GEO Investing

Manitex International Inc. (NASDAQ:MNTX), a company that GeoInvesting has covered at great lengths, released Q2 2015 financial results today, reporting sales of $105.6 million vs $68.4 million in the prior year and in line with analyst estimates of $105.3 million, and EPS of $0.02 vs $0.22 in the prior year and below analyst estimates of $0.08.

Takeaways from Manitex Q2 Earnings Release and Conference Call

  • Manitex is facing a very difficult business environment but is hanging in there.  Integration of acquisitions is progressing, gross margins are only slightly down and stable, and the company is reducing debt.  The company has assembled a diversified business platform that will be well positioned when the market turns.
  • Last year 2015 EBITDA on a pro forma basis was expected to be around $40 million.  Actual performance is more likely to be in the $30 million range.  The $10 million erosion is principally due to the energy market.
  • Energy producers overbought equipment in 2013 and less so in 2014.  The idle equipment in the energy patch is finding its way into other markets, notably construction.  The CEO expects flow of used equipment to run its course by the end of 2015.  Once the idle energy patch equipment is absorbed for non-energy uses, Manitex sales of equipment should improve.
  • Not counting energy, other markets are doing okay.  Construction remains relatively flat and other non-energy markets are stable to growing.
  • Markets are highly competitive so there is very little to no pricing power.  There is also little pressure on commodity and input costs.
  • CEO’s overall assessment is that this downturn is not as bad as 2008-2010, because companies were leaner coming out of last downturn so there was less overcapacity going into this cycle.

Manitex Priorities Are a Key to Success

  • Focus on successful integration of PM and ASV
  • Review and attack cost structure.  Expect to realize $4 million in cost savings this year ($2 million already achieved) and another $15 million over the next three years.  More efficient global purchasing will be the key driver of cost savings.
  • Run a lean operation and aggressively pay down debt
  • Be poised to capitalize when the business environment improves

While we feel that Manitex stock will not be in favor in the near term, the long term prospects remain attractive. We are still long and will maintain MNTX as a GeoBargain, or Top Pick.