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

Mike Sulewski - James Goodfellow - Avondale Partners Les Sulewski - Sidoti & Company Matt Koranda - ROTH Capital Partners Chris Sansone - Sansone Advisors Dale Hefner - Metropolitan Services.

Good day everyone and welcome to the Manitex International Inc. Third Quarter 2015 Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. David Langevin. 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 November 11, 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 will welcome any questions.

Let's begin with Slide 3. The third quarter saw a continuation of the slowdown in our historically strong straight mast boom truck business that we have been discussing for some time now.

However, regardless of the stress of the conditions facing that particular market which everyone is aware, we have to move forward to control as we can and use this time to implement and execute our long term plan to grow the enterprise profitably and prudently for the benefit of our shareholders.

A major part of these plans include the two acquisitions we made in our past 12 months which were quite large for us and which had been performing at or above our expectation since becoming a part of Manitex each less than a year ago.

The PM Crane Group makes knuckle boom cranes which are mounted on commercial truck chassis and serve a broad and growing market. We had long recognized knuckle boom market as a growth area in mobile cranes. And this market continues to grow.

PM is based in Europe when the knuckle crane technology was started and where the market for these cranes is the largest. PM reported sales in the third quarter were approximately $23 million and EBITDA margins were 13%, long above our consolidated company average for the quarter of 7.2% and also above our long term operating target of 12%.

More importantly the market for knuckle boom continues to grow very nicely in North America where PM historically has had very little business.

And as we have stated since announcing the acquisition, our plan is to become a North American market leader and we continue to work and are making progress in bringing the production of the PM knuckle boom cranes to our large crane plant in Texas. This will allow us to better serve North American market in sales, parts and service.

PM is now running in an annual sales rate of approximately $100 million with most of those sales going to the international markets. In our long term growth for PM is to reach $200 million of sales with much of that expansion expected to occur in North America.

The other acquisition we made in the past year is ASV, the joint venture with Terex Corporation. Our first goal at ASV has been to reestablish the ASV brand, as well as the ASV distribution. As reported in and commented on by Andrew in today’s release, we are making solid progress in both these areas.

Andrew will shortly speak about our ASV expansion as we read-out the strong ASV brand. We reported today that ASV had sales in the third quarter of approximately $27 million and EBITDA of 9.5%, which is again above our average EBITDA for the Manitex Group.

ASV is currently - annual sales rate of approximately $120 million and as we expand the ASV distribution and brand recognition, our long term goals for ASV are somewhat to PM which is to also grow ASV into the $200 million annual sales range.

And as we announced yesterday, we will start the New Year also very positively having received strong orders of $12.7 million which by the way are orders larger than we received from these customers last year at this time and we believe there will be additional follow-on orders.

Finally these orders represent various ASV products for the international and North American markets. I'd like to now briefly comment on many of the smaller businesses within our overall group which are providing meaningful support to the organization during these difficult times.

Particularly Liftking which in the third quarter began to produce military units on approximately $125 million in military contracts we announced some time ago, Sabre which has made the transition from being at almost exclusive energy provider to sales of over 80% to non-energy customers in the third quarter.

CVS remains a consistent and steady contributor and Liftking as well as turned into a profitable contributor. Finally while the marketplace absorbs the surplus energy equipment, we have the opportunity to bring down our debt levels with our goal being to return to levels consistent with our history.

As reported today, we reduce our total debt on a year-to-date basis by $23.1 million. With current liquidity have returned by cash and availability in our working capital alliance of $33.6 million and we believe we will be more aggressive in debt reduction in the fourth quarter to finish out the year with improving debt ratios.

With that overview I'd like to turn it over now to Andrew..

Thanks David and good afternoon, 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 and then move into the comparative financials. So let’s start with Slide 4.

Quarter 3, 2015 market conditions have been relatively consistent without saying in quarter 2. For our Lifting and Equipment Distribution segments where broad range of markets are served, the dominant influence continues to be the downturn in the energy sector.

But we have also seen a relatively steady general construction sector in North America and internationally. For our ASP segment focus more on the North America and Australasia construction, market conditions again were relatively steady.

As is widely known the energy sector seen a dramatic decline since the end of last year with consequent negative impact on demand for a larger tonnage straight mast crane product in particular which were among the higher margin products at Manitex.

