Manitex Earnings Lag Estimates, Shares Fall
Shares of Manitex International, Inc. (MNTX) fell as much as 18.3% and eventually closed at $16.03 a day after the company reported its first-quarter 2014 results on May 8. Earnings declined 12.5% year over year to 14 cents per share, negatively impacted by around 3 cents per share of ConExpo cost as well as increased number of shares outstanding. Results also lagged the Zacks Consensus Estimate of 18 cents.
Operational Update
Net revenue rose 5.1% year over year to $63 million, of which 12.5% was from acquisitions. However, organic revenues decreased 8.1%, due to decreased material handling revenues year over year. Revenues fell short of the Zacks Consensus Estimate of $65 million.
Gross profit improved 13.4% to $11.6 million from $10.2 million in the prior-year quarter. Consequently, gross margin expanded 130 basis points (bps) to 18.5% due to improvement in the industrial crane operations from improved production costs and a favorable impact of product mix from the acquired business revenues.
Selling, general and administrative expenses (SG&A) increased 17.9% year over year to $7.3 million. Operating income was $3.6 million, compared with $3.3 million in the prior-year quarter. Operating margin expanded 30 bps year over year to 5.8%.
Financial Update
As of Mar 31, 2014, Manitex’s cash and cash equivalents were $1.1 million versus $6.1 million as of Dec 31, 2013. The decrease in cash was the result of cash used to reduce debt and pay accrued expense. Cash used for operating activities came in at $3.7 million in the reported quarter compared with $2.5 million in the year-ago quarter.
As of Mar 31, 2014, long-term debt decreased to $52.7 million from $54 million as of Dec 31, 2013. Debt-to-capitalization ratio was 37.7% as of Mar 31, 2014, down from 38.9% as of Dec 31, 2013.
Total backlog grew 29% to $100 million as of Mar 31, 2014 from $77.3 million as of Dec 31, 2013, primarily led by crane operations. Manitex reported a book-to-bill of 1.36x in the first quarter 2014, a significant improvement from 0.6x a year-ago.
Outlook
Manitex did not provide any guidance for 2014. The company remains optimistic and expects significantly improved results for the second quarter and for remainder of 2014, with higher sales and gradual improvement in gross margin. Furthermore, it expects to continue benefiting from expansion in backlog and a slow but steady economic growth.
The company is planning to increase its production for the second and third quarters of this year, which should result in revenues in excess of $70 million in the second quarter. With the planned increase in production, the company anticipates a gross margin of nearly 20% for the full year.
Manitex will also benefit from an additional military order at its Liftking subsidiary. Subsequently, towards the end of the quarter, the company was awarded a five year contract from the U.S. Navy valued at $25.9 million, for supply of specialized material handling units, with shipments anticipated to commence in 2015.
Additionally, Manitex remains committed to increase its innovative product offering, as evident from the introduction of Manitex TC 70 crane, which will likely drive sales. However, the company expects a modest recovery in the energy sector which will affect the company’s North American rig count.
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 #4 (Sell). Some better-ranked players in the same industry include Atlas Copco AB (ATLKY), The Babcock & Wilcox Company (BWC) and Blount International Inc. (BLT). All of these stocks carry a Zacks Rank #2 (Buy).
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