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

Mike Sulewski - Seaport Global Matt Koranda - ROTH Capital Partners Alex Silverman - Special Situations Fund Peter von Schilling - Polar Asset Management.

Good day, everyone, and welcome to the Manitex International Incorporated Third Quarter 2016 Results Conference Call. Today’s conference is being recorded. And at this time, I would like to turn the call over to Dave Langevin, Chairman and Chief Executive Officer. Please go ahead, sir..

Thank you, Jenny. 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, which will be available until November 16, 2016.

Now please refer to our first slide regarding our Safe Harbor statement. We ask that you carefully review this statement and also refer to our SEC filings for further guidance on the many risk factors associated with our company.

As has been our custom, I will start with a brief overview of our business and our markets, highlight some of the key financial operational and strategic accomplishments for the quarter and the year-to-date; and Andrew will provide a more detailed account of the financials before opening up to questions. Let’s begin with Slide number 3.

We reported non-GAAP adjusted earnings of $800,000 or $0.05 a share, compared to adjusted net loss of $600,000 or $0.04 a share for the third quarter 2015 on sales of $74 million, which was off 12% from when we were a year ago.

There were numerous non-cash items that impacted the GAAP reported financial statements, about $21 million and all, from portfolio adjustments associated goodwill and assets changes, and Andrew will cover all this later in detail.

We were pleased that despite our market that continues to run at historically low cycle levels and in fact is not far off the lows we saw in 2008, 2009 in straight mast cranes, we’ve continued to do what we said we would, which is to execute our plan to reduce our debt, adjust our production levels to match the level of orders, operate efficiently, and divest our portfolio of non-core product groups.

For the year, we brought total net debt down to $160 million, representing our pay down to $21.6 million, including $10 million of that being our term debt, which has now been totally retired. I don't think we need to spend anymore amount of time on this, I do want to make sure that it is clear as to the progress we made in the last 12 months.

If you will recall in the fourth quarter of 2015, we retired approximately $20 million in debt, which came from $6 million from the Load King proceeds, and the rest from working capital.

At the end of the third quarter 2016, we had Manitex’s direct debt of $68.7 million, which is down from $83 million at the end of the second quarter, which means we’ve eliminated $16 million of the all-important Manitex’s direct-to-recourse debt in this current quarter, and were down to our last $20 million of working capital debt under the Manitex direct-debt.

Another important part of our plan is to lower our working capital. With the expectation that that we will see accelerated collection of our receivables and the work log [ph] of inventory as we complete the fourth quarter of this year and head into 2017.

Our reported inventory, which is detailed in our 10-Q, includes finished goods of approximately $28 million, largely located in the U.S., and with our uptick in Quoting activity, we hope to move this inventory to cash in the near future.

If we can pay down as much debt in the fourth quarter as we did in the four quarter of last year, we will have almost no recourse bank debt left, which is a significant accomplishment. We’ve said we want our debt-to-EBITDA ratios to be about half of what it has been.

And with the challenges in the crane markets, there’s pressure on our sales and the EBITDA. While we remain confident about retiring our debt, we can accomplish this goal. We are working hard in deleveraging the company toward our targets.

Other activities included in September, we announced that we divested the Liftking business, which generated $13.4 million in net proceeds. Further, we removed approximately $7 million in overhead and servicing cost for the year. $2 million of which positively impacted the P&L in the third quarter.

And we are well ahead our stated three-year cost reduction goal of $15 million.

And another area where we’ve seen excellent progress is ASV, which is now running at a sales rate of approximately 100 million a year, but more importantly 80% of ASV’s business is coming from independent non-Terex dealers, and has generated an operating margin of 7.5% both for the quarter and year-to-date.

We’ve successfully transformed ASV from a company dominated by one customer to a large group of independent dealers thus creating sustained value with a solid base on which to grow. The crane lifting part of our business enduring the hardest hit part of the industrial economy.

The severe decline of energy market related demand is all too familiar to us at this point, and the lack of replacement cycle is even a more familiar story. The used market remains a challenge for new equipment sales and we’ve talked about all these things in the past.

