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

Mike Sulewski - Global Hunter Securities Matt Koranda - ROTH Capital Kristine Kubacki - Avondale Partners Les Sulewski - Sidoti & Company Dale Hefner - Metropolitan Services Chris Sansone - Samson Advisors Peter von Schilling - Polar Jeffrey Long - Tuxedo Road Associates.

Good day and welcome to this Manitex International Incorporated Second Quarter 2015 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 Chief Executive Officer. Please go ahead, sir..

Thank you, Shannon. 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 August 12, 2015.

Now please refer to the first slide regarding our Safe Harbor statement. We ask that you review this statement and also refer to our SEC filings for further guidance on the many risk associated with our company. I will start with a brief overview, followed by a quick review of our results by Andrew, and then we would welcome any questions.

Let's begin with Slide 3. We've seen significant changes to our markets during the first six months of 2015 specifically in our core crane straight mast boom truck market.

As everyone knows our boom truck business has been a large contributor to our growth and the value creation for our shareholders particularly over the last several years as it served the expanding needs of the energy industry. However, the rapid decrease in oil prices has resulted in a dramatic decline in oilfield activity.

This in turn has not only constrained new equipment purchases but it also idled the use of energy equipment such as our boom trucks. Since the equipment is not being used, the energy producers have sold off to slightly used or in some cases brand new equipment into a fairly solid non energy market.

This has resulted in a dynamic that is created a temporary slowdown in a large segment of our straight mast boom market.

As outlined in our release, the effect of this slowdown in new equipment sales which is principally at our Manitex division, combined with the currency impact on our international sales results in an almost $30 million decrease in sales for the quarter, which has a significant impact in our crane plants absorption for this period and of course a big impact to our earnings per share.

In spite of this we were still able to report adjusted 18.8% of gross margin and 7.7% of EBITDA which is very good considering the very weak straight boom truck crane market.

And fortunately while we are experiencing the energy increase in our business over the last several years, we are also working on diversification in our Manitex group product portfolio. And we are seeing the benefits of these actions as I will outline now.

PM Cranes our most recent acquisition completed in the first quarter of this year saw an increase in sales to little over $23 million in the second quarter when compared to around $16 million in the first quarter. Please let me provide a quick overview of PM for new participants to our company.

PM is a knuckle crane boom product which has not had exposure to the energy markets of North America. It is a company based in Europe with broad international presence and very little business historically in North America due to lack of distribution.

It is built on a flat bed over the road truck similar to our straight mast crane products with multiple applications for its use in the marketplace. Our goal with PM is to produce its core line of products in our United States crane plants and expose its products to our large Manitex North American distribution channels.

We believe PM’s knuckle cranes will be the most complete line of knuckle cranes made in the United States giving it a significant advantage over its primarily European based competition. Meanwhile the traditional markets of PM are solid or slightly growing.

The gross margins from PM products are better than historical averages for Manitex with EBITDA margins in a 10% range. As we go forward the growth of PM bodes well for the future value of Manitex.

We should also note that we also -- that we experienced a steady and consistent quarter for our other relatively new addition to Manitex and ASV, the joint venture which we completed with Terex Corporation in the fourth quarter of last year. ASV also has little energy exposure and improves our presence in the general construction market.

Finally, we made further advancement of our stated goals and additions to the above which are to continue to reduce our debt levels, and push through cost reductions by primarily implementing global purchasing programs. Andrew will provide further details on these and other important measurements in our second quarter results summary.

But at a very high level we made record EBITDA for this period with our improved diversification and cost reduction activities. At a time when our most valuable asset that being the Manitex boom truck division was experiencing an unprecedented we believe temporary fall off in its markets. With that overview, I'd like to now turn it over 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. So let's start with Slide 4.

Quarter two 2015 market conditions have been mixed for each of our operating segments with some areas of strength and others being weak. For our Lifting and Equipment Distribution segments where broad range of market is served, the dominant influence has been the downturn in the energy sector.

But we've also seen continued positive influences from the general construction sector in North America, modest international market improvement and improvements within container handling equipment.

As is widely known, the energy sector has seen a dramatic decline since the end of the year with consequent negative impact on demand for our larger crane products in particular. North American rig counts at 1,089 are 48% of the levels a year ago.

And capital expenditures on equipments have been significantly reduced, lowering the demand for larger tonnage crane products. In addition, this energy decline has created a follow on effect of pressing demand for new equipment from other growing sector such as general construction.

Because the versatility of these cranes makes them useful for a variety of applications. Equipment rather than standing idle in the energy field is being sold to these other markets. Consequently, 2015 overall market demand is trending down to levels last than in 2009. We believe however that this is a temporary timing issue.

And as existing aging equipment works its way through the system, demand will start to return and then pick up further as the energy sector turns.

Our European markets have continued to show incremental progress as economic conditions and credit availability have improved and various international geographies served in particular by PM have shown good demand.

The strength of the dollar although negatively impacting our top and bottom lines as we translate sales and foreign earnings to US dollar, has provided some impetus to euro zone competitiveness which we anticipate may help sales volume in future months.

