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.

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-32401

 

MANITEX INTERNATIONAL, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

Michigan

 

42-1628978

(State or Other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification Number)

 

 

 

9725 Industrial Drive, Bridgeview, Illinois

 

60455

(Address of Principal Executive Offices)

 

(Zip Code)

(708) 430-7500

(Registrant’s Telephone Number, Including Area Code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, no par value

MNTX

The NASDAQ Stock Market LLC

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

 

 

 

 

 

 

 

 

Non-accelerated filer

 

Smaller reporting company

 

 

 

 

 

 

 

 

 

 

 

 

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

The number of shares of the registrant’s common stock, no par, outstanding at October 31,2023 was 20,252,113.

 

 

 


 

MANITEX INTERNATIONAL, INC. AND SUBSIDIARIES

 

GENERAL

 

This Quarterly Report on Form 10-Q filed by Manitex International, Inc. speaks as of September 30, 2023 unless specifically noted otherwise. Unless otherwise indicated, Manitex International, Inc., together with its consolidated subsidiaries, is hereinafter referred to as “Manitex,” the “Registrant,” “us,” “we,” “our” or the “Company.”

 

Forward-Looking Information

 

Certain information in this Quarterly Report includes forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995). These statements relate to, among other things, the Company’s expectations, beliefs, intentions, future strategies, future events or future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause actual results, levels of activity, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. In addition, when included in this Quarterly Report or in documents incorporated herein by reference the words “may,” “expects,” “should,” “intends,” “anticipates,” “believes,” “plans,” “projects,” “estimates” and the negatives thereof and analogous or similar expressions are intended to identify forward-looking statements. However, the absence of these words does not mean that the statement is not forward-looking. We have based these forward-looking statements on current expectations and projections about future events. These statements are not guarantees of future performance. Such statements are inherently subject to a variety of risks and uncertainties that could cause actual results to differ materially from those reflected in such forward-looking statements. Such risks and uncertainties, many of which are beyond our control, include, without limitation, those described below and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, in the section entitled “Item 1A. Risk Factors”:

 

a future substantial deterioration in economic conditions, especially in the United States and Europe;
the reliance of our customers on government spending, fluctuations in activity levels in the construction industry;
our level of indebtedness and our ability to meet financial covenants required by our debt agreements;
our ability to negotiate extensions of our credit agreements and to obtain additional debt or equity financing when needed;
any failure on our part to maintain an effective system of internal controls;
the cyclical nature of the markets we operate in;
a further impact of increases in inflation and interest rates;
our increasingly international operations expose us to additional risks and challenges associated with conducting business internationally, including currency exchange risks;
difficulties in implementing new systems, integrating acquired businesses, managing anticipated growth, and responding to technological change;
the availability of the third-party financing that some of our customers rely on to purchase our products;
our operations are in a highly competitive industry and the Company is particularly subject to the risks of such competition;
our dependency upon third-party suppliers makes us vulnerable to supply shortages;
price increases in materials could reduce our profitability;
our rental fleet ages causing significant impact to profitability;
the Company is unable to collect on rental revenue;
our rental fleet is subject to residual value risk;
the Company faces product liability claims and other liabilities due to the nature of its business;
the negative impacts COVID-19 has had and will continue to have on our business, financial condition, cash flows, results of operations and supply chain, as well as customer demand;
the Company’s success depends upon the continued protections of its trademarks and the Company may be forced to incur substantial costs to maintain, defend, protect and enforce its intellectual property rights;

1


 

volatility relating to our stock price;
our ability to access the capital markets to raise funds and provide liquidity;
the willingness of our shareholders and directors to approve mergers, acquisitions, and other business transactions;
compliance with changing laws and regulations;
a substantial portion of our revenues are attributed to a limited number of customers which may decrease or cease purchasing at any time;
a disruption or breach in our information technology systems;
the significant percentage of our common stock held by principal shareholders, executive officers and directors;
our reliance on the management and leadership skills of our senior executives;
impairment in the carrying value of goodwill and/or other intangible assets could negatively affect our operating results; and
provisions of the Michigan Business Corporation Act and the Company’s Articles of Incorporation, may discourage or prevent a change in control of the Company.

 

The risks described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 and in this Quarterly Report on Form 10-Q are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or operating results. If any of these risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary significantly from what we projected. We do not undertake, and expressly disclaim, any obligation to update this forward-looking information, except as required under applicable law.

2


 

MANITEX INTERNATIONAL, INC.

