10.08.2015

Revenues soar but profits fall at Manitex

Boom truck, crane and platform manufacturer Manitex has reported a strong rise in first half revenues, but profits have fallen steeply.

Revenues for the six months were $211.5 million over 61 percent up on last year, thanks to the addition of PM, ASV, and higher sales of Valla and port handling equipment. Pre-tax profits for the period slumped from $7.2 million last year to $633,000 this year, due to lower margins from crane sales and a substantial increase in operating and development expense related to the acquisitions and integration of PM.

In the second quarter revenues were up over 54 percent to $105.6 million, of which $32 million came from the partial acquisition of ASV from Terex. Sales of lifting equipment increased eight percent to $70.9 million, of which $23 million was PM group. Pre-tax profits for the quarter dropped from $4.4 million last year to $490,000 this year for the same reasons that affected the first half.

Chief executive David Langevin said: "While the unprecedented downturn in the energy market continues to challenge us to preserve our margins, our long-term strategy to build a diversified portfolio of niche products as a market leader has enabled us to withstand the pressure of the sales decline that we've seen throughout the boom truck industry. As a result of our recent PM acquisition and ASV joint venture, our sales and EBITDA have reached a higher level than ever before, and we continue to pursue our plan to emerge from current headwinds in the industry with a stronger balance sheet, higher margins, and greater earnings power than ever in our company's history. While the boom truck demand picture has been quite subdued for several quarters, we remain optimistic and prepared for a turn in the cycle and the demand for our products that it will bring”.

"Our acquisition of PM group in January marked our expansion into the growing knuckle boom crane market, and with revenues of over $23 million for the second quarter, compared to approximately $16 million in the first quarter, and with EBITDA contribution in the second quarter of 10% of sales, PM already represents a solid contributor to the value of our company. Further, as stated in our first quarter release, we continue on the path of integrating PM production with our North American crane production facilities as well as aligning the PM products with our core North American sales and marketing channels. This initiative will make our PM knuckle boom crane the most complete product range of its kind made in the USA, and give us a strong competitive edge. Finally, ASV, our venture with Terex, contributed $32 million in sales for the current quarter with EBITDA margins above our historical corporate average. These two new product areas were significant contributors to our Company's financial performance thus far this year, and we remain excited about their contribution going forward."

Chief operating officer Andrew Rooke added: "Results for the second quarter were significantly impacted by the reduced demand for our higher tonnage crane product that has been created by the energy sector slowdown and the redeployment of equipment into other markets. Nonetheless, the performance of our other companies and our recent acquisitions is positive and encouraging. Sales under our military contracts at Liftking are expected to ramp up in the second half of the year, and PM is securing orders on an international basis. Additionally, the introduction of the new ASV branded product into its new distribution network is expected to expand geographic coverage, and will accelerate in the second half of the year. Cost control, working capital management and debt reduction are our highest priorities as we rebalance after the recent acquisition activities. Our cost reduction initiative is right on plan as at June 30, 2015 and has delivered $2.0 million of the $4.0 million year over year and $15 million over three years cost reduction targets previously announced. We have reduced our debt by $18.1 million, since the start of the year as adjusted for the acquisition of PM, and our cash and available credit lines of credit provide liquidity of approximately $42.0 million. Throughout the second half of the year we will continue to repay debt and vigorously manage our working capital balances."

Vertikal Comment

While the bottom line looks a little scary, it also suggests that the company is getting on with integrating its acquisition and melding them into a substantial and very international lifting equipment producer.

It is hard to judge at this stage, but signs are that the company will be well on the way by year end and ready for a prosperous year in 2016. It could do with some time now to digest what it has and consolidate it properly before jumping into any further acquisitions.

All in all it looks promising from the future.