We believe we are making prudent moves and having a successful year relative to the market. The key for our business since we began as a consolidator within the equipment space has been our commitment to diversification and product innovation. Given the current marketplace, PM, our knuckle boom product is the vocal point of our product portfolio.

I would like to wrap-up my prepared remarks with the positive reference for our company, which is that our company’s North American rolling eight week Quote activity as of early November is up significantly versus the same period in 2015 with an increase of about 70% in the value of Quotes from a year ago.

We all know Quote is not an order, it’s a good sign for the future. So please don’t get the idea that we’re not open for business. We just need to continue to be cautious, control all we can, and complete the transformation of our company. When the cycle turns and it always does, our shareholders will be rewarded.

With that brief overview, I’d like to turn it over to Andrew..

Thanks David, and good afternoon and welcome everyone. Let’s start with the market conditions on Slide 5. Market conditions in North America continue to be extremely challenging with very low demand for new straight mast and industrial cranes created by the downturn in the energy sector.

The redeployment of equipment from energy markets has also diverted demand from new equipment purchases remains as an overhang to the market for new equipment. Although we have recently seen some favorable use for equipment pricing to small quantities of cranes, which may indicate pockets of demand beginning to come forward.

As a result of these factors to straight mast market continues to operate at levels approximately approximating to 2009, which is a relative low for the industry and where we would expect the bottom to be.

Overall, although it’s taking longer than we expected, the overhang of equipment is working its way through the market and that will translate into new crane demand from other sectors of the economy such as residential and commercial construction, and general highway construction, where there appears to be more positive trends.

We continue to aggressively pursue all opportunities and a place of this is reflected in our estimated increase in market share so far this year. As previously stated, our knuckle boom crane acquired through the PM acquisition in the first quarter of 2015 has very little exposure to the energy sector.

And it’s a growing market as it increasingly gains wider acceptance for many applications, particularly here in North America. In quarter three of 2016, as in the earlier part of the year, Italy, West Europe, and North America were the strongest contributors for PM sales, and helps offset low demand from the Middle East and Eastern Europe.

In North America, in the period since the acquisition, we have focused on establishing a network of service and dealer support who will provide the foundation for expanding our knuckle boom crane presence. At the end of the third quarter, we’ve signed 18 PM locations to the network in the USA alone.

Complementing this activity and deepening our North American knuckle boom footprint is a launch of the Manitex PL74 knuckle crane fabricated in our Texas facility, targeted at the residential construction arena. This establishes us as the only domestic assembler with a full line of knuckle boom cranes, parts and service.

For our ASV segment, demand was somewhat subdued during the third quarter although underlying indicators of construction spending and rental activity remain positive. We are making good progress reintroducing the ASV brand and establishing new distribution in previously owned geographies.

With our expansion of ASV brand distribution, now it’s over 126 locations signed up in North America with additional potential dealers in the pipeline for approval. In quarter three, ASV branded product comprised more than 80% of machine shipments, up 190 basis points on the sequential quarter basis.

With regard to orders in our backlog, at the end of the quarter our continuing operations backlog was 46.3 million, a decrease of 14.6 million from the 54.2 million at the end of quarter two, reflecting the continuing low levels of demand. The backlog includes 22% of PM products and 14% of ASV products.

For the third quarter of 2016, our booked orders ratio to sales or book-to-bill ratio increased to 89%, compared to 81% for the second quarter and is 89% year-to-date.

Moving to financial results, today we reported a GAAP net loss from continuing operations attributable to Manitex with 5.9 million or $0.36 a share, compared to GAAP net loss of $0.6 million or $0.04 a share in the third quarter of 2015.

The Q3 2016 results include the previously announced $5.7 million of non-cash asset impairment resulting from the sale of Liftking relating to the Lift Ventures investment, and a further $1 million of restructuring costs.

On Slide 5, I’m going to concentrate on discussing the adjusted results for the quarter and the comparable period as presented here, which adjust for these restructuring costs. And which present our adjusted results for Q3 2016 of net income from continuing operations of $0.8 million and $0.05 a share.