The container handling market served by CVS has continued its modest strengthening on an international basis. Excluding any currency impact, CVS was able to post 14% increased revenues for the quarter compared to the comparable quarter of 2014.

For ASV segment, North American construction demand is the strongest influence and there has been incremental improvement in both residential and non-residential activity compared to prior years. Turning to products. The knuckle boom market is posting favorable year-over-year comparisons and is trending to year-over-year growth of around 10%.

For our PM products, that have had little historical penetration in North America, our focus is two fold. First to introduce the products to our existing network of dealers, and to potential new dealers and the establish service and support centers. And second to implement our plan to manufacture the knuckle boom crane in our Texas facility.

With the North America market growing faster than the overall market as the knuckle boom product gains wider acceptance, we see this as a great way to provide the most comprehensive range of US made product and local support to an existing and new customer base. This project is progressing to plan.

For ASV products mainly compact track loaders and skid steer loaders, the market has been stronger than recent years. And construction activity although impacted by the wet weather is trending positive.

For ASV our focus has been to reintroduce the ASV branded product and its unique features as well as to establish new distribution in previously un-served geographies. The ASV branded product was announced in April just four months after we completed the formation of the joint venture.

And we've recently announced the launch of four ASV branded skid steer loaders as well as adding an additional compact track loader the RT 75 into the middle of our CTL model lineup. This is an exceptionally mobile and light footprint model working at the extremes of conditions where competitive product is hard to find.

The expansion of ASV brand distribution has also progressed well in the first half of the year. With almost 50 locations signed up and initial orders have been shipped or are in process.

We anticipate this sign up and the shipping of product to accelerate in the second half of the year, and expect it to be well ahead of our internal plans for this initiative at the end of the year.

With regard to orders in our backlog, at the end of the quarter our backlog was $97.5 million, a decrease of 9.2% from the $107.3 million that we entered the year with. The backlog is broadly based and comprised 69% from Manitex products comparable with 2014. 18% of PM product and 13% of ASV product.

For quarter two 2015, our booked orders ratio to sales or booked to bill ratio was 89%, up from 84% in the first quarter. Now turning to the financial results. Slide 5 shows the key figures for quarter two 2015 with comparatives to the quarter two 2014 and quarter one of 2015.

The results shown in the slide are adjusted for the transaction related and other exceptional costs incurred in both quarter two 2014 and quarter one 2015 largely from the ASV and PM transactions. Net revenues for the three months ended June 30, 2015 increased $37.2 million, or 54% year-over-year. Lifting equipment increasing $5.4 million, or 8.3%.

Equipment distribution decreasing $0.5 million, or 10.6% and the ASV segment contributing $32.2 million of the increase. The impact of currency translation, the result of a stronger US dollar, lowered total net revenues by $10.2 million compared to the second quarter of 2014.

The lifting segment included the benefits of $23.2 million of sales from the recently acquired PM group, without which revenue would have decreased $17.8 million, or 27%.

After adjusting to the effect of only 75 days of activity from the date of acquisition in the first quarter, PM cranes sales still increased approximately 17% in quarter two compared to quarter one. The increase is driven by sales to North America and internationally to Europe and the Middle East.

Sales in quarter two of 2015 a straight mast boom truck crane were adversely affected by the slowdown of activity in the energy sector which resulted in sales of under utilized equipment to other industries such as the relatively strong general construction sector.

This contrasted with strong sales into the energy sector in the second quarter of 2014 and also resulted in a significant mix win with sales of cranes with capacities greater than 40 tons reducing from 50% of cranes sales in quarter two of 2014 to 31% in quarter two of 2015.

This mix change also had a significant impact on gross profit percent and operating income. Sales of other equipments reflect a steady demand from the general construction sector and the strong demand from the container handling sector where CVS recorded a 14% revenue increase excluding any currency impact.

ASV revenues for the second quarter of $32.2 million were unchanged from quarter one 2015. Unit sales of machine increased from the first quarter by 20% and reflect a stronger comparative demand for skid steer loaders which increased over 60% compared with the first quarter which compared to an increase of 8% to compact tracked loaders.

Demand from general construction activity in North America remains steady and sales to Australasia also remains strong. Sales of after market and OEM parts were approximately 12% low than the first quarter, largely due to low demand for OEM and the carriages.

Shipments of the newly launched ASV branded product commenced in the quarter to a number of new dealers established in North America. This is a very positive trend and is expected to increase progressively throughout the second half the year as new distribution continues to be bought online.

Gross profit of $19.8 million, or 18.8% of sales compared to $13.1 million or 19.2% sales in quarter two of 2014. The adverse impact of volume in crane product mix was partially offset by improved margins from PM product and benefits from the cost reduction project we initiated in 2015.

Adjusted net income for the second quarter of 2015 which excluded $0.4 million pretax of acquisition related cost related to the transactions for the newly acquired businesses of ASV and PM was $0.4 million or $0.02 per share compared to net income of $3 million and $0.22 per share for the second quarter of 2014.

Operating income adjusted for acquisition expenses in the second quarter of 2015 was 4.7% of sales compared to 7.6% of sales for the three months ended June 30, 2014.