North American rig counts at 977 of 42% of the levels a year ago and capital expenditures on equipment that are being significantly curtailed negatively impacting demand.

As we have discussed on prior calls this year this energy decline is also weakened demand for new equipment from other growing sectors such as general construction, as equipment that has been sold in the last few years rather than standing idle in the energy fields is being sold to these other markets.

Consequently, 2015 overall market demand for truck cranes is trending down to levels last seen 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.

In contrast to the straight mast cranes, our PM brand and knuckle boom cranes has historically had little energy sector exposure. This is used in the wide variety of end markets and continues to experience growth across many of the geographies we sell into. We expect year-over-year market growth in North America and internationally.

And during the third quarter, the Middle East, South America and Europe represented the strongest areas with demand coming from the general construction and utility distribution sectors. The strength of the dollar as well as negatively impacting our top and bottom lines as we translate sales and foreign earnings to U.S.

dollars those provided some challenges for exports from the U.S. and for most of 2015, in second quarter three this has adversely impacted demand particularly in Canada where all of our business segments has significant market presence.

Turning to products, the knuckle boom market is posting favorable year-over-year comparisons in many areas including North America. For our PM products in quarter three, we added approximately 15 service center locations in the U.S.

and signed another three dealers to carry the PM range of equipment as we continue to broaden distribution and support here in North America. We also move forward with our plan to manufacturing the knuckle boom crane in our U.S. Texas facility and still expect this to be operational during 2016.

In international markets, we have expanded our distribution network further with the opening of a new subsidiary PM Middle East in the Jebel Ali Free Trade Zone in Dubai principally to support our efforts directly in the Middle East and East African markets.

This operation is staffed by our team of experienced lifting professionals, charge of expanding the full Manitex International portfolio with crane brands into these markets as well as the PM brand. This new operation complements out 10 other international branches located in several countries in Europe, Far East and Latin America.

For ASV products, mainly compact track loaders and skid steer loaders, the market has been stronger than in recent years. And construction activity is trending positive with rental operations benefiting from much of this activity.

For ASV, our focus has been to reintroduce the ASV branded product and its unique features, as well as establish new distribution in previously un-served geographies.

The expansion of ASV brand distribution has progressed well from the starting point of zero, and other 50 locations are now signed up and we expect this to double by the end of the year. ASV branded product represented 12% of ASV unit sales in quarter three.

In addition, and as we recently announced, it was encouraging to receive orders for 2016 of approximately $13 million, not included in our September backlog. From key customers who serve international and rental markets, deliveries of which will commence in quarter one of 2016. These orders are larger than similar stock orders received for 2015.

With regard to orders of our backlog, at the end of the quarter our backlog was $88.9 million, a decrease of 17% from the $107.3 million that we entered the year with. The backlog is broadly based and comprised of 64% to Manitex products comparable with 2014, 26% of PM product and 10% of ASV product.

For quarter three 2015, our book-to-orders ratio to sales, or book-to-bill ratio was 91%, up from 89% in the second quarter. And as previously mentioned does not include the just announced nearly $13 million of orders received by ASV. Now turning to the financial results.

Slide 5, shows the key figures for quarter three 2015, with comparatives for quarter three 2014 and quarter two 2015. Net revenues for the three months ended September 30, 2015 increased $30.5 million, or 46% year-over-year.

Lifting equipment increasing $5.3 million or 8.6%, equipment distribution decreasing $2.3 million, or 44.2%, and the ASV segment contributing $26.9 million of the increase. In total, the PM and ASV acquisitions contributed $49.7 million of revenue in the quarter.

The impact of currency translation, the result of a stronger US dollar, lowered total net revenues by $7.9 million. Sales in the Lifting equipment segment benefited from the PM acquisition revenues of $23 million, which also have a higher gross margin.

But we're adversely affected by the reduced sales of our straight mast crane product and the adverse mix from reduced volumes of high capacity cranes generally sold in the energy sector. Q3 also saw the commencement of sales of military material handling equipment under the recently awarded long term contracts.

Gross profit of $18.3 million or 18.9% of sales compared to $10.9 million or 16.5% of sales in quarter three of 2014. Improved margins from PM product and benefits from the cost reduction project we initiated in 2015 were a good offset to the adverse impact of volume in crane product mix we had in the quarter.

The savings target of approximately $4 million in 2015 and $50 million and beyond from 2014 cost base, the cost reduction program has delivered $3 million in savings year-to-date, September 30.

