Greetings, and welcome to the Manitex International Incorporated First Quarter 2021 Results Conference Call. During the presentation, all participants will be in listen-only only mode. Afterward, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to Steve Filipov, Chief Executive Officer. Please go ahead. .

Thank you, operator. Good afternoon ladies and gentlemen, and thank you for your continued interest in Manitex International. I hope everyone is safe and healthy and appreciate everyone taking the time to listen to our call. Today on the call with me, I have Joe Doolan, our CFO, who will discuss in more detail our financial results.

Please see our website or our release for replay instructions for this call, which will be available until May 13, 2021. Moving to slide 2, which is our safe harbor statement and remind you that everything we discuss is subject to change and described in our SEC filings for further guidance on the many risk factors associated with our company.

I will begin with a business update for our first quarter, followed by Joe, who will present a financial summary. After which we will welcome your questions. Now, let's begin on slide 3.

The global Manitex team delivered another good quarter of improvement and I want to thank our team for continuing to keep focused on the fundamentals of safety quality, cost and delivery.

Our revenues trended in the right direction with a 4% improvement over the fourth quarter of 2020 and our third consecutive quarter of consistent EBITDA improvement. With over $100 million of backlog, we are seeing a healthy recovery in global markets and all businesses are ramping up to meet this demand.

Our transformation strategy to develop our growth businesses in knuckle booms, area work platforms and electric vehicles is starting to gain significant traction. And with our North American straight mast business, now starting to turn around, we see a positive trend to growth in 2021 and beyond.

From an operational perspective, we continue to strengthen our COVID-19 safety protocols and have seen lighter periodic shutdowns. But overall, we are seeing the majority of our markets return to growth. We are ramping up to meet increased demand across all businesses.

And as we ramp, we are dealing with the daily challenges of availability and pricing of components. We have an experienced management team, who has dealt with these challenges in the past, and we are confident we will mitigate them as best we can.

Joe will comment further on our liquidity and balance sheet, but with $28 million in total cash and credit availability, we feel Manitex is on solid ground for our future growth plans. Please turn to slide 4.

All of our businesses experienced improved performance in Q1 and most notably was a straight mast market, which was the main driver of sequential growth after several quarters of market deterioration. Many, if not all of our dealers in North America are seeing improved quote activity. Rental fleet utilization is improving.

Customer sentiment is at pre-pandemic highs. And all of these are positive signs of an expected improvement in the North American crane market for 2021. Anecdotally, we know the utilization rates at some of our dealers have gone from the lows of 40% to north of 70%, which is a healthy indicator of activity in the markets our products serve.

Our Manitex articulating crane sales team in North America or MAC is also gaining traction, starting with an additional order for a follow-on military customer. But most importantly, we are seeing the specialized lifting market growing in tree care, utilities, forming and waste management.

Our PM Group management team continues to make the necessary improvements to grow our businesses globally. Demand from European markets in North America have led the backlog and sales growth at PM for the past few months.

But with strong exposure to commodities, we are also seeing an increase in demand coming from Chile and Argentina, which are trending in the right direction for us. Each of our top and geographic markets show good growth this year.

Demand for our oil and steel aerial products is mainly driven by the sales and distribution plan, we implemented in 2020 and we are now seeing these improvements taking hold in our top European markets, with Italy, France, Spain and the UK all showing positive growth for us.

Last but not least, we remain very excited about our zero-emission Valla products, as demand for cleaner lifting technology is gaining traction and our team continues to deliver new products to the market with a new 3.6-ton crane launch this quarter.

Our large European rental customers received their first units and are now placing them in the market. Our Valla team in the US is making excellent inroads with new customers in the nuclear industry, industrial manufacturing facilities and warehousing applications.

We have much more upside with this business and will be launching several new products later this year to meet these growing new market applications. Let me now turn it over to Joe to discuss our financial performance.

Joe?.

Thanks, Steve. Good afternoon, everyone, and thank you for joining the call today. Slides 5 and 6, reflect our financial performance for the quarter. Please turn to slide 5 and I'll address my comments from this slide. Our revenues for the quarter were $47.2 million, an increase of 4.4% compared to the $45.2 million for the fourth quarter of 2020.

The increase was driven mainly by higher sales of our straight mast cranes in our Manitex business. Sales of knuckle boom cranes at our PM business in Q1 were consistent with sales in Q4. Our first quarter net loss was $0.8 million, a $1 million improvement from the fourth quarter net loss of $1.8 million.

The improvement was driven by higher gross margin of $400,000 due to increased sales of $2 million, as I mentioned and lower income tax expense of $600,000. The loss per share was $0.04 for Q1, compared to a loss of $0.09 per share in Q4.