Resulting from an adverse sales mix of lower capacity product and lower crane sales, those partially offset by $0.9 million of lower operating expenses excluding the acquired businesses. On an adjusted basis SG&A as percentage of sales was 12.1% sales for the quarter compared to 10.8% for the three months ended June 30, 2014.

Reflecting some of the structural changes in the recent acquisition, including additional operations both sales and manufacturing in a number of overseas locations. Adjusted EBITDA for quarter two 2015 was $8.1 million, or 7.7% of sales. A marginal up from the first quarter of 2015 on similar sales levels.

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

The sales reconciliations show the build-up of the $37.2 million increase in revenues quarter-over-quarter, with acquisitions revenues of $55.4 million, a volume reduction of $8 million and a negative currency translation impact of $10.2 million.

With regard to net income the net $37.2 million improvement in revenue generated the gross profits benefits of $6.7 million.

Additional operating expenses from the acquired businesses of $7.8 million were partially offset by $0.9 million of reduced operating expenses in the remaining operations, principally the effective reduction implemented in our crane operations with those reduced volume and the benefit from currency translation.

Interest expense increased $3.2 million of which $2.4 million is directly attributable to the non recourse term and working capital financing debt in ASV and PM.

$0.5 million of the increase is related to the debt associated with financing the PM and ASV acquisitions whereby the company issued convertible debt instruments with a face value of $22.5 million and entered into a $14 million term loan with its bank. Amortized debt financing fees of $0.3 million comprised the balance of the increase.

For the three months ended June 30, 2015 other expense of $0.2 million was principally foreign currency losses or related to the PM operation, the result of currency expense. During the second quarter, a hedging program is started with PM which will help reduce volatility of their currency exposure.

For the remainder of the operations, foreign exchange gains and losses were insignificant. Finally our tax cost decreased $1.2 million, largely from the reduction in taxable income but also with the reduction in the 2015 effective tax rate leading to a 27.9% rate for the quarter compared to 32.5% for quarter two of 2014.

Slide 7 shows our working capital was increased from $85.6 million at December 31, 2014 to $97.5 million at June30, 2015, including the acquisition of the PM. Working capital ratio is very much in line with our prior comparisons.

Our current ratio of 1.8 xs for the current is lower than prior comparisons due to the addition of PM working capital facilities and current liabilities since these are transactional based. This compares to North American term line that are treated as long term finance.

Adjusting for this difference, we give a current ratio of 2.1 at June 30, 2015, an improvement over the ratio of 2 at December 31, 2014. Operating working capital as percentage of last quarter sales was 34.4% also showed improvement from the start of the year as a result of the improvement in receivable and inventory turns.

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. Total debt of $197 million has increased $84.7 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 second quarter 2015, we made term debt payments of $5.2 million, taking the total term debt repayment to $8 million for the 2015 year-to-date. This remains a key priority for us with the objective of rebalancing of debt to EBITDA ratio.

During the second quarter we generated cash from operations of $7 million and anticipate continued cash generation to enable further debt reduction. Slide 9 provides a breakout of the $197 million in total debt at June 30, 2015 and identifies of the total, $110.6 million of debt relates to ASV and PM and is non-recourse to Manitex.

Additionally, in total $81.5 million is related to working capital financing and is either transaction or collateral-based, and a further $21 million is in the form of convertible notes. Also show on the slide for reference is the total cash and availability of $42 million at June 30, 2015.

Our objective is to continue to pay off debt through working capital improvements through 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 previously.

With the 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 this specific senior management resource plan to review and attack our cost base across the organization and as identified cost reductions with total approximately $4 million in 2014 and $15 million in the three years beyond.

From 2014 cost base, the program picked has delivered $2 million in savings year-to-date June and had a positive impact in the quarter principally in cost-to-good sold, helping to offset a less favorable sales mix that impacted our gross margin, and we believe we are on track to achieve the $4 million goal set for 2015.

And now, I’d like to hand back to David for his final summary..

Thank you, Andrew. Our goals for this year are clear. First to execute on the introduction of PM knuckle cranes into the North American market, to establish manufacturing of PM knuckles into the Manitex North American production facilities, and also to use the PM international sales network to expand sales of other Manitex products internationally.

Second use, our cash generation as well as our strong current asset position to continue significantly reducing our debt levels. Third, expand ASV sales by continuing on the program of expansion into new ASV oriented dealerships.

And finally continue to review our portfolio companies and products, to emphasize our higher margin products and place our future growth around the companies and products to drive the highest return for our shareholders. With that Shanin we will welcome any questions. .

[Operator Instructions] Thank you. First question comes from Mike Sulewski with Global Hunter Securities. .

Good afternoon, guys. So let me just talk quickly, I just want to make sure I got -- I may have missed this on the interest cost. So your debt was down, but looks like your interest cost were up a little bit.

What was behind that and will it come down from here?.

Well I think we had some currency issues in there in the second quarter. We might have had some hedging. I think our debt while it is down, it did go up so I think our debt was little higher than what we originally had projected. And our models show that for the next quarter and the following quarter it does go down..

Okay, great. And they can go up the P&L a bit here. You certainly sounded about a year ago that things looked particularly good for EBITDA, still isn't - is certainly positive here.