During the third quarter it had a positive impact principally in cost of goods 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.

Net income for the third quarter of 2015 was $0.2 million or $0.01 per share compared to net income of $1.8 million and $0.13 per share for the third quarter of 2014.

Adjusted EBITDA for quarter three 2015 was $7 million or 7.2% of sales, an increase of $2.5 million and an improvement of 40 basis points as a percentage of sales from the third quarter of 2014. Slide 6, is a bridge movement in sales and net income for the third quarter of 2015, compared to the third quarter of 2014.

The sales reconciliation shows the build-up of the $30.5 million increase in revenues quarter-over-quarter, with acquisition revenues of $49.7 million, a volume reduction of $11.3 million and a negative currency translation impact of $7.9 million.

On the income reconciliation, the sales volume reduction from the core crane business offset much of the benefit from the revenue increase from the PM and ASV sales which together with the increased interest cost had the impact to lower in quarter three net income.

Slide 7, shows our working capital has increased from $85.6 million at December 31, 2014 to $95.7 million at September 30, 2015, including the acquisition of PM. Working capital ratios are very much in line with our prior comparisons.

Our current ratio of 1.8X for the current quarter 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 the North American term lines that are treated as long term finance.

Adjusting for this, we give a current ratio of 2.2 at September 30, 2015. An improvement from the ratio of 2X at December 31, 2014. Slide 8, provides a breakout of $196 million of total debt at September 30, 2015 including the addition of $3.6 million in the quarter from the extension by 11 years of the lease to our Georgetown, Texas facility.

During the quarter we repaid a further $2 million of term debt bringing the total repayments so far to $10 million. Of the total debt, $119 million is non-recourse to Manitex.

Additionally, in total $78 million is related to working capital financing, these are the transactional or collateral base and the further $21 million is in the form of convertible notes. Also shown on the slide for reference is a total cash and availability of $33.3 million at September 30, 2015.

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.

Slide 9, shows our capitalization and liquidity position and also significant change from the year end of 2014 substantially driven by the PM acquisition in January of 2015.

As just discussed, total debt of $195.6 million has increased $83.3 million with the assumed non-recourse debt of PM and the acquisition financing debt in the form of the term loan and convertible note.

During the third quarter, we generated cash from operations of $2.9 million and for the nine months of 2015, adjusting for the ASV conversion tax payment we have generated $22 million. And we anticipate continued cash generation to enable further debt reduction for the rest of the year. I'd now like to hand back to David for his final summary..

Thank you, Andrew. We know our shareholders appreciate that we have very little control over the markets. But that we are doing everything necessary for Manitex and the position as we have done in the past, poised to receive significant gains when straight mast crane markets return.

Our gross margins are better than anyone in our business even with sales levels and our straight mast boom markets are operating at 2009 levels.

We believe we will continue to make progress in lowering our debt levels, allowing more room for stock growth as we execute in our plan to expand Manitex straight mast cranes into our international branches which we acquired when we purchased PM, along with the growth of PM knuckle cranes principally targeted for the North American markets as well as the strengthening of the ASV brand and the expected expansion of sales and profits for ASV.

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

[Operator Instructions] And we'll take our first question from Mike Sulewski of [indiscernible]..

Good afternoon guys.

Can you hear me okay?.

Yes, hear you fine Mike..

Couple of questions here, can we - ma be I have to go back and do my math again but when you guys said for PM you are looking about $100 million this year of revenue, looking back it was in the first two quarters is that kind of just a pretty solid fourth quarter here..

We did 23 in the last couple of quarters. Obviously we bought it in January of this year, had a short period in the first quarter.

So that was in the low 20s and we should be - we believe with production and it's always difficult to try to pick production in the fourth quarter because of holidays and those are obviously especially and severe in Europe but we believe we will click over above the $25 million in the fourth quarter..

So the hundred include the positive – but it was not part of your –.

Yes, part of when we were – when they weren't part of us. We are trying to frame obviously Mike where we are internationally right now with that business and again we have business in the U.S. it's up essentially this year on North America but principally in the U.S. But again our ideas are we are trying to show that we want to expand that in the U.S.

and continue to expansion in Europe and around the world as Andrew mentioned on the opening of the conditional branch..

Got it.