Net revenues for the three months ended September 30, 2016 decreased $9.9 million or 11.7% year-over-year. Compared to the third quarter of 2015, Lifting segment sales decreased $6.6 million or 12.1%. All crane products were down year-over-year, although knuckle boom’s had increased sales in North America, Italy, and Western European regions.

Container handling equipment sales were up in the quarter. The equipment distribution segments sales were up $0.9 million from new and used equipment sales.

ASV segment revenues were down $3.9 million of which approximately 80% related to machine sales, principally from non-ASV distribution adjusted gross profit of $12.4 million or 16.6% of sales, compared to $15.8 million or 18.7% of sales in quarter three of 2015.

Most generally an unfavorable sales mix in the quarter with a high percentage of small capacity equipment, although ASV was the exception to this with the increasing volume through its independent dealer network at generally better operating margin in its other distribution channels and higher percentage of machine sales.

Adjusted net income for the quarter was $0.8 million or $0.05 a share compared to adjusted net loss of $0.6 million or $0.04 a share in quarter three of 2015.

As already mentioned, the adjustments this quarter related to the $5.7 million non-cash asset impairment for Lift Ventures asset arising from the Liftking sale and restructuring cost of $1 million. There were no adjustments in the third quarter of 2015.

Adjusted EBITDA for the third quarter was $2.8 million or 3.8% of sales, compared to $5.2 million or 6.2% of sales in the third quarter of 2015. Slide 6 is the bridge movement in sales and adjusted net income for the third quarter of 2016, compared to the third quarter of 2015.

On the adjusted income reconciliation, the principal items were lower sales of $9.9 million from volume and mix resulting in a gross margin decrease of $3.4 million. The benefit from reduced operating expenses of $1.5 million and a tax benefit of $3.6 billion.

The benefit from tax taxes resulted from the effective tax rate for the year, excluding discrete items, but including a valuation allowance against U.S. deferred tax assets of minus 3.8%.

As previously mentioned, our cost reduction program is contributed to mitigating the adverse effects of lower volume going through our facilities, as well as the generally adverse mix of smaller products and the competitive pricing environment.

Our target for 2016 was a full-year incremental reduction of $5.5 million, and year-to-date we've achieved 128% of that target with some focused actions across material, personnel, and facilities in particular, including a decrease in headcounts of 18% year-to-date, excluding divested operations.

Slide 7, shows our working capital decreased from $82.7 million at December 31, 2015 to $69.5 million at September 30, 2016.

Our DSO increased due to an increased percentage of international sales with generally at longer terms combined with the timing of sales at the end of the quarter and the receipt of some international payments that slipped over the quarter end.

Although in dollar terms, the value of inventory remained flat, with the start of the year, inventory turns reduced to 2.3 times at September 30, 2016. This reflects a decrease in inventory in North America and an increase in Europe, particularly in container handling where sales volume are increasing.

Our current ratio at 1.6 times for the current quarter is consistent with last year. Adjusting to the Italian working capital facilities with the reported in current liabilities, since these are transactional based, the current ratio would be 2.2 at the end of the third quarter.

Slide 8 provides a breakout of the $166.7 million of total debt at September 30, 2016, a reduction of $9.3 million in the third quarter. Of the total debt $117.5 million or 73% is non-recourse to Manitex.

In total, $72.2 million is related to working capital financing, but these are the transactional or collateral based and a further 21 million is in the form of convertible notes. Since the start of the year, we have made term debt repayments of $9.5 million and eliminated $9 million in debt associated with divest and operations.

North American recourse debt is reduced by $18.5 million, ASV debt has reduced by $2.9 million, and Italian debt has increased by $12.2 billion from working capital requirements. Slide 9 shows our capitalization net debt and liquidity position. Adjusted EBITDA for the quarter was $2.8 million and is $15.7 million on a trailing 12-month basis.

Our objective is to make further debt reductions, particularly from working capital and inventory as we manage production with current levels activity, but also potentially from non-strategic assets and subsidiary sales. And with that, David and I would like to open it up for questions..