Do you think you might see better EBITDA in the back half of the year I guess versus the first half or do things look sufficiently difficult in the energy environment that you won't be able to get any better in the third and fourth quarter here?.

Well, I think the way we should look at it is on a pro forma basis last year with the acquisitions we were in the 40s on an annualized basis for EBITDA.

This year we are in the 30s on an annualized basis for the first two quarters [indiscernible], and the problem is that Manitex obviously is a big driver; it was 50% of our business at Manitex prior to the acquisitions.

So if you had last year without the acquisitions $20 million in EBITDA and you are losing 50% of that to a great extent then you are certainly going to be in the 30s I would expect somewhere this year and so I don't expect -- I do not expect until you see the flow through of the equipment in the energy business into where its exhausted into the non energy business.

And they have to come back and start ordering and inventories at a dealer levels are backed down that we will see expansion again in our EBITDA. That's where I see it. I don't know Andrew if you see it any differently..

No. I think that's about it, Dave..

Well, can you maybe give us a sense of what innings you think we are in as far as the inventory clear out here in the channel?.

Well, that's always the tough one, isn’t it? Because we've talked -- you and I have talked about this trying to figure out where the used equipment is coming from and how to accurately keep track of that, obviously it is very difficult. If you look at the last couple of years, we sold in the straight mast boom truck market.

And of course we have to distinguish difference now between the straight mast boom and the knuckle cranes because we are not talking about the knuckle cranes here. They are performing well. The straight mast cranes sold somewhere between 1,600 to 1,700 units a year for the last two years.

And I am looking at the last two years because we know that the energy business now is over buying in anticipation of continued growth on energy side which of course as we know is not happened.

So you have to anticipate that a chunk of those units, I don't know about third 40% something was going into the energy field because we didn't have a lot of growth in construction at that time.

Now fortunately we have growth in construction, so construction is absorbing the used equipment but it clearly is not buying new equipment, it is same for us and everybody else in the industry.

So we have to just wait until the -- till that period goes through, reduce do everything we can control which is reduce our cost, try to run more PM through our crane plants as quickly as possible and try not to -- and try to be ready for the turn which we know will happen because in a very near future and of course in the energy world isn't completely stopped, you still have energy maintenance, you have energy service, you have other energy areas that are continue to use equipment.

So all those dynamics are at work. So I am hopeful that by the end of this year we have all that through the process and next year is an up year for us which would then return our EBITDA back into the $40 million and $50 million range..

And next question comes from Matt Koranda with ROTH Capital Partners. .

Hey, David and Andrew, good afternoon. Just wanted to start out with ASV. It sounds like for the second half of this year maybe you could help us understand the potential revenue uplift that you could see from the new product introductions? And the new geographies that you guys putting in and that you mentioned in the prepared remarks. .

Andrew, you are closer to ASV than I am.

Do you want to take a stab at that?.

Absolutely, yes. We indicated I think some very positive trends with regard to the ASV branded products in its own right. As you know, lot of historically the ASV products has been sold through the Terex distribution and that of course continues. But our objective is to get some growth through ASV brand.

And to that end there is fairly large portion of the market where distribution has not been in place. And we've been working diligently to increase that distribution sign up new dealers.

And of course as you know that takes a little bit of time process you have to do due diligence accordingly and obviously to get the interest as well from people in the first place. We've done that towards the second quarter, the pace of signing up new dealer has increased pretty significantly.

We probably got in the region of about 50 locations now are about to take or have taken initial orders. And we expect that will accelerate through the second half. So that we have -- I anticipate that we’ll put probably 50% more products through maybe even the 100% more product through that distribution in the second half compared to the first half.

And that obviously is only part of the distribution picture that we are looking at. But that is obviously a very important part of the future growth strategy for ASV as we look to grow that product and increase penetration in the marketplace. .

Okay, very helpful. And then in terms of PM if we can switch to that for a moment. Maybe you could just comment on the current bookings environment. What's that like especially in Europe just given some of the macro hiccups like Greece that happened in June and July.

Did that affect order patterns at all or you are still seeing strength in the order flow for PM?.

Matt, at PM, we get very good data from them on where they are taking orders and where they are shipping product.

And the European market, and now getting we are coming off as you know historically very, very low basis because they didn't have the energy pick up that we had in ’10,’11 and ’12, as you know we peaked in energy in the first quarter of 2012 and they never saw that at all.

So they have been down for so long they don't know what up is, but they are seeing increases throughout Europe, Middle East, obviously North America, even in which we think of not very strong areas. They have some very strong basis in South America, so even in some of those markets. So they are showing some very solid increases in Europe right now.

But again that's coming of a very low base. And their backlogs, they run a very quicker turn. They don't mount as many cranes as we do. So probably the reason why their gross margins are much better is because they just assemble the cranes and sell out more kits than what we do at Manitex, where we end up mounting a lot of cranes at the plant.

So their cycle is much quicker than our cycle. So you see as we go forward probably a little less, certainly backlog is a good indictor of what's going on but it is between ASV and PM, it is -- they have -- both of them have a much quicker cycles to the market. .