And then back on your core mast crane business, I guess maybe you can give us sort of overview of - I guess first it sounds like your language or tone was little bit likely you were bottoming here in that particular business may not got out any time soon but perhaps we reached a level where we can just kind of wait for things that on come back.

I guess that's question would you agree with that. And then I guess part two of question is, I mean should we sit here and wait for the rig counts to improve before we see any increase in the core mast crane business..

Thanks Mike for the questions, I appreciate. I don’t think we were so concentrated on the rig counts because all that was again was just trying to demonstrate the decrease that we’ve had.

We all know in – you and I and the other analyst have tried to figure out how can we analytically take where we are in the movement of energy equipment into the construction markets because clearly as we all know the construction market in North America is performing much better and so we know that and we see it every day and the auctions and then the used inventory market that start to used cranes that were produced in the - and are picked cranes produce in 2013 and 2014.

Specially starting in the second quarter we are pouring into the market, absorbing the growth that you have on the construction side and those are first construction growth we’ve seen since 2009.

And so if we try to analyze that and do any kind of measurement, it seems to be that while the order, the core activity and the activity that we have with customers is improving, we’re still not varied and that is such a big impact as you know in 2013 our crane business which was that time was $200 million - our total Manitex business was $200 million but crane business was a substantial portion of that.

We earned over $0.80 a share. So we want to look at now and say, we’ve got PM business that’s growing, ASP business that's growing and when the Manitex business runs through with the energy overhang we should be in very good shape. .

Okay..

I don't know if that helped you, but it's not really rig count, it really can be a rig count because I just don't expect - we are not expecting rig count to significantly improve for sometimes. So it's really the construction market which is where we were always based prior to the energy changes in the North American market..

Can I ask you this way perhaps, so you think that your core markets might improve before the big crane markets starts to improve?.

Well generally speaking, yes generally speaking we do only because obviously our cranes are 300,000 or 250,000 and not $2 million. So they’re going to move faster up and down then the larger - the people that deal with the larger cranes absolutely.

So you’ll see, we lead and we lied because of the – or we lead on both sides, we come down faster and we grow up faster because of the sensitivity of the price..

Great.

If I can just squeeze in one last follow-up here on that topic, I just want to make sure, do you get a sense in your core crane business - core mast crane business not the rest of it that you are maintaining your market share or is that also a concern to you?.

I think we’re holding up in the 30s, the low 30s. I think we should have all market, I think we should do better and I think we should continue to expand because we have the best product and the best distribution in the area and that's where we concentrate.

But I would answer the question it seems like we are holding up our market share but obviously the market right now is unbelievably low for new cranes – for new cranes and the straight mast cranes not knuckles but straight mast cranes.

We always have to distinguish that now because obviously PM is now a bigger part of our business than Manitex, we just want Manitex to get back to where they were..

Right, got it. Got it..

Thank you..

Well thank you very much..

And our next question will come from James Goodfellow of Avondale Partners..

Hi guys. Good afternoon, just jumping on for Kristine here. Thanks for taking the question.

We'd love to hear any updates, I know you kind of touched on this in your closing remarks, any updates on your intentions or activity in terms of streamlining the portfolio and I don’t know how you are looking at divestitures of non-core businesses going forward, any activity there, anything anecdotal would be very helpful..

Sure James. Well you know the process is not a quick process, it want to take some time and I would say that we are very far along on one of the companies and products that we have determined is something that we may entertain other opportunities and offers for.

And I would say after that if we finish – hopefully we can finish something between now and the end of the year but that is not guaranteed and then I would expect us to take another stab at it again next year. But again it’s a certainly very important part of our strategy we built up.

This company with a number of different products and companies and now that we’re at certain size will concentrate on our highest margin products at our highest margin companies and peel off the few of the lower ones which will do better in other circumstances, get more attention, get more resources.

And we‘re also doing the same thing with our working capital because obviously as you look on our balance sheet, we have - and as Andrew summarized we have cash receivables and inventory in excess of $200 million and we need to turn all those quicker and faster and more importantly in that group we have $25 million of finished goods, so that is something that historically we never had anything at that level because we generally built order.

But with the braches and the operations we have now, we do have more inventory and we do want to flush out inventory through the system and probably try to do as much as we can in the near term..

Okay. Thanks, that's helpful.