Thank you. [Operator Instructions] And we’ll go to our first question from Mike Sulewski of Seaport Global..

Good afternoon guys.

Can you hear me okay?.

Yes, we hear you fine Mike..

Yes we do..

Great.

I guess first things first, I mean the most recent development that happened yesterday with the election, so you had mentioned that you had a pretty good increase in Quotes over the trailing eight weeks, I guess they must have been prior to the election yesterday?.

Yes that's right.

In your discussions with - I guess my question is, as you talk with customers, where they kind of banking on the Democratic candidate winning all the while and have a total surprise, might change their converting those close to orders, or - quite actually even more pleased now that both the Executive and Congress will be in the same party to pass more infrastructure spending bills..

Well I could imagine that was going to be helpful for us in our business, which has been widely reported today.

So, I would think that it would be positive and it was, which always kind of surprise me, it was always his comment that the political arena had an impact or I guess, just from a confidence standpoint, impacted their buying decision, so I was that kind of surprised by that, but heard it consistently so it must be true, but obviously should be positively impacted by the day - by yesterday I would assume, but I don't know anything further, just by reaction from talking to people..

Okay.

Then just kind of changing over to your outlook for the near-term, as I think back to last year - last year's fourth quarter, I recall the real creed on your excess inventories then, you had questioning, you had some mix, just trying to get yourselves cleaned up for 2016, [indiscernible] going to the fourth quarter this year, but if I got your contact roughly, just tell me about the current deals again and kind of cleanout again for 2017 or do you feel like your inventories in general are on a bit firmer footing as we close out the year?.

I think it’s a good question Mike because you could pick up from what Andrew and my comments were, I think we still have too much working capital. We've built for some inventory in the first and second quarter.

As we all know, this summer was very slow, so we had that inventory still on our books, and we obviously want to have that inventory available again for the first and second quarter of next year because it’s generally when you move things you are better seasonality than what we have now.

I think the same thing is going to be prevalent, we will be doing everything we can to convert that into cash and as you know we're getting very close to retiring all of our U.S. debt and so would be excellent way for us to end the year.

So it was just prudent as we said, as we roll through the rest of this year and into next year, fortunately as we mentioned our order activity is picking up, dealers are coming to the end of their inventory and their allocations. So - and they’ve been very hesitant to buy.

So maybe that we all want to hopes today, so maybe that will something that we can look forward to over the next six months, but I think it is a good pick up Mike..

Okay.

Also switching over to your debt for a second, quick question there, was the $9.3 million of repayment in the quarter inclusive of the $13.3 million you received from the asset sale or do you pay that in October?.

No, I believe that’s all paid in the third quarter.

Is that right, Andrew?.

Yes, it’s right..

Okay. Another one from me, once your inventories rise of your cranes, when you competitors had a pretty big write-down in the quarter on the value of their used cranes, there are kind of textures that they work with how customers show them what these cranes are capable of doing.

I am curious is you had to take down the buyers, I mean your used cranes and your own inventory, for that you have a different kind of policy, you have markings to market on more regular basis..

We don’t have that big of a fleet, so we did not have to take any write-downs for inventory then. Andrew you are probably closer to that, so you might know, but I am not aware of any..

No, there is nothing significant Dave. If you do something on a continuing basis, but no there is nothing really that significant in the quarter..

Okay, I will hop back in the queue. Thanks so much guys..

Thanks Mike..

And our next question comes from Matt Koranda of ROTH Capital..

Hi guys, thanks for taking the questions..

Hi Matt..

I know you commented a little bit in the prepared remarks, a little on the last question, but you mentioned an uptick in Quotation activity over the last eight weeks in North America, so just wondering, I mean are there specific end markets that you would call out as especially strong that are driving that quotation activity as it all start from the commercial construction arena, are you seeing anything in oil and gas, any other end markets that might be popping up here?.

Well I think the reality is, we keep referring to 2009, but we know that this is not 2009 and the economy, the world economy, the stage that we deal in is far from or in far better shape, but what happened of course was as we all know, which is an old story that the energy markets have so much equipment that that poured into the construction markets, which were growing, but now we’ve had four years in a row, 2016 would be the fourth year of being down in new equipment sales year-over-year.

