edge against currency fluctuations, if you will, if that has a meaningful impact looking forward given we are much more widely operating, if you will, on a geographic basis.

Is there any specific strategy given only the acquisitions that you are bringing to play from foreign exchange?.

Thanks, Amit. We’ve functioned in the past with euros, dollars, Canadian dollars and those are still the principal currencies that we function in now and Andrew I know you even more actively involved in the hedging process we might still come up..

Sure..

Clearly it’s going to get higher focus for us now because the numbers are bigger..

Yes, of course. And you’re right, Dave. Historically we’ve implemented the hedging process where we needed and that’s really led to pretty insignificant movements on Forex and that if you like the core Manitex business historically.

We’ve just acquired PM, they will come on to our program as soon as we can get everything moving there, which will be relatively soon and they will adopt exactly the same hedging principals as we’ve been adopting..

Got it.

And just lastly, on the replacement parts business, how big is that business? Currently does that, given where we are in the cycle, given the market environment, do you think that could become a bigger business for us?.

Generally speaking, when we have less new equipment sales, we have more part sales, that’s proven over many cycles and certainly we haven’t experienced the cycle since the upturn after the ’09 recycling but the increase we had there was all energy related. So we are still kind of waiting for that cycle.

But I assume that this year PM has less parts business because of the fact that it’s more of a global company. So it hasn’t I think will improve in that regard and ASV has done a better job than we have as a percentage of parts primarily probably because there is also more with your product, which now generate more parts.

So I think you will see those two somewhat offsetting each other, so the percentage would probably stay fairly close to what we’ve been over the last year but maybe uptick a little bit..

Alright. Thank you, Dave, Thank you, Andrew..

Thank you..

And we will go next to Les Sulewski with Sidoti & Company..

Hi, Les. Maybe we lost, Les.

Are you still there, Les?.

Yes. Hello. Hi, David..

Sorry, Les, go ahead..

Can you hear me?.

Yes, no problem..

Okay. Sorry.

Can you just give us a quick refresh Dave on your military business to some of the long term contracts and perhaps what are some opportunities for expansion there in the short term if any?.

Sure. Thanks, Les. Congrats you brought it up. We announced last year two separate contracts with the Department of Navy total aggregate value over five, they were five year contracts. Total potential value, the top end was approximation of 125 million and we started to receive orders against those contracts.

Last year, we spent mostly in refining the specs and getting approval the original piece of the equipment that were required under the contracts. And those now we have started to receive orders last year in the third and fourth quarter.

Production started in the first and while it slows down a little bit in the second according to the production schedules that I’ve seen, they pick up again in the third and the fourth. So this year, we should have on an annualized basis a very good year-over-year improvement in our Canadian operations which is where the contracts are.

As far as additional orders, we are expecting more orders but at this point nothing concrete other than we are working our way through the process..

Okay. Got it. Thank you for that. And last one from me, on the – as far as the cost saving goes, are you looking more towards operational cost reductions or is it more of a pricing power and input cost.

How do you look at that overall?.

What we are seeing initially and Andrew commented on it was it’s mostly through the material pricing power that we now have as a result of being a larger company and we’ll concentrate on that throughout this year and the next couple of years to come..

Got it. Thank you..

Thank you, Les..

And we will go next to James Lee with Potrero Capital..

Hi, can you hear me?.

Hi, James, yeah, got you fine, go ahead..

Good. So given the macro challenges, you talked about energy challenges, is Q1 revenue at $105 million, is that the appropriate level to think about for quarterly basis..

It’s kind of hard to predict that, but I would say it really depends on how the demand starts to rollout. As I mentioned to – on one of the questions, we still have some inventory out there that has to be used up in the marketplace. So you heard our book to bill was under 1 for the quarter.

I like to try to keep our book to bill right around 1 if slightly above 1 so that we have some efficiencies in our production. So James, it’s really hard to answer that but I would expect some more in that range, yes..

Okay.

And did you talk about how much cash you’re expected to generate this year and how much of that comes from working capital?.

Well, it’s somewhat depended on as you know in the past as we’ve increased sales, we’ve used cash to grow that cash in our working capital lines to fund that growth because of the process that we use, which is a variable cost process. So we buy material and then produce it at a later date.

But in the near term, I want to get back into the 3s and as I mentioned to Kristine I think asked about the ratios, we are in the 4s now and to take it down to turn, we are somewhere in the 12 million to 15 million range which I think should be doable this year..

I was wondering how much cash you’re going to generate from working capital unless your sales go down quite a bit, if the sales they stabilize at these level, I am looking at your DSO, the inventory turn, it look pretty similar to what you have done historically if I am not sure how much working capital or cash flow is debt [ph]?.

That’s what I’m saying. We got 12 million to 15 million which we should be able to if we can decrease that 10% and generate obviously – regenerate cash so the combinations of those two should allow us to take our ratios back into the 3s which is fairly comfortable for a company like ours on an ongoing basis..

And I missed this early, did you talk about how much OpEx you expect to reduce in Q1?.

I’m sorry, what was the question about?.

The Q1 OpEx, how much do you expect to reduce from Q1?.

Did you get the question, Andrew?.

Yes. What we did talk about was the operating expenses as a percentage of revenues seem to be [ph] relatively consistent..

Yes, I apologize, James, I didn’t. We had a couple of million in there for acquisition cost, but other than that I expected to be in the near term relatively the same as and then we’ll try to continue to drive with that. As we go and as we will increase sales, obviously our percentage of operating expenses to sales percentage will go down..

Right. Thank you..

Thank you, James. Thank you..