Okay, got it. Last one for me and then I'll jump back in queue here. In terms of cash flow from operations and the outlook for the remainder of the year.

Can you just help us out especially around working capital assumptions that we should be making and maybe the implications there for debt repayment for the remainder of 2015?.

Sure, of course, Matt. As Andrew indicated in his remarks, we had $7 million in the second quarter and I expect and that was primarily in a receivable area because you look at the between first quarter and the second quarter, our receivables went down slightly. Our inventory went up slightly.

But going forward for the next couple of quarters, I wouldn't expect either receivables or inventory to be up. So I'd expect both of those to contract, and so therefore I would expect $7 million to be greater in the third and fourth quarter. And as you know we indicated that we paid off $18 million in the first half.

And I would expect that, at least that much in the second half which would mean that our debt levels would be go down for our total basis including non recourse debt into the 170s and then on a recourse basis on our Manitex debt going from the 80s into I would like to see us go into the 60s if we could from a debt standpoint.

If we go into the 60s we start of this acquisition process with $50 billion of debt and if we end the year with something in the 60s we think we have add a lot of value for the company and the risk factors is low again after we get through this year. .

Next question comes from Kristine Kubacki with Avondale Partners..

Hey, good afternoon, guys.

Just to make it more simple for me because I am slow but in terms of -- just thinking about the gross margin, I mean the quarter added 18.5% which is down, as I am calculating it from the first quarter slightly, it sounds like as we've think about the back half of the year, it sounds like we maybe could see a little better PM, maybe PM positive ASV PM positive.

I guess as you think about what's in the backlog for the Manitex and what's the mix there, how should we think about their gross margin movement from here for the rest of the year?.

Yes. Thanks, Kristine. Thanks for your question. Gross margin is very interesting because in previous downturns and you heard Andrew say that on the core straight mast boom product it is as bad as 2009 for new equipment purchases right now. And at that point we were down in the 16s range for gross margins. But I don't see anything like that.

In fact, I see improvement in the third and fourth quarter for couple of reasons. One, Liftking, Andrew mentioned that we will have more military business, we didn't have military business coming through in the second quarter.

As you know, we have very large contracts there and that business has backlog and we will start to ship in the third and fourth quarter. So we will see some improvement in our gross margins from that because obviously that's very specialized equipment with good margins it has attached to it.

And so our other companies, we have a fortunately a large mix of other companies outside of Manitex, and they are all performing well or better as we go along for the rest of this year. So I don't expect deterioration in our gross margins between now and end of the year.

I don't know, Andrew you look at the same models and the same stuff that I saw or see but I don't know if you think of anything else..

No. I think again Dave you hit it very right..

Okay and then kind of reading out to my next question then I believe in the last quarter you talked a little bit about maybe looking at the portfolio as a whole and maybe be an opportunistic there.

Is there any uptick there?.

No. We continued on that path when we have something definitive to report we will report it.

And we will -- as I have said many times over the years, we have products that would margins and contributions that exceed our average and we have products and contributions that do not and we will emphasize the ones that exceed and go forward with our -- those are our core businesses anyhow. But we report when we have something definitive. .

Okay. And then my last question is little bit on the after market side. I was just wondering if could comment kind of the trends there within the kind of core business and then also within the press release there was little bit talk about the ASV segment after market doing down lower demand for OEM and carriages.

I was just wondering if you could give us a little color there and what you are seeing on the after market side?.

Yes. So specifically on ASV and again Andrew you correct me because you know this much better than me. But I assume it's the under carriage is more a Caterpillar for the quarter.

Is that right or some other suppliers as well?.

Yes. It is Cat generally, that's correct. .

Okay..

Is that something kind of short term in nature or something that's a little bit longer term?.

Cat actually pulls quite a bit of product into the first half of the year. They got some restructuring going on and also just sense of that their build, so I think that will continue through the rest of the year. .

Okay. .

And on the other businesses I would say everything I have seen is very steady and of course that means that there is utilization of products in the marketplace as all we know. Because of marketplace contrary, I don't want to scare people because contrary to 2009 this is a very good market for the rest of the products.

So just -- it just have one sector that happens to be a big one for us historically that in a last couple of years is really affected by the operation of used and slightly new equipment or slightly used equipment going into the marketplace.

So again I don't want to have anybody over react to what's happening but definitely has a temporary impact to us. But on the part side, their business has been very steady and of course as a percentage that percentage will increase because we will have less new equipment and more parts business.

Which is probably also helping it to marginalize some because as you now, the margins on parts are very strong..

Can you remind us what percentage that is again of the total business?.

It is generally been in the 10% to 15% range. .

Next question comes from Les Sulewski with Sidoti & Company..

Hey, good afternoon, guys.

Perhaps Andrew maybe this was for you since it is for ASV -- it is regarding ASV, 0:41:47.9, what's the involvement of the original parent company? Are they still utilizing some other distribution? And perhaps maybe you can kind of touch up on pricing difference just the rebrand?.

Sure. So the ASV originally or historically has gone through the Terex Distribution. And that continues to this day. So we were very closely with the sales and the distribution organization of the Terex Construction and sell to them and through their distribution.