So, we have kind of reached the bottom point as Andrew referred to in his prepared remarks and we don’t know if it’s a long extended volume or if it’s finally coming to an end, but clearly the drilling business, the energy business is up as we all know, construction markets continue to modestly improve, so the combination of those two factors and the fact that you’ve had so many years where it has not grown because of the use of old inventory, of used inventory that now dealers lots are getting empty and so they are coming back now looking at Quote activity for delivery, primarily starting in 2017.

So, I think we wanted to mention that because we’re obviously trying to give every indication we can of the better days are here to come..

Sure, understood, okay. That’s helpful.

And then on the infrastructure spending front, just wanted to dive maybe one layer deeper there and try to understand, when we see items coming out and proposals being made over the next several months, is there anything in particular that we should be looking for that would benefit you guys in an outsized way, I mean specifically should there be - like if we look at highway projects or general construction projects or stimulus for oil and gas spending, I mean what should we be looking forward, what would get you guys more excited about…?.

I will assume we will have a positive environment for the energy business. That obviously has an impact on our bigger cranes, which is very positive for us, and which we all experienced during 2010, 2011 and 2012 and then on the other side construction spending of course any place where you have lifting that’s going to effect this as well.

And then moving materials is involved with our knuckle cranes. So, I can’t imagine how we won’t benefit from anything that is going to come out of Washington over the next six months..

Got it. And I think you alluded to the fact that you guys have a U.S. manufacturing footprint that kind of differentiates your knuckle boom products, maybe just talk about sort of your - the status there in setting up production and being ready to fulfill demand on that front..

We are just making steady progress of transforming our plan to not only fabricate and assemble our straight mast cranes, but also our knuckle cranes.

It is a complicated product because as you could imagine when you look at a knuckle crane there’s a lot more moving parts and so it’s not something that you just throw into the plan and start up, but it is something that we have been working for a year and a half now.

So, we are making progress and that should be real beneficial for us as the market starts to turn-up..

Got it. Okay. Maybe just one more on the cost reductions, they look like $2 million more in the quarter.

So, you are tracking well ahead of the goal for the year, is that still coming primarily from materials reduction, what other improvements is in there?.

They were initially material because obviously we were in a very soft commodity environment. Some of those, steel for example has shown some life in the last couple of weeks in the standpoint that it is getting to be a little more expensive and we are seeing the broader view.

We did announce at the beginning of this year that were going to broaden our cost reduction programs, unfortunately that’s also included to layoffs as Andrew referred to. And so we have a combination of the current year’s reductions is a combination of material and labor and plant consolidation. So it is a little bit of everything.

Well, last year was a line of material..

Got it. I would assume then, I mean that’s essentially at least when we look at it from a higher level in the gross margin section of the P&L.

it is not really showing up, I guess or it’s at least kind of impacting the negative effect, so essentially it is kind of impacting [ph]?.

I would say it this way, up to this point we’ve had very little pricing power.

So, our margins, compared to everybody else, better than anybody, but it would be - we are hanging on to the margin purely from the cost reductions not from any ability to hold on to the margins in the market because clearly when you have this type of market and we are competing against used equipment, you do not have a lot of pricing power.

So, I would say a little differently that all you are doing is just hanging on to everything you can and doing everything you can to keep a positive margin and that’s happening only through cost reductions at this point. But hopefully that will change as demand improves.

It is a clearly over previous years, we’ve been much, much higher and this is about the bottom of where we’ve been if you look at the 10 years we’ve been public. I can’t remember many quarters at this level..

Right. Okay.

So I guess in [indiscernible] do you care about the hazard sort of a bit of guess as to what - how to model the next several quarters in terms of gross margin, should we candidly thinking about it in terms of just essentially flattish from these levels or do we see a little bit of an uptick, as well as maybe - little bit of pricing power of the demand coming back?.

