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00:00 Thank you for standing by. This is the conference operator. Welcome to the Manitex International Inc. Third Quarter twenty twenty one Results Conference Call. As a reminder, all participants are in a listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions.

[Operator Instructions] 00:35 I’d now like to turn the conference over to Mr. Steve Filipov, Chief Executive Officer. Please go ahead..

00:42 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 we appreciate you taking your time to listen to our call.

I’m Steve Filipov, CEO of Manitex and with me today is Joe Doolan, our CFO, who will take you through the financial details of the third quarter, which we announced earlier today. Following our prepared remarks, as is our custom, we will open up the line for Q&A. 01:12 Please see our website for a release, for replay instructions for this call.

A telephone replay will be available for seven days and the slides we cover with audio broadcast or webcast will be available for a year. 01:26 Slide two is our Safe Harbor statement, which reminds you that everything we discuss is subject to change.

As described in our SEC filings, which you can refer to for further details on the many risk factors associated with our company. 01:40 So, please now let's turn to slide three for a review of our operating results. Let me start by providing some color on the current business environment, and the impact it’s having on Manitex.

It's clear that we are in an uncommon period of time with robust customer demand for our products while facing one of the most challenging global supply chain environments and period of workforce constraints not seen the case.

These factors are negatively impacting production and also contributing to manufacturing labor inefficiencies for us as well as the entire industry as I'm sure our listeners are aware. 02:20 At the same time, we've seen significant material cost inflation since the beginning of twenty twenty one.

So, you might ask what are we doing about it? Let me assure you that we are tackling these problems head on. We've implemented multiple price increases and surcharges across all product lines. We are working with our customers to be transparent about why and where are these increases coming from.

We are adjusting workflow within our facilities to mitigate production and efficiencies, and helping our supply chain partners identify issues and engage new suppliers to meet demand. We are taking all steps available to reduce margin pressure and increased product throughput to meet the demands of our customers.

03:10 While we view these challenges as temporary, we do not take them lightly and ongoing and -- and the ongoing uncertainty they’ve caused worldwide. We're taking the right actions to position our company for success and will emerge from the current environment, a stronger, more resilient business.

03:29 The global Manitex team was able to mitigate many of the production constraints this quarter with year-over-year revenue rising almost forty percent to nearly fifty one million dollars.

Joe will take you through the deeper look at our financials, but our gross profit also increased twenty percent to eight million dollars and adjusted EBITDA was one point six million dollars for the quarter.

03:54 At the same time, we've been working hard to continue to improve our balance sheet and our net debt is twenty six point five million dollars, which gets our leverage ratio to less than three times trailing adjusted EBITDA.

Our backlog continues to grow and remains at five-year record high of one hundred and thirteen point six million dollars, with our European businesses leading the growth and good improvement from our straight mast business in North America. 04:22 Now please turn to slide four for some additional color on our operational performance in Q3.

As I mentioned earlier, business is robust and demand is high, and we are working daily to manage our supply chain constraints and a volatile pricing environment. 04:39 Let me start with our PM Knuckle Boom business, which continues to be robust with orders up over one hundred percent since the end of last year.

Our revenue here rose twenty two percent versus Q3 twenty twenty and global demand is up with our key markets in Europe, North America and Latin America. 05:00 We continue to bring new and innovative products to the market and have launched three small and medium sized cranes at a recent trade show in Italy.

Our plan is to continue to accelerate new product launches in twenty twenty two and twenty twenty three with further developments in the higher capacity cranes.

05:19 The European supply chain team works across PM, oil & steel and Valla products to leverage volume and is working on a daily basis to mitigate shortages, but more importantly to find additional suppliers to meet ongoing demand.

I have firstly met some of these new suppliers and I am impressed by such high quality, professional companies that will help us grow in twenty twenty two. 05:45 Our leadership in the straight mast market continues to show strong demand within a more difficult supply chain environment.

Revenue rose forty three percent versus last year even as a ramp up has been more challenging than here than in Europe. We have brought our new steel suppliers, which has helped us help availability in the past couple of quarters, but prices remain high.

06:11 In order to offset these costs, we've implemented a steel surcharge on all of our products effective twenty twenty one, which will remain in place until we see prices start to come back down, which we do not expect to happen until sometime in twenty twenty two.

As we discussed doing our Q2 call, truck chassis supply continues to be a significant challenge. Semiconductor shortages have been a major issue for our truck suppliers and while there seems to be some improvement in deliveries remain cautious about the next couple of quarters. 06:46 Switching over to our Oil & Steel Aerial business.

The team has been doing a stellar job growing our share in Europe and revenue rose thirty two percent year-over-year. Twenty twenty one will most likely be a record revenue for this business. We are very excited about our new track-mounted self-propelled aerial work platform.

Oil & Steel has been a leader in this business for years and we have designed a new range of fifty five to sixty eight foot platforms from the ground up. While having just launched these products at a recent trade show in Italy, we've already seen orders come in and recently launched them at a TreeCare show in the U.S.

07:28 We see demand from our aerials continue to be strong in the utility, construction, rental and infrastructure projects mainly in Europe, but expanding into North America as we develop dedicated distribution.

07:42 Turning to our Valla zero-emission electric cranes, revenue rose more than seventy percent versus Q3 twenty twenty and backlog is also growing. There's an excellent demand for electric cranes and our team has done a great job in launching new products to meet customer demand in this space.

Our biggest challenge continues to be our supply chain, and although, we will more than double this business in twenty twenty one versus twenty twenty. We have more work to do in margin improvement and integrating the operations within our other European businesses to leverage resources and improve supply chain inefficiencies.