As you are probably aware from lot of the discussions that we've had that distribution is not comprehensive across North America. And as a result one of our objectives is to grow the ASV brand in its own right rather than selling it to the Terex product. And so we've launched the ASV product in its own right pretty rapidly after the acquisition.

We put the compact tracked loader is out there. We've recently added to that line and just this last month we've also added the complete line of skid steer loader as well into the ASV brand all which is sort of new products. So we are continuing to build out and to drive the ASV product in its own right.

But at the same time maintaining the relationship and selling strongly through the Terex distribution network. .

That's helpful. .

And pricing I don't think --.

Pricing, yes. Sorry on pricing, yes I mean generally pricing is largely speaking they are equivalent.

You find that one of the interesting aspects of this business and certainly this year has been incentives that have been put out by number of competitors which obviously effective at the end of the day retail pricing that goes out into the marketplace similar we are making sure that we are competitive with that and Terex utilize their financial services as well to help provide support in that respect for sales through their distribution in that regard.

.

Okay. And maybe to touch up on the previous question about the margin impact from I guess a mix of revenue flowing into second half of the year. Specifically I believe from the last you mentioned you are going to have some pickup in the military business.

Should need -- I think that's kind of lower margin business compared to PM perhaps or maybe it is more in line with the Manitex side. So maybe --.

If I may want to make sure I understand the question. So you are asking is our military business where is that fit from a margin perspective..

From the -- yes. .

It is generally the higher end of our margins. And the reason is why is because generally the products that we provide there are very specialized so it has a very decent margin associated with it.

So then we have a lot of upfront cost which we've already incurred which has been charged because you have to go through a very rigorous testing program, manual preparation program, engineering program, it's just been lot of work that we put into it.

So you love to get these contracts because as you know we have $125 million contracts over the next five years in several different areas but now we'll start to see the benefit of that starting in the third quarter. So the margins there will be higher. .

Okay, got it. And perhaps maybe just last one any sort of bleat through from slowdown in China? Perhaps maybe something your shipping customers or any of that nature. .

No. We don't have by that much exposure to China as you know because of other fact that we be in the size where we are we pretty much have concentrated where we feel like we have more control. And so we have not got any impact there at all..

Next question comes from Dale Hefner with Metropolitan Services. .

Hi, guys. You talked quite a bit about raising cash through working capital reduction. But I think I heard anybody asking I was wondering if there are any opportunities for a facility consolidation or you might be able to sell some real estate.

Is there anything out there in that way?.

Well, we are looking at assets, we are looking at our as I said we are looking strategically at our businesses and as we've said several times, we will concentrate on our higher margin major businesses. And fortunately, all of our businesses making money and they all have value to somebody.

It is just whether or not they have more regard to someone else than to us. So we are under going that process, yes. .

Right.

But even like in situations where you wanted to keep maybe both businesses, is there any extra room some place where you might like to be able to move and kind of like save money on facilities?.

No. I wouldn't imagine us or envision us doing something like that. No.

No, okay. And secondly on the energy sector I guess I heard your comments about the sector kind of planned to having to pick up because it affect or it is your business having to pick up because people have been offloading their units on the energy sector or other sectors. I guess the kind two ways to think about it.

One is there would be some pick up whether a rig counts went back up or not. And I just wondering whether your comments or in view of rig count staying about where they are now or you expected improvement also factoring in an increase in rig counts. .

Well, it is very hard to predict the future of rig counts in the whole energy areas as we all know. It is fragile combination between supply and demand. And so we are just looking and saying, our equipments is being used now, the rig count is down significantly, it is stabilizing at this level over the last couple of months or this last weeks.

And so we see business being activated in the current market, but by all means we still have -- there is a lot of equipment that was originally sold over the last couple of years going into the energy world.

And as we all know, to one that stuff ideal some of the producers just need cash so they put that into the non energy market because as I said in the last quarterly call a 40 ton crane is a 40 ton crane so whether it is used in energy, whether it is used in non energy, it still has a same as many applications.

And so we've just have to wait for that to go through and we hope that by the end of the year that's looks good. So that the next year we have a much more clear runway. It could happen sooner, we don't know. It could happen sooner also..

Right. So it doesn't sound like you are being overly optimistic on the rig count but one final question.

The cases for who you use other people's distributor, I was wondering do you always sell your product to the distributor and then the distributor sells to the customer or there situations like for you own the piece of equipment while it is on the distributor's lot until it get sold to the customer..

We do a little bit of everything. Primarily generally speaking we sell to the distributors. But we also consigned to distributors if they have a customer that wants to review a product prior to purchase. We do some of that in a small way. We rent some equipment in a small way. So we have multiple ways that we try to get to the market.

But generally speaking we sell to distributors who then sell to end user. .

Next question comes from Mike Sulewski with Global Hunter Securities..

Hey, guys. Just one quick follow up question. So earlier today we hear for company a little bit hear today about chassis available -- they sometimes they had been initiatives with getting their -- getting the proper trucks and chassis to mount their truck mounted equipment.