It depends on what you see. I mean it’s very difficult obviously. I would say in the near term in the fourth quarter you shouldn’t really show any improvement at all, but I would anticipate next year that we would see improvement..

Okay, got it. Very helpful. Thanks guys..

Matt, I would just complete, the fourth quarter is not obviously a strong seasonal quarter, so it is not usually where you will see a strong margin period, but we should hopefully start seeing beneficial incremental increases next year..

Okay, got it. Thanks for the clarity on that..

Thanks for your questions. Thank you..

And we will hear next from Alex Silverman with Special Situations Fund..

Hi guys, how are you?.

Hi Alex..

Matt asked most of my questions, I just want to touch on what did Liftking, I assume you reported Liftking as discontinued ops since it was sold at the end of the quarter?.

Yes, it’s correct..

What would it have represented in reps in the quarter?.

Do you have that information, Andrew?.

Actually, I can and I can find it in a couple of minutes..

Okay.

If you are looking, did it have a negative or positive impact? I assume a negative impact on gross margins?.

Yes, it’s correct..

Right. So if you could….

What we did report was and the release that we had and in our 8-K we had about $20 million of trailing sales and about $2 million of trailing EBITDA, but that is 12 months, September to September. And as I recall seeing the third quarter was not positive at Liftking up to the point that we - before we sold it.

It was not very large, I remember it was 3 point some million in sales is what I recall, it was very small..

Yeah, it is that region, I will get the number in a second..

Yeah, it was like 2.9 or something like that, I remember very small..

Okay, thank you guys, appreciate it..

Thanks Alex..

And our next question comes from Peter von Schilling of Polar Asset Management..

Hi Peter..

Hi Dave, Andrew thanks for taking my questions. I got a few, which hopefully I don’t think you’ve touched on quite yet, so just in terms of the revenue front, so we’ve seen some sequential uptick in rig counts, from your prior experience how long before you start seeing some of that rig count increase pole demand for ….

Yeah, I guess… I’m sorry, go ahead and complete it, I am sorry..

No that was my question..

As I was mentioning with Matt, it seems like, and again it is a little bit unusual now, because obviously we had so much, so fast reduction, I just still have a used equipment, but it seems like the used equipment pricing and the options that we have seen and Andrew referred to this in his earlier remarks are improving, so that means that obviously the used equipment pricing for the energy area is getting better and that is also what we are seeing in our Quote activity.

So, I am hopeful that we won’t see it in the fourth quarter, but I hope we start seeing it in the first quarter.

But clearly we’re getting to activity now that we haven’t seen and certainly the number of people commented to me after our last quarterly call, when I said that July and August were lousy, they responded back to me how lousy, but technically it was slow in July and August, but it is picking up. .

Okay, great. So, you’ve done a fantastic job rebuilding the ASV independent network and so I’m just looking for some color about - when you add more dealers do you ship them some equipment and is any of the increase that you are seeing from the dealer channel, which is buried in the ASV numbers.

Is any of that just stalking of new dealers or are you actually seeing some pull-through of end demand from the new dealers you are adding?.

Andrew has been the one that has done an excellent job of - along with his organization of rebuilding ASV, so Andrew why don’t you comment on that question please..

Well thanks to that and you’re right. Actually the team has done a great job. Yes the process is pretty much as you described, which is when you bring a dealer on board they would generally take a number of units hopefully.

The more the merrier as far as we’re concerned, but certainly a representation of the breadth of the range of product, those go out to sort of initial stocking orders and then the process is clearly for them in conjunction with our sales team to try and move that product through into the retail area.

Unlike most things, I think it’s fair to say that some have more and some have less success. So, on a broad basis, I think the sell-through has been pretty satisfactory from our perspective. I think most of the dealers that we’ve signed up have been placing new orders for equipment that’s sold.

So this is not just a stalking item this is actually units going out on a retail basis..

Right, but just so I understand, those initial stocking orders are recognized by you as revenue or they are sitting in your inventory?.

No, no it’s a sale to us..

It is a sale and so….

These are independent dealers..

Yeah, that’s fine.

