Manitex Falls as Q3 Earnings Miss on Unfavorable Product Mix - Analyst Blog

Shares of Manitex International, Inc. (MNTX) have lost 3% of their value to close at $11.51 yesterday, since the company announced its third-quarter 2014 results on Nov 6. Earnings slumped 38% year over year to 13 cents, due to the allocation of a higher proportion of production and sales to smaller tonnage cranes and material handling products.

Along with this, there was negative impact of product mix, partly offset by recent rebound in orders for higher tonnage cranes. Results also lagged the Zacks Consensus Estimate of 15 cents.

Operational Update

Net revenue rose 15% to $66 million from $57.5 million in the year-ago quarter, with approximately 20% contribution from the Valla and Sabre acquisitions. Year over year revenue growth was led by a 46% increase in material handling product sales backed by improved demand from the general construction market. Revenues, however, fell short of the Zacks Consensus Estimate of $68 million.

Crane revenues were flat year over year. Order intake in the quarter was in proportion with current levels of output. Material handling product reported a 46% year-over-year increase in sales on improved demand from the general construction market. The segment also recorded a number of shipments of military focus under existing contracts with Manitex Liftking subsidiary. Container handling revenues at Europe and CVS operation were up 50% year over year benefiting from increased demand in both Europe and international markets.

Gross profit declined 2.6% to $10.9 million from $11.2 million in the prior-year quarter. Gross margin contracted 300 basis points (bps) to 16.5% in the quarter. The benefit from higher revenues was offset by the significant sales mix change on margin. Selling, general and administrative expenses (SG&A) increased 17.3% year over year to $6.9 million.

Operating income was $3.4 million, compared with $4.7 million in the prior-year quarter. Operating margin declined 300 bps year over year to 5.1%.
 
Adjusted EBITDA (Earnings before interest, taxes, depreciation and amortization) was 4.5 million, down 19.6% from $5.6 million in the year-ago quarter. EBITDA margin was 6.8% in the reported quarter compared with 9.8% in the prior-year quarter.
 
Financial Update
 
As of Sep 30, 2014, Manitex's cash and cash equivalents were $4.9 million versus $6.1 million as of Dec 31, 2013. Cash used for operating activities came in at $1.7 million for the period of nine months ended Sep 30, 2014 compared with $1.1 million in the year-ago comparable period.
 
Total debt stood at $54.7 million as of Sep 30, 2014, up from $54.2 million as of Dec 31, 2013. Debt to capitalization ratio was 35% as of Sep 30, 2014 compared with 36% as of Dec 31, 2013. Total backlog grew 32% to $102 million as of Sep 30, 2014 from $77.3 million as of Dec 31, 2013.
 
Manitex has announced an agreement to form a joint venture with Terex Corp. (TEX) in A.S.V. Inc. (ASV), with estimated sales of approximately $128 million in 2014. Manitex will own 51% and Terex will own 49% of ASV following the transaction, which is expected to close before the end of 2014.

Manitex also announced orders of $17 million received for larger, higher tonnage/higher margin products. Production is expected to commence in the fourth quarter.

Outlook
 
Manitex remains committed to improve its innovative product offering through expansion of product portfolio and diversification of revenue sources by in-house development and acquisitions. The company remains on track to close the acquisition of PM Group, which adds over $100 million of profitable revenue to its base business.

In the third quarter, the company witnessed an increase in its backlog, and expects that mix and margin will improve in the fourth quarter and beyond led by military orders in Liftking and stronger orders for larger cranes from numerous dealers.

Bridgeview, IL-based Manitex International is a leading provider of engineered lifting solutions including boom truck and rough terrain cranes, rough terrain forklifts, special mission oriented vehicles, container handling equipment and specialized trailers.
 
Manitex currently carries a Zacks Rank #3 (Hold). Some better-ranked players in the same industry include Barnes Group Inc. (B) and Middleby Corp. (MIDD), both having a Zacks Rank #2 (Buy).

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