08:21 Let me now turn it over to Joe to discuss our financial performance.

Joe?.

08:26 Thanks, Steve. Good afternoon, everyone, and thank you for joining the call today. Please turn to slide five in the presentation. This reflects certain trends in our financial performance for the quarter and previous four quarters.

As Steve mentioned, revenue for the quarter was fifty point nine million dollars, an increase of fourteen point four million dollars or nearly forty percent compared to thirty six point five million dollars for the prior year.

08:51 The improvement was driven mainly by higher sales of straight mast cranes in our Manitex business, knuckle cranes and our PM business and aerial platforms in our Oil & Steel business. Gross profit was eight point zero million dollars or one point four million dollars higher than the prior year period driven by the increased revenue.

The gross margin percentage was fifteen point eight percent of sales for the quarter, down from eighteen point three percent for the prior year, driven mainly by increased material costs and steel surcharges as well as product mix.

09:26 As can be seen from the chart on gross margin, our margin declined from Q2 twenty twenty one to Q3 driven mainly by the increased material costs as well as an impact from product mix.

Adjusted EBITDA was one point six million dollars or three point one percent of sales for the quarter, this is up from adjusted EBITDA of one million dollars or two point six percent of sales for the prior year.

The increase was driven by higher sales of straight mast cranes in our Manitex business, Knuckle Boom cranes in our PM business and aerial platforms in our Oil & Steel business. 10:02 The adjusted EBITDA percentage is higher than the prior year, but below our target due to the increased costs and product mix that I mentioned earlier.

Our backlog was one hundred and thirteen point six million dollars as of September thirty, which is a five year high and represents a sixty seven percent increase compared to the year end. This reflects higher orders in the straight mast crane, knuckle crane and aerial platform businesses.

10:29 Straight mast crane backlog has increased seventy one percent since year end. Knuckle crane backlog has more than doubled since the beginning of the year and our backlog for aerial work platforms is up thirty three percent from the year end.

10:43 Our book-to-bill ratio was one point zero five to one for the quarter and is one point two nine to one for the year, which is a significant improvement over the book-to-bill ratio of zero point eight eight to one in the comparable twenty twenty period. 10:59 Now please turn to slide six for additional financial results for the quarter.

Operating expenses were eight point two million dollars for the quarter, which is in line with our expectations and up zero point nine million dollars from the prior year, mainly due to higher professional fees, advertising costs and sales commissions.

11:17 Operating expenses as a percentage of sales declined significantly to sixteen point one percent in Q3 compared with nineteen point nine percent in the prior year, as we were able to leverage our existing expense base, supporting the increased revenue for the quarter.

We will continue to take actions to maintain prudent expense control and strive the lower SG&A as a percentage of sales in our operating model. 11:43 Net loss for the quarter was one point one million dollars and is three hundred thousand favorable to the prior year.

Adjusted net loss of two hundred thousand dollars for the third quarter is an eight hundred thousand dollars improvement over the prior year. 11:58 Please turn to slide seven.

Our net debt was twenty six point five million dollars at quarter end, representing a three point four million dollars improvement from the start of the year that is a one point one million dollars increase versus the second quarter.

This increase was driven by higher draws on our working capital facility to support increased inventory purchases to meet our backlog. 12:21 Our leverage ratio remains less than three times trailing EBITDA as of September thirty.

At September thirty, the company had available liquidity of approximately thirty three million dollars consisting of seventeen point five million dollars of cash, ten point six million dollars of availability on the U.S. revolver, and five million dollars in working capital facility.

12:42 The team is confident that the company will have the necessary liquidity through cash and other credit lines open to meet our obligations that are scheduled over the coming twelve months. We remain in compliance with all debt covenants. 12:55 With that, I will now turn the call back to Steve Filipov..

13:01 Thanks, Joe. Please turn to slide eight. I want to take a moment to summarize where things stand before we begin Q&A. The business continues to be in good shape underscored by our record backlog of one hundred and thirteen point six million dollars. We have excellent visibility into expected robust demand over the coming quarters.

The pandemic was a bit of a factor in reducing Q3 activity due to new Delta variant restrictions, but the larger issue as discussed involves current supply chain constraints hampering logistics and shipping worldwide. 13:39 We continue to aggressively work through this on both sides of the coin.

Managing costs on one hand, while when appropriate raising prices on the other. We believe our approach and further steps to tighten expense controls and pursue new suppliers is allowing us to ship product as quickly as possible while mitigating margin compression, but more work needs to be done as this is issue is not over.

14:07 We have an active pipeline of solid opportunities ahead of us, and I personally feel we’re poised for further growth heading into twenty twenty two. Our balance sheet is strong and our team is working seamlessly to grow the top line, reduce working capital and enhance returns for our shareholders.

14:26 With that, operator, could you please open the lines for the Q&A session..

14:33 We will now begin the question-and-answer session. [Operator Instructions] There are no callers currently in the queue. I would like to turn the conference back over to Mr. Steve Filipov for closing remarks..

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15:26 Thank you, operator. Well, I think the quarter was fairly straightforward, and let me summarize again for everyone on the call. I think the team feels positive about our business, orders are robust and continue to be robust as we sit here halfway through the fourth quarter.

Obviously, the announcement of an infrastructure bill, puts winds on our sail and we feel very good about the opportunity to participate later in twenty twenty two and beyond with an infrastructure bill.

15:59 And then obviously, as we mentioned, we're working all of our internal costs to make sure that we can neutralize obviously the input costs from our suppliers, and we feel pretty good about the next couple of quarters. 16:16 With that, I'll turn it back to the operator to please close the call..

16:23 This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day..