Manitex International, Inc.

Greetings. Welcome to Manatex International Incorporated fourth quarter and full year 2022 results conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Paul Bartolet, Managing Director with Valium Advisors. Thank you. You may begin.

Thank you. Welcome to Manatex International's fourth quarter and full year 2022 results conference call. Leaving the call today are CEO Michael Coffey and Chief Financial Officer Joseph Doolin. We issued a press release earlier today detailing our fourth quarter and full year operational and financial results. This release, together with the accompanying presentation materials, are publicly available in the investor relations section of our corporate website at www.manatexinternational.com. I would like to remind you that management's commentary and responses to questions on today's conference call may include forward-looking statements, which by their nature are uncertain and outside of the company's control. Although these forward-looking statements are based on management's current expectations and beliefs, actual results could differ materially. For a discussion of some of the factors that could cause actual results to differ, please refer to the risk factor section of our latest filings with the SEC. Additionally, please note that you can find reconciliations of historical non-GAAP financial measures in the press release issued earlier today and in the appendix of this presentation. Today's call will begin with prepared remarks from CEO Michael Coffey, who will provide a review of our recent business performance, including an introduction of our new Elevating Excellence Initiative followed by a financial update and outlook from our CFO, Joseph Dooling. At the conclusion of these prepared remarks, we will open the line for questions. With that, I'll turn the call over to Mike.