Moving onto the oil field overhang if you will, some of your competitors have spoken this and you touched on in your prepared remarks, we would love to hear anything anecdotal or anything that you’re seeing in interaction with dealers or directly with customers in terms of where you see the process of clearing the used channel standing today?.

It’s still there; it is not as prevalent as it was last quarter.

It’s less, there is more – there is more activity on the core side but I don’t expect it to end between now and the end of the year but we certainly hope that we have – if we have continuation only in the first half of the year and not the second half but again that’s very hard to determine.

We just look at what we’ve sold in the marketplace, what we all have sold in the marketplace in the last two years 2013 and 2014. How much we are selling this year but we know the market is much larger because of the construction side. So you know if you just run some averages you have to have absorbed much of that overhang during this year.

But I'd still think we will have some carryover into next year..

Okay.

And then in terms of knuckle boom opportunity, can you speak to any specific end market reads on the European side of things, and any specific opportunities you've seen there?.

Well, the European market has performed much better this year, it continues to form well. They never had the rebound that we had because obviously they don't -- generally speaking, have the energy markets that we have. So, we didn't have the construction rebound after 2009, we had only energy rebound.

Now we're seeing the construction market rebound, which is good because it's absorbing the downturn in the energy. But there over there, they're now are experiencing the construction rebound also because companies that have survived and have grown or are now starting to grow, have very old equipment.

So, you have just the replacement cycle that you would normally would have every four or five years are now finally starting to kick in Europe. So, we're very optimistic that Europe this year has seen some growth and will continue to seem some growth as Andrew referred to in his prepared remarks..

Is there any specific among the geographies within Europe that you're seeing..

Well, U.K. is the strongest but believe it or not even places like Spain which were dead -- again the people have survived the awarding new equivalent. So, we generally see expense in our new orders coming in for -- we have branches in Spain, Germany, U.K., France, obviously the modern states are performing better.

And so we have lot of exposure now to Europe and it's not so bad to housing exposure right now..

Okay. That's great color. Thanks guys..

And our next question Les Sulewski at Sidoti & Company..

Just two -- hi, how are you? So, just to kind of work on the questions early about the markets raising productively, and you mentioned in the past and you were probably like nine months away and on the inventory kind of weaning out, I mean are we closer to maybe the three to six months away, can you comment a little bit more on that or what the inventory are in the marketplace?.

Sure. If you look at, we try to do those analytically. So, because it's a very hard, it's a very large market, it's hard to try to capture. But if you look at sales through the markets or units through the markets in 13 and 14, was roughly 3,000 units.

And we assumed, at that time we were assuming and making statements that 50% of that was going to energy. So, it's 1,500 units.

So, those 13 and 14 units were lot of times purchased in anticipation of additional growth beyond what they needed right now because I wanted to make sure they got their equipment because as we know, there was a tremendous lag -- I mean we were taking orders in 2012 and producing and shipping in 2013.

So, there was a lag of when they were ordering versus when they were receiving their shipment.

And so if you assume that this year you have another 1,500 to 1,800 unit market because of the increase in construction, so the increase in that market would normalize the straight mast boom market this year to be in the same range it has been over the last two years. We're really experiencing something closer to 2009 level, which is 600 units.

So, you have somewhere around 900 to 1,200 units coming into the market from the energy space absorbing, absorbed or absorbing the growth in the construction market. So, that would tell you that you still have some more room to grow with that.

If that analysis is right, then one could question whether that's right or wrong but that's we're trying to put some mathematical analysis around something that's very hard to do. And so that would made us to believe we have somewhere around six months you have to go, but again we'll see..

Yeah, thank you for clearing that up. That's helpful. Regarding the ASV side, you did $27 million in the third quarter and this is kind of a slow run rate, we would expect for the fourth..

Andrew might speak to that because you're closer. My overall assumption is slightly better but I -- you know production and what's happening there closer than me. Yeah, you're right in that statement. I've -- we're targeting slightly higher performance than the third quarter.

Hopefully we'll some of the year end activity that often comes into the market. Also we get a little bit of pick up we'd rather relate it to sales and it's now clearing that type of activity. So, you're right, slightly above the quarter three numbers..

Overall, I guess on the gross margin side, is this the sustainable rates looking at next year?.

Well, we've been at those range now for little bit and certainly in earlier downturns especially ones that were as dramatic as what we've experienced at Manitex, we saw quite a bit of deterioration in the gross margins.