And so, as you start ramping some of these big increases that you’ve done in terms of building the channel you think you were going to get some difficult comps in terms of comping against your stocking orders or are you seeing, like I’m not sure how the equipment turns on the dealers lot and therefore are you seeing enough replacement sell-through that were not - sort of running into a problem of comping against destocking orders?.

No, I think this is a continuous process through which we’ve been conducting really since the - certainly the sort of the backend of last year and the lot of this year and you can see that we’ve reported incremental improvements through the ASV distribution pretty much every quarter.

The fact that we are at a 126 locations now, I would hope that that number gets to 150 by the end of the year and continues to increase through 2017.

So, I see this is building momentum and at the same time the benefit that you have of having a greater number of dealers out there, is that your brand recognition becomes much stronger and that helps you pull-through into a retail area as well. So, I don’t think that is a concern for us at the moment..

Great and on ....

Peter, I just wanted to add on that because I think it is, from my chair it’s very interesting to watch at ASV.

It is a different product than what I have experienced because I haven’t been in a construction world that much, but it’s having all those locations and continuing to add the locations is very valuable because that is obviously your franchise that’s your building.

And it is not as complex, you know to sell a crane you need a very specialized customer, very specialized - in our case dealer, but you don’t need - it is just a different type of dealer. As they broaden their base that just adds more value to our company..

And do you think we’ve reached the bottom here in terms of the non-independent dealer sales or the OEM sales or is there more that to go away as you transition just recent channels?.

I think we will still be selling through some of that distribution for a period of time, but I think it’s pretty much now, the volumes are going to go more through the branded distribution through our independent distribution and that’s under our control and that’s sort of very encouraging and really what we want to do?.

Great.

Just a couple of questions on the balance sheet and working capital, on Slide 7 you - and you’ve highlighted in the reduction working capital, but typically you’ve focused more on operating working capital, the number that you present as operating working capital, so I’m just not entirely clear why we see good progress on the working capital front, but not as much progress or we’ve gone backwards in terms of the operating working capital?.

I think it’s an area that we try to emphasis or we are going to try to improve on, which gives us some good opportunities over the next 3 to 6 months. So, I think you’re right Peter. I think we should continue, it is something we really need to address and we try to indicate that.

We built some inventory, which we’ve never usually done in the past, but we did it in the first couple of quarters, and so now we want to flush through the marketplace as it continues to improve. So, I think you are right.

And also you had some expanding sales, it is kind of weird because we’ve had expanding sales of PM and ASV, so those are indirect - from a debt standpoint indirect companies and we had a decrease in sales in our direct companies so you’ve had kind of a push and pull impact on the working capital..

Okay, alright. And just, I’m focused on the Slide 8, when we talk about the debt.

So, you said you’re close to paying off another chunk of the Manitex specific debt would that be the working capital facility in Manitex CVS, so that 36.7?.

The 36.7….

Sorry, 36.6..

I don’t have the slide in front of me, but the 36.6 is CVS, which is about 16 million of that and the rest is Manitex. And the Manitex debt here in the U.S.

is the one that we are tackling because when we get that down to zero then obviously we now have a working capital line that’s unused and at the end of the quarter it was $35 million or $30 million as I recall. So, you have a lot of availability that is unused and that gives you a good position to then launch over into new sales as we grow..

Yes, oaky.

And so then you won’t have anything that’s recourse [indiscernible] in North America?.

That’s correct..

The other things we have is, we have a convertible debt of about $21.5 million with leases from operating leases, but that’s the only debt piece we have left..

Okay.

And then in terms of ASV, are they self funding their - any of their term payments or that they have requirements for?.

They are self funding..

Okay, well that’s good progress and hopefully we will see some more as we got through the end of the year. And that [indiscernible] thanks. Thanks very much..

Thanks for your questions. Thanks Peter..

Dave just before there’s another question, just going back on that Liftking volumes, you were pretty much spot on it is about 3.3 million in the quarter..

Okay. I thought it was in the 3’s. Thanks Andrew..

And we do have a follow-up question from Mike Sulewski of Seaport Global..

Hey thanks guys, thank you so much for this.

