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spk02: was implemented to return value to our investors. Last quarter, we introduced three-year financial targets that reflect our confidence in the underlying strength of brand markets, coupled with the commercial and operational benefits we expect to generate through our strategic initiatives. These objectives can be found on page eight of our presentation. Our targets remain unchanged, and as a reminder, Between year-end 2023 and 2025, we are targeting revenue between $325 million and $360 million, or a 25% growth at the midpoint range. Total EBITDA between $35 million to $45 million, or growth of 65% to 110%. and between 300 to 500 basis points of adjusted EBITDA margin expansion. Before I turn the call over to Joe, allow me to provide a few concluding remarks around our outlook for 2023. I can't say enough about the confidence our customers have placed in Manatex. We are very grateful for their business. Customer demand remained strong through April 2023. Our management team is making meaningful progress with our strategic initiatives, and we have a positive and confident outlook toward the future. Coupled with our focus on improved operating processes in 2023, we will continue to focus on market share growth within North America, expansion of our equipment rental business, improved utilization of our manufacturing facilities, and a further reduction in net leverage from current levels. Given our solid first quarter results, continued new order momentum, and sustained margin improvements, we believe Manatex remains on track to deliver low double digit adjusted EBITDA growth in 2023. I will now turn it over to Joe for a detailed review of our results.
spk01: Thank you, Mike, and good morning, everyone. I will provide some additional details on the quarter, give an update on our liquidity and balance sheet, and conclude with commentary around our outlook for 2023. Turning to slide 11, net revenue for the first quarter 2023 was $67.9 million, up 12.3% compared to the same period last year, driven mainly by contributions from the Rayburn Rentals Acquisition, which was completed in April of 22, along with growth in our PM business. First quarter revenue growth was negatively impacted by 1.2 million, or approximately 3%, due to lower truck chassis sales, which are largely pass-through revenue items. We expect full-year 2023 chassis sales to decline relative to last year, which will be a headwind to reported sales growth. However, the sales decline will have a limited impact to gross profit but will benefit gross margin for the full year 2023. Lifting equipment segment revenue was $61.1 million in the first quarter of 23, an increase of 1.1% versus the prior year period. As I just discussed, lower truck chassis sales impacted first quarter results, and lifting equipment segment revenue would have increased 3.4% excluding chassis sales. Lifting equipment revenue growth was driven by improving demand trends in international markets, coupled with improved throughput in manufacturing facilities. Rental equipment segment revenue was $6.8 million in the first quarter of 23, supported by strong end-market demand in key North Texas markets, including the opening of the company's Lubbock, Texas location in March of 23. The rental business benefited from the deployment of new rental fleet acquired in 22 and market share gains in its Texas market. As of March 31st, 23, total backlog was 238.1 million, up 16% from a year ago, driven by continued favorable trends in key end markets in North America with contribution from recently launched products. Backlog in our US-based straight mass crane business was up 32% from the prior year, while backlog for articulated cranes increased 13%. Gross profit was $14.4 million during the first quarter of 23, up from $10.1 million during the prior year period, or an increase of 42%. The increase in gross profit was a result of contributions from Rayburn, benefits from our operational improvement initiatives, and improved mix. As a result of these factors, gross profit margin increased 440 basis points to 21.2% during the first quarter. SG&A expense was $11 million for the first quarter of 23 compared to $8.8 million for the comparable period last year. Increase was primarily related to SG&A expense of $1.4 million related to the Rayburn acquisition, costs related to attending the ConExpo trade show, an increased stock compensation expense partially offset by the higher transaction costs which were incurred in the first quarter of 2022. Operating income was $2.6 million during the first quarter compared to operating income of $0.7 million for the same period last year. Operating margin in the first quarter of 23 was 3.8%. The year-over-year improvement in our operating income was driven by the contribution from Rayburn and our improved gross margin performance. Strong operating income improvement was especially impressive given we incurred nearly $1 million in operating expenses from the ConExpo trade show. Adjusted EBITDA was $6.3 million for the first quarter, or 9.3% of sales compared to $2.7 million, or 4.5% of sales for the same period last year. Net income was essentially break-even for the first quarter compared to net income of $0.2 million, or $0.01 per diluted share, for the same period last year. Adjusted net income was $1.4 million, or $0.07 per diluted share, in the first quarter of 2023, up from adjusted net income of $900,000, or $0.05 per diluted share, in the same period last year. adjusted net income for the first quarter of 23 excludes $800,000 of stock compensation expense and approximately $700,000 of other non-recurring expenses. Now turning to our balance sheet on slide 12. As of March 31st, 2023, total debt was 96.2 million compared to 90.3 million at the end of the fourth quarter of 22. Owing to normal seasonal working capital uses, and increased purchases of rental fleet for the Rayburn business. Cash and cash equivalents as of March 31st were 10.1 million, resulting in a net debt of 86 million compared to 82.1 million at the end of the fourth quarter of 22. As a result of the strong operating results, net leverage improved to 3.5 times at the end of the first quarter of 23, compared to 3.9 times at the end of the fourth quarter of 22. As of March 31st, total liquidity was $36.6 million, consistent with the end of the fourth quarter. As Mike detailed, during 2023, we expect to grow adjusted EBITDA in the low double-digit percentage range, compared to $21.3 million in adjusted EBITDA that we reported in 2022. Our target is supported by continued new order momentum, optimism on end market trends, as well as expected margin improvements resulting from our Elevating Excellence initiative. That completes our prepared remarks.