But we seem to be able to with our diversification and with our cost reduction programs which have been very nicely implemented around our company, we seemed to be able to withstand higher margins.

But then on the other hand of course as we've also commented, we have higher fixed costs, somewhat a couple of points here fixed costs is what we've experienced in the past. So, we need to have more sales like we've had in the past.

So, we're hoping that 2016 will return back to some growth levels throughout our Company and not just in the PM and ASV areas..

Okay. I guess the last one on the PM side too, any kind of measurable savings that you expect from moving the manufacturing to Texas..

Well, we've always done very, very well out of that facility. And so what we expect is the efficiency, the absorption, and the renewable cost is not such a huge component for us in our cost of goods sold, principally, over head, indirect, and material. So, I would expect that plant to perform well as they have in the past.

So, I would expect that any business we bring in the North America, sell in North America, make in North America, is going to be very profitable business..

All right. Thank you, guys..

And our next question will come from [Bill Pichey of Fidel Capital] [ph]..

Can you hear me?.

Hi, Bill. Sure, you're fine. Thank you..

Terrific. Listen, just turning to the balance sheet again here, you've done a pretty good job here. The six months you knocked $20 million off the debt, another $3 million in Q3. At this pace, what do you expect this debt to EBITDA ratio? It's pretty gaudy 5.9X to adjusted EBITDA.

Do you think that can get down to what's your normal, 3X to 4X?.

Well, before this latest round of acquisitions we were in the three range. We obviously want to get back to that, but realistically though what we said last quarter is if can double that $80 million, what happens is you have seen the schedules that kick in 6 and 12 months.

So I expect that we'll have -- I don't suspect, I know we'll have some more payment schedules in this, in December time period that will kick. So, we'll have some more reductions in our debt. And as I mentioned earlier, we have a significant amount of inventory that we -- much more than what we normally carry.

And we will try to, we have ways to move that through the rental channels especially in the fourth quarter. So, our plans to move more than what we did in the third quarter. More in line with what we did in the first half.

Certainly we take the starting of the year to 11, if you take down your hope somewhere between $30 million to $40 million for the year, again, that's a hope not a, we'll take it, but that's what we're trying to do. And then obviously if we have enough of sale, that helps, and the next year we do the same thing.

Then go back and we do a better or we have better markets and better improvement on our EBITDA, then our ratios are going to fall back into line than what has happened.

And it's also part of the calculation and that movement from 5.4 to 5.9, and has been certainly improving or not improving, but detriment during the year is the fact that you have some pretty decent EBITDA numbers last year and the year before. And that was primarily Manitex driven. And of course now, Manitex, is way down.

So, you're kind of losing part of the engine that really drove the EBITDA numbers..

Sure..

So, the calculation is being affected by the fact that your EBITDA numbers are down..

Right..

Our overall EBITDA is up. We did $20 million last year, we did $23 million through the first nine months year. But that's all from the -- primarily from the new acquisitions, not from the old Manitex, Company..

Yes, turning a little bit to ASV's for a moment, just my second question here. These 50 locations you add and going to 100, that sounds like a very aggressive plan to me. ASV if I recall is a huge company before the 2008 depression kicked him in the pants. Can you give me an idea of the competitive landscape for ASV in the U.S..

I wouldn't say it was huge, but it was a substantial company before the great recession. And Andrew, do you want to talk more specifically about the expansion from 50 to 100, you certainly are closer to that..

Yeah, sure. Thanks for the question. Just reference back to when ASV wasn't independent company a number of years ago before Terex acquired them. They probably had somewhere in the region of 200 dealer outlets. So, we're aiming to try and replace and get back to a similar number.

I think the comment that you made that it was an aggressive number, I think the team have done an amazing job getting to where they have them so far this year. And there's a high degree of confidence around that 100 number.

That is established from a number of ongoing discussions that we have, there's a process to go through to get dealer signed up and multi location dealers signed up. So, I'm fairly confident with regard to getting to or very close to that number that we've just talked about. And then we will continue to do the expansion as we move into 2016.

There's a number of territories, number of geographies here in North America that we're not yet being able to serve properly with ASV product.

It's a great product that has a lot of unique features that people want and as we continue to expand that dealer distribution network, very happy to say that we'll able to serve those territories with our product.