The adjusted net loss was $0.1 million or $0.01 loss per share for Q1, compared to an adjusted net loss of $1.3 million or $0.07 per share in Q4. Our gross margin was $8.8 million or $400,000 higher than Q4, driven by the increased sales in Q1.

The increased gross margin is primarily due to the $2 million of higher sales of straight mast cranes in our Manitex business unit. The gross margin percentage was 18.7% of sales for the quarter, consistent with what we experienced in the fourth quarter.

The higher gross margin from the international sales was offset by higher cost of materials in the US for the quarter and the mix of US sales that was skewed to lower tonnage units, which typically have a lower gross margin.

As you can see from the chart, our gross margin continues to trend higher as PM sales represent a growing portion of our total revenue. As Steve mentioned and as has been noted throughout the industry, supply chain challenges such as increasing steel costs and chassis availability are situations that need to be monitored and we are doing that.

Our global purchasing, sales and manufacturing teams are all doing an excellent job of managing through this environment, as capacity starts to build again. Operating expenses were $8.5 million for the quarter, consistent with expenses recorded in Q4, 2020.

Operating expenses as a percentage of sales declined from 18.8% in Q4 to 18.1% in Q1 as we were able to leverage our existing expense base, supporting the increased revenue for the quarter. Increased insurance and incentive compensation expense during the quarter were offset by lower consulting cost.

We will continue to take action to maintain prudent expense control and are targeting lower SG&A as a percentage of sales in our operating model. Adjusted EBITDA was $1.9 million, or 3.9% of sales. This is an increase of 24%, or $0.4 million from the fourth quarter, which reported adjusted EBITDA of $1.5 million or 3.3% of sales.

The increase was driven by increased sales in our straight mast crane business. Our backlog was approximately $84 million as of March 31 and increased order activity in April took that backlog to $107 million. This represents more than a 57% increase compared to December 31. This increase was driven by higher orders across most business units.

Straight mast crane and articulating crane backlogs increased by nearly 70% from December. Backlog for aerial work platforms has increased by nearly 40% from December 31. Now moving to slide seven for a net debt update from Q1, 2021.

Net debt was approximately $31 million at quarter end, representing a $1 million increase from year-end, consisting of traditional bank debt and a revolver. The small increase was driven by an increase in short-term financing and foreign currency movements.

The team is confident that the company will have the liquidity through cash and other credit lines open to meet each of these obligations and any others that are scheduled over the next 12 months. We remain in compliance with all debt covenants.

At March 31 the company had available liquidity of approximately $28 million, consisting of $16 million of cash, $10 million on the revolver and $2 million in working capital facilities. With that, I will now turn the call back to Steve..

Thanks, Joe. Please turn to slide eight and let's turn our attention to our outlook for Q2 2021. COVID-19 will continue to be top of mind for all of us at Manitex. And while vaccination rates continue to show progress globally, we still have a long way to go and we will remain vigilant about our team's health and safety for the future.

As we have commented several times today, our record backlog of over $100 million gives us confidence and visibility to what we expect to be much improved financial results in 2021 over 2020. And we're excited to see that this demand is coming from all markets and across all businesses.

We still have challenges to overcome, as we ramp up to meet this growing demand, but I'm confident our management team is taking the right steps to mitigate any supply chain issues that arise.

We're also working with our customers and our dealers to deal with the current volatility in component pricing and taking the necessary actions to not dilute our margins.

We will turn challenges to opportunities and keep focused on delivering the best products to the market and making Manitex a larger, more diversified and more profitable company going forward.

With that, operator, could you please open the lines for the Q&A session?.

Thank you. [Operator Instructions] One moment please for the first question, which comes from the line of Mike Shlisky with Colliers Securities. Please go ahead..

Good afternoon, guys..

Good afternoon, Mike..

Hey, Mike..

A question about the backlog. It looks great, both quarter end and April 30.

A big topic has been, are the backlogs due to really strong demand, or are there a handful of unshipped cranes you wish you could have had, but you couldn't ship by the end of the quarter, because of chassis availability or other issues with the supply chain? Is there any way you can kind of break out what you may have missed in the quarter from a revenue perspective that will come eventually, but just is still stuck in backlog there?.

Sure. Sure, Mike. Yes, I mean, its demand driven, I'd say, across the board. There really wasn't much that we missed from a production perspective in the first quarter. And sitting here the middle of the second quarter, we're dealing daily with supply chain challenges. But to be honest with you, there are some areas that are getting better.

We're managing through them and demand still is strong across the board. I think the numbers that we mentioned, whether its knuckle booms, boom trucks, aerials and even Valla, are all still today in high demand. So I tried to talk a little bit about the markets which are driving those. And North America utility markets are strong.