I just wondering if you could just tell us if you are seeing that in your product, so you are doing enough chassis and trucks delivered on time given the somewhat robust truck market that we are seeing right now. .

It is amazing Mike when you think about it. Our business is way down but you still have issues getting this chassis. So I think it is just very aggravating trying to because you think gosh you are not making that many units anyhow but then you still have problems getting to chassis.

So I would say it is not newly as bad as it was initially and when this business started coming back in 2010, at that point there was huge capacity problems. So I wouldn't say it is nearly as bad as that.

But we still have an occasional bottleneck where you have the wrong chassis because we obviously have chassis in our inventory now but sometimes we have the wrong chassis, sometime we try to convince the customer to change a chassis but as you know a lot of customers are very particular about which kind of chassis they put their crane on..

Next question comes from Chris Sansone with Samson Advisors..

Hi, Dave.

How are you?.

Fine. Well considering I am okay..

Thanks. Yes, I agree. Couple of questions for you on the Lifting equipment. You guys reported approximately $71 million of revenue and within that there is $23 million of PM Group..

That's correct, that's right. .

Okay. So Manitex and the Manitex companies those revenues there were $48 million for the quarter. .

Yes. So they were in the 60s a year ago and now they are in the 40s. That's right..

Okay.

And how much of that $48 million was related to the government business?.

Not very -- almost nothing for this quarter. It starts again - it starts in the third and fourth quarter..

Okay.

And so can you annualize that $48 million level and call it maybe what the run rate would like for 2015?.

Well, I guess I mean obviously and I don't know if you can annualized it or not because we are not done with 2015, but you probably -- if you had $265 million of non acquisition sales last year was $265 million of sales last year with $5 million being roughly being acquisition sales last year. So it is $260 million.

And obviously at $48 million you are around $200 million from your old Manitex products prior to acquisition. So that's probably a fairly reasonable fall off, I don't know what you think Andrew. Probably fairly reasonable fall off in just our Manitex business..

I would say, yes, absolutely. .

And then we will have some government pick up in the second half..

Yes. You have a better mix or the better mix in the second half of the year, yes. .

Okay.

Are you guys providing any guidance on what's the magnitude of the government business will be in the second half?.

We have not. It is a good piece of business and we generally don't breakout our backlog by product but it is good percentage of I think you said 69% and the -- of our backlog was at the Manitex's businesses and obviously that piece is up for the second half of the year. .

Okay.

And my last question is what do you guys think your CapEx is going to be for 2015?.

Usually as you know we are variable cost company. So we assemble everything around the world. And so we generally have not had significant amount of CapEx because it is set on just replacement of minor equipment in our plants. We don't do fabrication or significant bending or building.

So I would say somewhere in the $1 million or $2 million range for the year, I don't you know if you feel that's reasonable Andrew but that's my guess..

Yes. I think consistent with prior year I think that's right. There are no major significant projects that we have to take that out of the normal range. .

And then I guess my last, last question is when you look at the ASV and the PM product groups, is there a difference in timing when those products to be fully populated by the Manitex footprint?.

Well, I think as Andrew indicate on the ASV side, it is -- they are making progress there. And on the PM side all really what we are trying to do is get into North America because it has a good position around the world.

And I think conversely we are trying to get our Manitex products which rather than CVS and Europe is all North American oriented, probably those products do their operations around the world because they obviously have the much broader larger footprint around the world. And so that just takes prime but it is every quarter you make progress..

Next question comes from Peter von Schilling with Polar. .

Good afternoon, Dave and team. So my question for you guys a couple sort of specific questions.

On slide 6 when you do the bridge from year-to -year on sales, so the $10 million in currency translation, does that -- that applies to what that doesn't apply to the previous year's $68 million of revenues that would be the currency translation impact on the sales from acquisitions of $35 million..

How did that come up? Where did you derive it from Andrew?.

It is the effect of the difference in the currency for both Canadian and Italian businesses. .

So European and Canadian businesses. .

Correct.

Some of that would be in the 68, we can come through CVS and Liftking and some were not which would be PM..

But not that much it would be in the $68 million? I am just trying to -- so ASV in the quarter was $32 million of revenues. .

You probably got I would say 40% of it is in the $68 million. .

Okay, right.

So then I am going to do with ASV I believe after my add it was $32 million in the quarter?.

That's right. .

That's what you reported so $55 million minus $32 million is $23 million of PM revenues. .

That's correct. .

Of which and then the prior year of which that absorbed like you said $6 million of currency from revenue I expect a $10 million between 40:60, okay, great. And then the second question would be when you put your Q15 decode [ph] you reported Q1, 2015 gross margin as 20%.

And operating expenses as [15 spot 993] and then is the deck your --and just you are saying Q1 gross margins are 18.4% and looks like you would -- the operating expense went down 14 point to 84, so it looks like you are just shifting expenses between cost of sales and OpEx but can you just walk us through what change you made there?.

I think Andrew you want to try that. Yes. It was on the PM side, but go ahead Andrew. .

Yes. It is obviously and the PM was acquired we have been working through all of the purchase accounting and the acquisition process et cetera we have been and as we've gone through the financial reporting within and we've ensured that the -- we got better analysis now between cost to good sold and SG&A expense.