So, it's a good program, the team has done an exceptional job doing that and I'm very confident that it will continue to make good progress..

All right. Thank you very much..

This is David again. Building of a brand or the rebuilding of the ASV brand and the rebuilding of ASV distribution, it's -- we're not apples. So, you're not going to see Andrew dancing on TV commercials trying to build the brand.

But the way we do this is obviously some of these announcements that we've made in the last month regarding ASV, it's just trying to bring more attention to your brand in the marketplace. And to build the spirit and the opportunity that you have for our dealers, and as I see this, people want to become part of it.

So, that's why we're trying to really bring as much attention as we can, and as Andrew said, the team has done a great job of building and rebuilding the brand..

Great. Thank you. Appreciate that..

And our next question will come from Matt Koranda of ROTH Capital Partners..

Hi guys. Good afternoon.

Just wanted to spin back to the repurposing of the straight mast boom truck fleet into construction from oil and gas, and just was wondering if you could comment on the pricing environment, I mean obviously that's put some pressure I would assume on pricing but maybe you could talk about the environment and what you're seeing there, and also maybe the dynamics, the competitive dynamics there as well, the implications for that just given that you guys are generally lower priced than some competitors, is it impacting some of your competitors more drastically seeing the lower price environment relative to you guys?.

Thanks, Matt. I will say generally the competitors, we have great competitors as we've said on many occasions.

Everybody wants to make money, but it's a very, very difficult environment right now because you have some energy providers who just want to clear out inventory, just want to turn it into cash, and if you were a dealer and you had a job or you had a customer who wanted to buy a 40 ton crane and you could buy a 40 ton crane from the used market for half with very hours on it for half of what you can buy a new crane from us.

It's no wonder we sell any cranes right now in the straight mast area because it's just very competitive and it's very competitive for everybody in our business.

So you have to find pockets and we have some of those in utilities and other areas where they're not going into the used market, they're only buying new equipment's, and of course there are always pockets like that in the United States.

But it is very competitive and it really drives our margins down to very, very low levels, which is why we're reporting what we're reporting. But that won't continue forever, that's going to turn around of course..

Got it, very helpful.

I was wondering maybe if you could just comment for 2016 and I think we've seen a lot of commentary on the call in ASV and PM and straight mast, but are the pockets of strength relative to the other businesses for 2016?.

Thanks so much. I'm glad you brought it up, because we need to speak about some of those things.

Obviously, Lifting, we mentioned in my remarks that Lifting is now starting to produce some of the contracts that they signed quite some time ago because as you know there's a lag from the time that you sign a contract to the specs are signed off by all the department heads an the product goes into production.

That's started in a limited way in the third quarter, that'll expand in the fourth and then it'll carry over into next year. As I mentioned, Sabre, has done an excellent job of changing the product profile from an energy based profile to a non-energy based profile, that will continue to grow into 2016.

We mentioned that Load King has done a very commendable turnaround and is now on solid footing for next year. CVS has always done, although quite a while, has been a very consistent performer certainly in the -- you don't see the port business right now, when you look at containers any place in the world, it's not a growing business right now.

But CVS has done a good job of taking market share and expanding it's business regardless of what's happened in the market. So we would expect that to continue..

Okay, got it. Maybe one more if I could here.

Sure..

Just on the quarter on gross margins, I mean year-over-year improvement was really nice, it looks like about 240 basis points of improvement, could you just talk about how much of that improvement was due to mix versus the cost reduction efforts that you guys have put in place?.

The biggest positive to that addition or to that growth was PM.

The mix around the rest of the companies were not generally favorable that I can recall, Andrew, I don't know if you have any more clarity on that but I just, I would say the main provider was cost reductions and PM growth or PM addition, but certainly not Manitex because it didn't have it, Lifting had a little bit better..

Generally speaking, PM, the cost reduction programs as you talk about, those helped to offset some of the volume reductions, so those would be the major benefits I think in the margin..

Okay. Got it guys, thank you and I'll jump back in queue..

And our next question will come from Chris Sansone of Sansone Advisors..

Hi, good evening. Thank you for taking my call.

So, exiting 2015, what percentage of your sales do you think will be ultimately energy related?.

I would have to say if you exclude utility in that, and certainly we're going to have sales in 2015 on the utility side. It's going to be a very low percentage for 2015..