Thank you, Paul, and good morning to everyone joining us in the call today. Our team delivered strong fourth quarter results, highlighted by significant organic revenue growth across our lifting equipment and rental segments. sustained margin expansion, and our fourth consecutive quarter of improved profitability. Fourth quarter revenue increased 48% on a year-over-year basis. Excluding the revenue contribution from Rayburn Rentals, the acquisition we completed in April of 2022, we generated organic revenue growth of 34% in the fourth quarter. driven by the strength of our core lifting segment. We continue to see strong demand in our lifting equipment in both North America and Europe, driven by elevated activity levels across key end markets, such as transportation and infrastructure, upstream energy and electrical distribution, as well as general construction. Our rental segment, which is represented by Rayburn performed ahead of expectations during the fourth quarter, supported by robust rental revenue within the Texas market. Northern Texas has a strong backlog of infrastructure, commercial, and industrial projects, which are bolstering demand for Rain Bird Rentals. As previously disclosed, we are expanding into Lubbock, Texas. Last summer, we opened a temporary location while our new facilities were constructed. The new branch is now complete and we will be open in March. During the fourth quarter, we continue to drive productivity and efficiency improvements across the organization, consistent with the plans shared with you last quarter. These actions include a focus on asset optimization, improvements to our procurement and supply chain management, and increased fixed cost absorption. Last quarter, I reported that we are getting close to achieving our long-term objectives of 10% adjusted EBITDA margins. And I'm proud to share with you, we achieved this in the fourth quarter on strong sales momentum and early success in our operating efficiency initiatives. While quarterly results may vary as we continue to transform Manitest, we are very excited by the progress made related to our operational improvement initiatives and believe that we are well on track to achieve our longer-term margin goals, which I will discuss with you shortly. Last quarter, we reported improvements to our gross margins resulting from improved pricing and efforts to streamline our costs. This momentum carried into the fourth quarter with gross margin increasing 450 basis points versus the prior year, to 19.3%. This excludes one-time adjustments last year related to the disposition of Badger. The group reported adjusted EBITDA margin of 10.3% in the fourth quarter, a significant improvement versus both the third quarter of 2022 and prior year period, and our first double-digit EBITDA margin quarter in over five years. Exiting the fourth quarter, Customer demand remains strong, as evidenced by the 22% year-over-year growth in our total backlog. We are seeing continued favorable demand and growth into the early months of 2023. There is a strong emphasis on heavier cranes used in the energy sector, and we are very pleased with the exceptional demand for articulated cranes in both Europe and South America. The composition of our backlog by geography is 49% North America, 51% international. Since joining Manatex nearly one year ago, I've had the opportunity to visit our sites, meet with our team members, customers, and suppliers. An immersive process designed to provide our entire leadership team with a baseline assessment of where our business is outperforming and where there are opportunities for corrective action and continuous improvement. In a release issued earlier today, we introduced our Elevating Excellence Initiative, a multi-year business transformation strategy designed to drive targeted commercial expansion and sustained productivity improvements across our organization. In application, Elevating Excellence will refine our go-to-market strategy further optimize our resource base, enhance our sourcing and procurement, and ensure a disciplined approach to capital allocation. At a strategic level, Elevating Excellence builds upon the core values and accelerates the management actions we first introduced in mid-2022. At a tactical level, this initiative focuses on several key areas including a purpose-driven operating structure, a focus on process efficiency and operational excellence, new product innovations, organic market share expansion, sales mix optimization, disciplined capital allocation, and a refreshed brand identity reflective of our teamed approach. First, let's begin with our rebranding action. The leadership team and I used the rebranding to symbolize our new team structure and new levels of collaboration among the group. As previously announced, Manatex has consolidated and refreshed its branding across its global product lines into five categories. Manufactured lifting solutions under the Manatex and PM brands. Aerial work platforms under our oil and steel brand. industrial electric cranes under the Vela brand, and rental solutions under the Rayburn Rentals brand. Our rebranding will play a critical role in simplifying our go-to-market value proposition, ensuring that our customers understand the unique capabilities and end-market application of our product portfolio. As part of the process, we have discontinued the Mack product brand and are selling our articulated truck lines under the global PM brand going forward. Importantly, these actions will also be critical in supporting our more than 230 dealers in driving product distribution. We are fortunate to have a strong dealer network, a network we remain committed to as part of our growth and success. Next is our focus on organizational structure. Manatex is building a high-performance culture focused on driving profitable above-market growth. In practice, we are streamlining reporting structures, reducing redundancies, and implementing a data-centric culture that seeks to ensure accountability at every level of the organization. Last year, we made several key personnel changes. consolidating our operating structure to include dedicated business unit leaders across our North American and Italian manufacturing operations. We also improved our operating structure at Rayburn Rentals, preparing for future growth. These actions will allow for economies of scale and process efficiencies across the organization. We are now better aligned with a collective approach toward customer service, inventory management, manufacturing best practices, and improve supply chain management. In combination, these actions are intended to drive sustainable operating efficiencies while providing us ample capacity to support incremental commercial growth. Next is new product innovations. Manatex has a long history of innovation within our industry. We remain committed to bringing new, more efficient, and technologically advanced products to the global market in an effort to maintain and grow our market share. Our new product initiative is focused on core lifting equipment product categories that the company can market in both North America and Europe. we will be showcasing some of these new products along with a broad array of market-leading products at ConExpo 2023 in Las Vegas from March the 14th to the 18th. In particular, we are introducing ESSI, an electric crane system designed to decrease emissions and operating costs. We would encourage any of the analysts or investors attending the show to stop by and take a tour of our display. At a commercial level, organic market share expansion is a top priority for us. Manatex currently holds a leading share for straight mast cranes under its Manatex brand in North America. We believe there is a significant opportunity to leverage this position and expand our share in high-growth articulated crane, industrial lifting equipment, and aerial work platform markets in North America. The company has implemented an enhanced distribution model using North American resources to sell and support products traditionally supported from Europe. This new operating structure enables improved sales, support, and upfitting of our PM-branded truck cranes in North America. We will support current and new dealers with upfitting capabilities to further expand the PM truck grain product offering in North America. Management is working toward common goals to meaningfully increase share, especially in North America. Along with organic growth, we also remain focused on product mix optimization. Over time, Manatex has developed a broad global portfolio of lifting equipment and solutions. As we introduce new, innovative, and more efficient product lines, we plan to optimize our portfolio to focus on the highest growth and most profitable areas of our business. Additionally, we will continue to focus on driving high value aftermarket parts and services, which currently represents about 14% of our total lifting equipment business. We have an aim to increase our aftermarket support business by 10% over the next three years. Our growth will be positively impacted by our ability to increase levels of product support and maintenance solutions for our dealers. Our final area of focus involves continued disciplined capital allocation. In 2023, our capital allocation priorities will include debt reduction, select investments, in organic growth and maintenance capital to support our existing operations. We intend to reduce our net leverage ratio closer to our long-standing target at or below three times, driven by a combination of improved operating cash flow and planned decline in maintenance capital expenditures. In summary, we are building a strong platform for sustained profitable growth positioning Manatex to expand its leadership within the global lifting solutions and domestic equipment rental markets, consistent with our long-term focus on shareholder value creation. Today, we are introducing three-year financial targets that reflect our confidence in the underlying strength of our end markets, coupled with the commercial and operational benefits we expect to generate through elevating excellence Between year-end 2023 and 2025, we expect to deliver revenue between $325 million and $360 million, or 25% growth at the midpoint range, and total EBITDA between $35 million and $45 million, or a growth of 65% to 110% between 300 to 500 basis points of adjusted EBITDA margins. In February, we began to roll out Elevating Excellence across our site locations. Our entire team is energized by the initiative, and I am encouraged by the evident progress we've already made. Even so, we remain in the early innings of a multi-year business transformation. Our work together is just beginning. Before I turn the call over to Joe, allow me to provide a few concluding remarks around our outlook for 2023. Customer demand remains strong into the first quarter. Infrastructure spending in the U.S. remains well above pre-pandemic levels, and the federal stimulus is beginning to flow. We expect the infrastructure to be strong in the market for the U.S. Utility spending is also expected to remain favorable, with utility capex expected to grow, driven by a need to replace aging infrastructure. New renewable projects as well are benefiting from this federal spending and the associated programs. Construction demand is also strong in Europe, and our European businesses are directly supporting operations in South America, where demand is robust, fueled by global demand for raw materials, namely copper. This year, we will seek to grow market share in key product areas in North America. We will further establish our rental footprint optimize our manufacturing operations, and reduce net leverage. With 22% year-over-year backlog growth, solid end-market fundamentals, and improvements to our manufacturing throughput, we believe we are on track for low double-digit adjusted EBITDA percentage growth in 2023. And now I'd like to turn it over to Joe for a detailed review of our results.