And we will take a follow-up question from Matt Koranda with ROTH Capital..

Hi, Matt..

Hi, guys. Thanks for taking the follow-up.

Just really quickly, I was wondering if you could talk about the pricing environment in your boom truck end markets, especially in energy, or any of your dealers commenting on any pricing concessions for oil and gas sales, or if you could just talk generally about that and then maybe about the construction market as well?.

Well, I think, overall, obviously, when you are in this type of environment, pricing is a key factor in trying to get a sale, and we are obviously being as aggressive as the market dictates in our pricing policies..

Okay, got it.

I mean, what I guess I’m trying to get at is, are you guys seeing any benefit from being one of the low cost providers of boom trucks relative to competitors in those markets?.

Well, I think we have a lot of benefits. In terms of the market, it is very soft, so you were doing – from a percentage of market standpoint, we are doing as good or as better than anybody else in the marketplace, it’s a very – it’s a buyers’ market right now.

We had times as you know in the past where we were at a very strong pricing standpoint, but that’s not the case now..

Okay, got it. Thanks..

Thank you, Matt..

And we will go next to Jeffrey Lown [ph] with Tuxedo Road Associates..

Hi, Jeff..

I wanted to say this. David, I’ve known you as an acquirer, this is absolutely great operating results, and you, Andrew, and your team ought to be complimented for absolutely doing a spectacular job relative to your competition.

My question is this, as we look at the energy marketplace back in the 2010/2011 timeframe, there was an opportunity to go upscale with higher tonnage cranes with bigger margins, does that type of opportunity ex-PM exists in the construction industry?.

Thanks, Jeff, thanks for your question. Yeah, I think, obviously, the markets – as I mentioned earlier, a 40-ton crane is used for multiple purposes depending on the markets that you are serving. The same thing is true with an 85-ton, 100-ton.

So we have to continue doing everything we can to grow our larger tonnage cranes because it gets us into markets where we have much more of a price competitive position. But on the other hand, we have to control right now our R&D expenses. Andrew mentioned it.

We will continue to spend money like we’ve always spend money into regardless of what cycle or what product or what area we are in. We just have to be a little – we have to be very careful and we have to make sure that we are putting products together that can get short-term needs and long-term needs as well.

So, we are concentrating right now on the short-term needs. But Jeff, your point is well taken. Thank you..

Thanks, buddy..

Thanks, Jeff..

And we will go next to [indiscernible] with Metropolitan Services..

Hi, guys. I just had a question for you on the capital structure and that is that, obviously, these acquisitions created a little bit higher financial leverage than what the long-term pattern has been more than you would like to see.

So, obviously, you’ve been talking about leverage reduction, but does that mean that any opportunity for – like in a very opportunistic situation with regard to the stock price or there is just no room at all to consider any kind of repurchase activity as the market handed you guys a price that was just seem too good to pass up, is it just pretty much that we just can’t go there at this point or…?.

We were very creative and been very creative over many years. I mean, I use 2009 as an example, you couldn’t get anybody to give you any financing for anything, and we were able to put together several transactions that have had a long-term positive impact to our company. So, I wouldn’t say that anything is outside of the possibility.

It sits there right now. We are obviously a much different company. We were $15 million in sales in 2009. Now on an annualized basis, we were well in excess of $400 million in sales. So we just have to be more reflective of what we are and where we are going.

And somewhat change, you have to kind of reflect on the way you are adding that, not always keep driving. But clearly, if there is an opportunity that is strategic and valuable to our company, we can make it more valuable, we are going to do it.

This is not something that I want to give the shareholders any view that we are – that that’s something that they should anticipate in the near future..

Yeah, I understand. I understand totally. My second – last question is just – I just wanted to – just to kind of ask you a little bit about your terminology. When you – you mentioned for your looking to put money would be in the higher margin areas.

After you do a review of the various business units, you might focus money on higher margin areas, but do you really mean – do you mean a margin in terms of like the percentage on sales or do you mean like return on invested capital?.

We kind of always look at what it does for and it’s just kind of the basic stuff. Because everything falls, if you follow the basics. If your gross margin, it can demand a higher gross margin than the norms.

So if you say our normal gross margin is in a 18, 19 point percent range and you have products that clearly are above that and products that clearly are below that. We’ve always said cranes exceed that and material handling is less than that. That’s what we are going to try to do is grow our crane business.

We have an excellent opportunity to do that now with the strengthened market presence that we have around the world. So that’s really what we are trying to do.

And we also look at our EBITDA because once again that generates a lot of positiveness for the company, so we try to make sure that we are growing products and brands that have superior EBITDA margins compared to our mix..

Right. Following that line, thinking they will only kind of go in the direction like distribution business has got historically low margins, but it still could have a high return on investment, if the investment required to run it was low.

I guess why don’t if you might find areas like distribution for the gross margin was low, but the return on investment might still be high. That’s just – that’s where I was going..

Yeah, I think that’s a good point. And we, obviously, now have more distribution that we own even though most of – all of our distribution [indiscernible] we own the facilities, and we own the people and the areas of distribution around the world, but North America most of our distribution is through independent distributors.

But certainly on an international basis, as you know, we now have larger exposure and larger percentage of our businesses distribution that we actually own. So we will see how that develops as we go..

Okay. I understand and thank you..

Thank you..

[Operator Instructions] There are no further questions in the phone queue at this time. I’d like to turn the conference back over to management for any additional or closing remarks..

Thank you, Amber, and thank you everyone for your interest in Manitex International. We look forward to future calls. Thank you, again. Bye-bye..

That does conclude our conference. Thank you for your participation..