Right. So, I tried to put together the numbers for what it looks like in 2014 and I came up with $130 million of energy related revenue on of course $480 million of total revenue..

If you have pro forma with all the businesses, you're right..

Yes, right so that gave you energy of 27% so exiting 2016 where do you think that number is?.

You certainly going to have some business, I mean I was thinking about it as you were summarizing that Chris and I mean you’re going to have some business because there is maintenance business going on so it's not going to be zero but it's not going to be 27% obviously it's going to be much closer to a 10% range I would think on a estimate.

We are preparing 2016 but as now will enter that in much for us over the next couple of weeks, all the operations have been working on per weeks but we’ll start to get more actively enrolled.

So I have a better REIT for that at the next call but I would say it's somewhere between zero and 10% I would guess, I don’t know Andrew if you have any thought on that but..

My guess would be probably zero starting I think at this stage, we’re going to see some growth in the businesses we think and it then just comes back to question of what is going to happen in the energy sector..

Chris you always have - we have a much bigger energy component in North America now and there is going to be maintenance in that area but it is certainly not going to be likely were when we are growing from 300, 400 rigs to 2,000 along with the – and it was not only just the rig, it was also all the infrastructure that was surrounding those rigs as you all know..

Okay. Thank you..

Thank you, Chris. Appreciate it..

And our next question will come from Dale Hefner of Metropolitan Services..

Hello guys. Well, I have been waiting here I have been crunching a couple numbers here. I guess my question is on SG&A. I see that like through the first nine months there was - say 250 point increase in gross margin, it looks like the SG&A got worse by about the same amount..

That’s right..

So I just wondering if there is, if you are looking at any potential improvements on SG&A I realize it you probably inherited SG&A structures with PM and ASP there were higher than what you historically had.

But I was wondering if there was going to be any opportunity if you’re looking at improving that?.

Thanks Dale, thanks for your question. I would say but we have historically been in the 10% to 11% range but we ran very – ran rather simply when we were basically a North American oriented company. And now that we have expanded, we have more international obviously we’ve talked about the branches that we now own, those all add.

So now we’re in the 13% to 14% range, it is probably more normal and we really miss clearly we should be running $125 million a quarter instead of $100 million a quarter. And if you do that math and obviously we’re down to the back to 10% to 11% range and you can do that, you can go from $100 million to $125 million without adding G&A.

The other issue that we've had this time around is - it was much easier in 2009, it was very difficult because of the economic events. But from an operating standpoint, all reflects like crazy just everything went down.

Well now of course you can possibly very often engineer, we need all the engineers we can if you laid off an engineer today, he has got a job tomorrow, he or she has a job tomorrow.

So you have to be – you have to be very prudent and careful with - because you want to make sure the franchise is protected and the growth is when the markets it is very – we have very isolated situation that we are experiencing right now.

So I would say in the short run, you should see some improvement but it will be more on the sales line rather than on the G&A line because we should be able to add sales and G&A much G&A increase..

Right.

So you will grow your way into it eventually, right?.

That’s what we are going to do I think from now, yes..

I will add one other point to that as well. It was included in the SG&A expense on the year-to-date basis, remember you have somewhere in the region of $2 million of expenses relating to the acquisitions..

Yes very good point, thank you Andrew..

Okay. And just one more and then I will get off. My second question involves on the capacity of that Texas plant.

Obviously right now you are not manufacturing too many cranes there, so you could pick up through the next year - pick up some of that PM crane manufacturing there, but what happens when the straight mast market improves and then there is a lot more demand, is there going to be enough capacity there to do both?.

Yes it’s a very good size facility and we really flex it tremendously and we’ve been on the crane business as high as over $140 million in sales there and we’ve been as low as $20 million. So it’s quite a range and when we’re doing $140 million, we are running one shift. So we’ve never added significantly a significant second shift there.

So now obviously we’re running at reduced work weeks at that facility. So we’re very anxious to get more production into that facility. And again I can't wait to have a high class problem like that again..

Yes, I have got. Okay, well thanks very much..

[Operator Instructions].

There are no further questions, Shanin we done an hour or so..

Yes sir. It does appear there are no further questions at this time. I will turn it back over to you for any additional or closing comments..

Thank you, Shanin. I appreciate everybody’s interest in Manitex International and look forward to future calls. Thank you again..

And that does conclude today's teleconference. Thank you all for your participation..