I think you find somewhere in the range of $1.7 million move between those two category. So there is no net impact on the bottom line. We have improved their reporting and classification of both costs into more aligned with US GAAP reporting..

Right. One last thing, Peter, when you do these acquisitions. 50 years they were private companies so you have a lot work to do to make sure that they comply with all the SEC reporting. .

Yes. I know for sure. So I just want to make sure, so but the Q2 deck is more of an apples-t-apples when I compare Q2 gross profit to gross margins of Q1 gross margin..

Yes. If you look at both of those quarters now they are restated to be more correct number one and number two more consistent for go forward basis..

Okay. And so David just a little bit of perspective. And you commented a couple of times on this sort of call or maybe just to ramp it up would be I mean you have been in this business for long time.

And seen multiple downturns and so you know as when you look at the sequencing and how the core Manitex business is progressed Q3, Q4 last year, Q1 this year and Q2 this year. You want to give this all historical perspective on how you think the movie plays out from here. .

Well, I mean every -- you are going back into 80s, I mean you had the 1983 to 1985 downturn which was serious, 90 was 1991 was very shallow and quick. 2000-2001was quick, 2009 was very difficult because it was deep but on the other hand we in North America as you know were taking care off through the growth in the energy world.

And so now it just seems like it is not really broad from the standpoint that you have a good market. So the overall markets are not bad. I mean they are not booming, they are not bursting, and they are okay.

And but you just have an unusual item because of the fact that you have equipment that was over bought anticipation of the energy guys couldn't get their equipment on a timely basis.

So they from anybody so they ordered more than they needed and then as you know we had a quick reduction in the cycle or in the price which affected the cycle and now here we are.

So I am hoping that it is this year and this year only because of the strength of the overall market surround --around our areas and the fact that you never really had a rebound on the construction side and you are experiencing it now but it is coming through for us in the equipment side from the energy world.

So I am hopeful that by the end of the year we've got this flush through and we see improvements next year. But it is really hard to predict as you know..

Yes. You commented that I think straight mast cranes for you; you did sort of 1,600 and 1,700 units in the last two years. .

Quite correct.

But peak of the cycle was actually in 2012. .

Peak was -- yes, we have been down -- peak in 2012 and we have been down in 2013 and 2014 and now obviously will be significantly down in 2015. So the last three years we were down. That's a long cycle..

Right. Anybody who bought a straight mast crane in 2012, I mean the usage on those cranes and the energy patch is much higher and much more severe. .

Much more severe..

So when do you think those cranes would have exhausted?.

I am thinking that -- that's why I said I think 2013 and 2014 is a more correct reflection of what's coming into the market because I don't think 2012, most people that I spoke to, do not believe 2012 cranes can realistically come into the market and serve any purpose other than the second hand crane. So I really think it is 2013-2014 volumes.

So if you would have an average demand this year of somewhere between 1,500 to 1,800 units and you have to assume that of that 1,600-1,700 units in the last two years, there was 3,300 units sold in 2013 and 2014.

So out of those 3,300 you had 30% and again you are guessing but there are some percentage of it goes, that went to the energy business for those two years, probably more in 2013 and less in 2014. So you have now those units coming in, some of them have zero hours, no hours or few hours but all that's been happening over the last six months.

And so you hope that you exhaust that market over the next three to six months and you start to see a turn. .

Yes.

And has pricing gone more competitive? Should we expect that it is also going be like another pressure point as the existing guys trying keep their facilities full?.

Well, I think there is a dynamic in pricing we saw a few years ago. As you can imagine as you know we were recognizing and discussing price increases on a 90 day basis. And of course as we said at the time we follow the leader which is in our industry is Manitowoc.

But now clearly there is -- yes, you don't have any power from a pricing standpoint so fortunately that the commodity market is very soft. So you don't have any pressure on the cost side. In fact, as you know, we'll keep trying to take and we keep -- we will keep taking cost out.

So that our gross margin stay up at these which I think a very good level for -- and where we are at in the marketplace. But I would expect that there will be some inventory. We have some inventory so I think that everybody will be under pressure for the next couple of months at least. .

Next question comes from Jeffrey Long with Tuxedo Road Associates.

First of all you guys did hell of a job. My kudos to you in a credibly difficult environment. Two questions real quick.

Does CVS have exposure in North America primarily in the US?.

CVS has some -- historically did not have a lot of business in North America. Historically it was more of international company clearly European base and European centered. On the positive side, we picked up some distribution in North and South America that is stronger than we've ever had before. So I think we have upside in North and South America.

Whereas an area that historically they were not strong in. So CVS is a very -- as Andrew mentioned in his remarks is up nicely quarter-over-quarter, year-over-year and we expect it to continue. .

[Operator Instructions] And with no further questions in queue, I would like to turn the conference back over to Mr. Langevin for any closing remarks. .

Thank you, Shanin. And thank you for everyone's interest and patience. We appreciate your investment and interest in Manitex. Thanks again. Bye, bye. .

Ladies and gentlemen, that does conclude today's conference. We do thank you for your participation. You may now disconnect. Have a great rest of your day..