FORM 10-Q INDEX

TABLE OF CONTENTS

PART I:

 

FINANCIAL INFORMATION

 

4

 

 

 

 

 

ITEM 1: Financial Statements (Unaudited)

 

4

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022

 

4

 

 

 

 

 

 

 

Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2023, and 2022

 

5

 

 

 

 

 

 

 

Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2023 and 2022

 

6

 

 

 

 

 

 

 

Condensed Consolidated Statement of Shareholders’ Equity for the three and nine months ended September 30, 2023 and 2022

 

7

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022

 

8

 

 

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements

 

9

 

 

 

ITEM 2: Management’s Discussion And Analysis Of Financial Condition And Results Of Operations

 

25

 

 

 

ITEM 3: Quantitative And Qualitative Disclosures About Market Risk

 

30

 

 

 

ITEM 4: Controls And Procedures

 

30

 

 

 

 

 

PART II:

 

OTHER INFORMATION

 

31

 

 

 

ITEM 1: Legal Proceedings

 

31

 

 

 

ITEM 1A: Risk Factors

 

31

 

 

 

ITEM 2: Unregistered Sales Of Equity Securities And Use Of Proceeds

 

31

 

 

 

ITEM 3: Defaults Upon Senior Securities

 

31

 

 

 

ITEM 4: Mine Safety Disclosures

 

31

 

 

 

ITEM 5: Other Information

 

31

 

 

 

ITEM 6: Exhibits

 

31

 

3


 

PART 1—FINANCIAL INFORMATION

Item 1—Financial Statements

MANITEX INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(Unaudited)

 

 

September 30,
2023

 

 

December 31,
2022

 

ASSETS

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash

 

$

4,673

 

 

$

7,973

 

Cash – restricted

 

 

203

 

 

 

217

 

Trade receivables (net)

 

 

47,114

 

 

 

43,856

 

Other receivables

 

 

1,059

 

 

 

1,750

 

Inventory (net)

 

 

85,186

 

 

 

69,801

 

Prepaid expense and other current assets

 

 

2,748

 

 

 

3,907

 

Total current assets

 

 

140,983

 

 

 

127,504

 

Total fixed assets, net of accumulated depreciation of $28,382 and $22,441
   at September 30, 2023 and December 31, 2022, respectively

 

 

48,747

 

 

 

51,697

 

Operating lease assets

 

 

7,498

 

 

 

5,667

 

Intangible assets (net)

 

 

12,769

 

 

 

14,367

 

Goodwill

 

 

36,674

 

 

 

36,916

 

Deferred tax assets

 

 

452

 

 

 

452

 

Total assets

 

$

247,123

 

 

$

236,603

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

50,665

 

 

$

45,682

 

Accrued expenses

 

 

13,780

 

 

 

12,379

 

Related party payable (net)

 

 

13

 

 

 

60

 

Notes payable

 

 

18,640

 

 

 

22,666

 

Current portion of finance lease obligations

 

 

579

 

 

 

509

 

Current portion of operating lease obligations

 

 

1,998

 

 

 

1,758

 

Customer deposits

 

 

2,220

 

 

 

3,407

 

Total current liabilities

 

 

87,895

 

 

 

86,461

 

Long-term liabilities

 

 

 

 

 

 

Revolving term credit facilities (net)

 

 

48,259

 

 

 

41,479

 

Notes payable (net)

 

 

20,857

 

 

 

22,261

 

Finance lease obligations (net of current portion)

 

 

2,940

 

 

 

3,382

 

Operating lease obligations (net of current portion)

 

 

5,500

 

 

 

3,909

 

Deferred gain on sale of property

 

 

367

 

 

 

427

 

Deferred tax liability

 

 

4,574

 

 

 

5,151

 

Other long-term liabilities

 

 

5,057

 

 

 

5,572

 

Total long-term liabilities

 

 

87,554

 

 

 

82,181

 

Total liabilities

 

 

175,449

 

 

 

168,642

 

Commitments and contingencies

 

 

 

 

 

 

Equity

 

 

 

 

 

 

Preferred Stock—Authorized 150,000 shares, no shares issued or outstanding at
  September 30, 2023 and December 31, 2022

 

 

 

 

 

 

Common Stock—no par value 25,000,000 shares authorized, 20,252,114 and 20,107,014
   shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

 

 

134,294

 

 

 

133,289

 

Paid in capital

 

 

5,014

 

 

 

4,266

 

Retained deficit

 

 

(71,182

)

 

 

(73,338

)

Accumulated other comprehensive loss

 

 

(6,261

)

 

 

(5,822

)

Equity attributable to shareholders of Manitex International, Inc.