spk06: Operator, we are now ready for the question and answer portion of our call. Thank you.
spk00: Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star one. If you want to withdraw your question, please press star two. Your questions will be pulled in the order they are received. If you are using a speakerphone, please lift the handset before pressing any keys.
spk05: One moment, please, for your first question. Your first question comes from Matt Miranda from Roth MKM. Please go ahead.
spk04: Hey, guys. It's Mike Zabrin on for Matt. I guess just
spk07: Hey, Joe. I guess just first on margins. So gross margin surprised nicely to the upside. I believe we called out margin benefits from operational improvements, improved mix, higher pricing. Now, obviously, we're also running off a higher revenue base, but could you just maybe quantify or stack rank those inputs in regards to this quarter's gross margin growth?
spk03: Yeah, thanks. I appreciate the question. This is Mike Coffey. So I think the production revenue in units did not increase drastically in the first quarter based on mix and seasonal activity, which is common to the business. So the big inputs were really the relative lack of chassis, which are low margin contributors, pricing improvement, Number one, it's the weighted average influence on margin improvement. We're actually working off of improved pricing and margins are improving as a result. And then I would say the process and supply chain initiatives are beginning to have positive influences on the margins.
spk04: Got it. That's great. Great to hear.
spk07: And given the nice surprise on gross margins this quarter, how do we feel about margin cadence for the rest of the year? Should we hold the fly from here? I assume we dip a little bit in Q3 due to the EU European shutdowns, but just how should we think about how gross margin ramps throughout the rest of the year?
spk03: Well, we're still facing supply chain headwinds that are normal for every manufacturer. We're making some victories there, but last quarter, as we mentioned in the press release, We had a tremendous difficulty with suppliers of steel and fabricated products. And if you look at the commoditized cost of steel, it's increased a lot in the first quarter. So we are optimistic about our ability to improve margins. It'll be a little bit of a roller coaster, but we're still looking at a three to five point improvement from where we closed last year. So historically, if you think about the business before COVID, this is a business that was performing at about 19% gross profit margin. And the acquisition of Rayburn helped us to return to historic margins quicker. And manufacturing has been improving steadily quarter over quarter, its margin performance. So we're looking at continuing to improve our gross margin profitability through the year. And with pricing and these initiatives taking hold, we feel good about our potential to do that.
spk04: Got it. Makes sense.
spk07: Last one from you guys. Great to hear the positive feedback from ConExpo on the 85-ton electric crane. the press release calls out sort of record new orders that aren't entirely reflected in the backlog. Could you just maybe clarify exactly what we mean here? Are the non-reflected orders for, are those just for the 85 ton and electric crane? And just in general, when do we expect those orders to reflect on the backlog?
spk03: We're working on production schedules. And so there's, there's two things that, um, we're trying to balance. Firstly, we want to make certain that these new products can be distributed throughout our dealer base. And we had a few dealers that placed significant orders that we haven't confirmed yet because we feel like there should be a distribution of the products amongst our dealers. And so I'm expecting that these will be confirmed before the next quarter call.
spk02: But we are really, really thrilled with the positive feedback that both of these products had.
spk06: Got it. That's helpful and great to hear. That's all from me, guys. Thanks. All right. Thanks so much.
spk05: Thank you. There are no further questions at this time.
spk06: Remember, to ask a question, please press star 1. You may proceed. Operator, do we have another question?
spk00: No, not in this case. There are no further questions at this time.
spk03: You may proceed. Okay, very good. Well, thank you very much for hosting the call, and we'd like to thank everyone for participating. Joe and I will be participating in several investor events in the coming months, including the Sedoti Small Cap Conference, which is scheduled May the 10th. If we don't get a chance to connect during the quarter, we hope and look forward to meeting with you during our next quarterly call. As always, we want to thank everyone for your time and interest in Manatex, and this will conclude our call. Thank you very much.
spk06: Ladies and gentlemen, this concludes your conference call for today.
spk05: We thank you for participating and ask that you please disconnect your lines.
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