A few follow-up questions from me, I guess first, one of your major truck and cranes competitors talks about a 8 to 9 years replacement cycle for their products, as you mentioned in 2009 it was kind of where it’s in this about in the past, but that - we still have some more to go in 2017 or 2018 or the core replacement cycle in our oil and gas piece, just your [indiscernible] business, I guess are we not done yet with declines here if we are still going to be looking at a very low base from ….

Mike 2009 was the bottom, but we peaked in 2006. So 2006 was the peak for us. So, 2007, 2008 we’re down off of 2006. So, you’ve pretty much run the gamut of the cycle..

In 2005 or 2006 you are seeing?.

That’s right.

I mean if you think of that period of being - and it’s not about, it’s not about gauge that is kind of your period, you hit eight years from the last peak for the bottom and the bottom that you have assume that we are back down to 2009 levels and we never thought we would see those again Mike, so I mean it’s pretty depressing from our standpoint. .

Okay, got it.

I also wanted to touch on the Manitex branded new knuckle cranes, if and kind of wondering how important is that as far as, will that accelerate adopting among [indiscernible]?.

There isn’t any kind of growth in 2017 there at all, given that this is a brand new product with a well known brand name attached to it now..

I’m really sorry Mike, you were breaking out there, did you catch that Andrew, did you catch the question?.

I’m afraid no..

I’m sorry Mike, you were breaking in and out, I apologize..

Sorry, I’m on a cell phone at your competitor’s crane factory and ….

Oh, yeah, you are at the crane show, you are at the analyst show. I understand, no problem, I apologize..

I will just say it again.

I was kind of curious how important the new brand crane from Manitex that’s a knuckle boom crane, how important is that for your growth in 2017 compared to the overall rest of the year?.

For now and until we see a turnaround in the straight crane, as we all know the knuckle crane hasn’t experienced the pitfalls that we had on the straight crane and so having a U.S. manufacturer orientation is really going to help us and we’ve heard this from everybody we have spoke to on the knuckle side.

And as you know there are not a lot of competitors in the U.S. market for a full line knuckle crane manufacturer. So, we have primarily European based competitors and so we really are pinning our future and our hope and also as the highest margin product that we have in the portfolio.

So, to the extent that we can grow those sales it’s very important to us going forward..

Alright.

And one last one if I could, on the tax situation here in the third quarter, I have not seen the Q yet, not sure if it has been out at this point, you had a benefit of $2.8 million in this quarter, is that essentially a raise you had from last quarter? I thought you had a more normalized tax rate in the fourth quarter and next year?.

Mike it is a very good question. I was hoping we would never get any tax questions because it way too complicated for Andrew and I, but generally speaking we use it up all of our carry backs and we still have some more cash that we will be receiving from our - for taxes going forward. We do pay taxes outside of the U.S.

We will not be paying taxes in the U.S. and I will assume from modeling purposes that until we can get some further clarification as we go forward just the used standard rates for future models. But from a cash standpoint we will not be paying taxes.

We had those, when we first came out as a public company, because we merged with a company that had a lot of NOL carry-forwards. We used those carry-forwards and then we started to pay taxes as we made money and now we are going back and recovering those cash payments and then we’ll be carrying forward some loses from this year and to future years.

So, it’s very hard for us to predict and I think for modeling purposes you just got to have to use a standard effective tax rate..

At this point, do you think you will be paying U.S.

taxes in 2017?.

If we do, we are making a whole lot of money and everybody on this call will be thrilled, including us, but I don’t expect that we will paying other than foreign taxes, because we do have foreign income and we do not have any carryovers or carrybacks because we have consistently made money outside of the U.S..

Okay. I will leave it there guys. Thank you..

Thank you, Mike..

[Operator Instructions] And with no other questions in the queue, I would now like to turn the call back over to Dave Langevin for any additional or closing remarks..

Thank you, Jenny. I appreciate everybody’s interest and the great questions we had. Look forward to the end of the year and next year’s call. Thank you very much..

And again, that does conclude the call. We would like to thank everyone for their participation. You may now disconnect..