The tree care market is still very strong. Obviously, residential housing which continues to go up is strong. So I think the demand is there. Now, obviously, lead times are getting a little bit longer. So people are getting ahead of -- our customers are getting ahead of that, but we feel pretty good about that backlog that continues to be strong..

And then, just you mentioned, Joe that you're kind of monitoring the supply chain story, but you have not actually faced any major challenges yet.

Is that a fair statement? And is it something we should definitely be concerned about for the second or third quarter here, or just more of a theoretical thing to watch for?.

Sure. No. I would say, Mike, in the first quarter we talked about the steel volatility availability being an issue. I would say we took the opportunity to buy forward on -- at least from our steel suppliers. And now I would say, steel has actually not been too bad from a delivery perspective from those suppliers.

I'll tell you, I was on an operations call yesterday. And we had one of our suppliers that delivered two days early. So that's a positive thing. I would say that, there's always something missing today versus 12 months ago. And we're managing through that.

And as I said, the management team we have in place is doing a great job to manage our parts supply. And I think we feel pretty good about, where we are. And I think the first quarter demonstrates that even in that turmoil that we talked about we didn't do too bad. Sequential revenue is up 4%. The EBITDA is up and the backlog is up.

And I think those are all leading indicators that give us confidence that 2021 shouldn't be all that bad..

Got it. Sorry to harp on backlog again, but one more question on the backlog. Is that a five-year high here as April 30? I just want to make sure that that's apples-to-apples. The backlog that you're talking about on April 30 is obviously just mainly straight mast and knuckle boom.

The history has ASV and Load King and other companies that you used to own in the past.

Are you saying it's a five-year high just for the current lines today, or is it based on the old companies that you also used to own, when you look back over the last five years?.

No. I would say its like-for-like, right? So the product line….

Okay..

… we're just comparing the product lines that we have five -- we went back five years ago to your point, the company was much different after that. So we thought that was a good comparison..

Yeah. That's exactly right. Yeah, we compare to the same product lines now that we had back then..

Exactly..

Just making sure..

Yeah..

And maybe the last one for me, you had mentioned Steve, potential for positive growth in 2021 and beyond, so a kind of multi-year story here.

What gives you the confidence that there is a multiyear tailwind, across both the businesses?.

Well, I think the obviously the backlog substantiates the markets that we're in, the products that we build, and the customers -- the end markets I should say, that we deliver to, are pretty strong right now. And that gives us the confidence that, not only in 2021, but in 2022 we see positive growth.

Remember that, we talk about a knuckle boom market globally that's 50,000 units is growing. We're gaining share in some markets. And we're ramping up. There's a lot more opportunity for us to grow in knuckle booms, as we've mentioned before. The boom truck business in the North America -- in North America is coming from a pretty low-base.

So that is going to continue to grow. And as I've mentioned before, we feel that that business should stabilize between, 1,000 to 1,200 units in North America coming off of a low of 700 or so units. Then you have the Aerials business, which we mentioned is up significantly in the backlog.

And we're growing share in that business and launching new products. Valla is in our mind really just with zero emissions and everything going on around ESG is really just in its infancy. And we're already seeing good traction there. So I'm pretty confident that, 2021 is going to be better than 2020. And 2022 should be better than 2021.

At least that's the focus that we have today..

Excellent. Thanks so much. I will pass it on..

Great. I appreciate it Mike..

[Operator Instructions].

Is there anything further there operator? Questions?.

We do have a follow-up question from the line of Mike Schilsky with Colliers Securities. Please go ahead..

Hey guys, if it's just me I'll keep going, while we're on the phone here..

Sure..

Curious, how -- can you update us on? How it's going over in Asia with Tadano and efforts to kind of grow there?.

Yeah. Mike, I'd say, we're down year-over-year on revenue with Tadano, because we had a big shipment, which we I think mentioned in the first quarter last year to the Middle East. Obviously, the Asian markets have been open closed the past six to eight months.

So I would say, it's still -- it's, okay, but we need a little bit more runway there to see how these markets are going to take off. And I mentioned about, moving into Australia with the Tadano team. We're still working on the plans for that. So we're going to keep working it.

At the end of the day, Europe, North America, Latin America, Middle East to a certain extent are the real focus markets for us. And we see those gaining ground again in the knuckle boom business..

Okay. Got it. Well, that was it. Thanks guys. I appreciate it..

All right. Thanks Mike..

There are no further questions at this time. I will now turn the call back to you. Please continue with the presentation and/or closing remarks..

Okay. Thank you very much operator. And thank you everyone for your interest in Manitex. We appreciate your time today. And again, we feel good about where we are in a complex business and environment. But we feel like we've got a strong backlog over $100 million and confident that we'll be able to deliver growth in 2021 and beyond.

So thank you all very much. We appreciate it..

That does conclude the conference call for today. We thank you for your participation. And ask that you please disconnect your line..