 

 

61,865

 

 

 

58,395

 

Equity attributed to noncontrolling interest

 

 

9,809

 

 

 

9,566

 

Total equity

 

 

71,673

 

 

 

67,961

 

Total liabilities and equity

 

$

247,122

 

 

$

236,603

 

The accompanying notes are an integral part of these financial statements

4


 

MANITEX INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except for share and per share amounts)

(Unaudited)

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

2022

 

Net revenues

 

$

71,331

 

 

$

65,037

 

 

$

212,736

 

$

195,034

 

Cost of sales

 

 

54,746

 

 

 

52,693

 

 

 

166,806

 

 

160,198

 

Gross profit

 

 

16,585

 

 

 

12,344

 

 

 

45,930

 

 

34,836

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

Research and development costs

 

 

861

 

 

 

659

 

 

 

2,512

 

 

2,095

 

Selling, general and administrative expenses

 

 

10,545

 

 

 

10,440

 

 

 

32,342

 

 

30,317

 

Transaction costs

 

 

 

 

 

37

 

 

 

 

 

2,236

 

Total operating expenses

 

 

11,406

 

 

 

11,136

 

 

 

34,854

 

 

34,648

 

Operating income (loss)

 

 

5,179

 

 

 

1,208

 

 

 

11,076

 

 

188

 

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(1,997

)

 

 

(1,409

)

 

 

(5,658

)

 

(2,982

)

Interest income

 

 

141

 

 

 

-

 

 

 

141

 

 

3

 

Foreign currency transaction (loss) gain

 

 

(883

)

 

 

175

 

 

 

(1,656

)

 

268

 

Other income (expense)

 

 

196

 

 

 

(2,852

)

 

 

(541

)

 

(1,864

)

Total other expense

 

 

(2,543

)

 

 

(4,086

)

 

 

(7,714

)

 

(4,575

)

Income (loss) before income taxes

 

 

2,636

 

 

 

(2,878

)

 

 

3,362

 

 

(4,387

)

Income tax expense

 

 

742

 

 

 

206

 

 

 

962

 

 

570

 

Net income (loss)

 

 

1,894

 

 

 

(3,084

)

 

 

2,400

 

 

(4,957

)

Net income attributable to noncontrolling interest

 

 

194

 

 

 

288

 

 

 

243

 

 

442

 

Net income attributable to shareholders of
   Manitex International, Inc.

 

$

1,700

 

 

$

(3,372

)

 

$

2,157

 

$

(5,399

)

Income (loss) per share

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.08

 

 

$

(0.17

)

 

$

0.11

 

$

(0.27

)

Diluted

 

$

0.08

 

 

$

(0.17

)

 

$

0.11

 

$

(0.27

)

Weighted average common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

20,252,114

 

 

 

20,094,475

 

 

 

20,193,696

 

 

20,039,981

 

Diluted

 

 

20,254,830

 

 

 

20,094,475

 

 

 

20,196,255

 

 

20,039,981

 

 

The accompanying notes are an integral part of these financial statements

5


 

MANITEX INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net income (loss)

 

$

1,894

 

 

$

(3,084

)

 

$

2,400

 

 

$

(4,957

)

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

Foreign currency translation gain (loss)

 

 

(1,134

)

 

 

(2,007

)

 

 

(439

)

 

 

(4,396

)

Total other comprehensive income (loss)

 

 

(1,134

)

 

 

(2,007

)

 

 

(439

)

 

 

(4,396

)

Total comprehensive income (loss)

 

 

760

 

 

 

(5,091

)

 

 

1,961

 

 

 

(9,353

)

Less: comprehensive income attributable to noncontrolling interest

 

 

194

 

 

 

288

 

 

 

243

 

 

 

442

 

Total comprehensive income (loss) attributable to shareholders of
   Manitex International, Inc.

 

$

566

 

 

$

(5,379

)

 

$

1,718

 

 

$

(9,795

)

 

 

The accompanying notes are an integral part of these financial statements

6


 

MANITEX INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In thousands, except share amounts)

(Unaudited)

 

 

 

 

 

Outstanding
shares

 

 

Common
Stock

 

 

APIC

 

 

Retained
Deficit

 

 

AOCI
 Gain (Loss)

 

 

Noncontrolling
Interests

 

 

Total

 

Balance at December 31, 2022

 

 

20,107,014

 

 

$

133,289

 

 

$

4,266

 

 

$

(73,338

)

 

$

(5,822

)

 

$

9,566

 

 

$

67,961

 

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

53

 

 

 

 

 

 

(79

)

 

 

(26

)

Gain on foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

673

 

 

 

 

 

 

673

 

Employee incentive plan issuance

 

 

62,402

 

 

 

410

 

 

 

(410

)

 

 

 

 

 

 

 

 

 

 

 

 

Repurchase to satisfy withholding and
   cancelled shares

 

 

(7,605

)

 

 

(40

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(40

)

Share-based compensation

 

 

 

 

 

 

 

 

766

 

 

 

 

 

 

 

 

 

 

 

 

766

 

Balance at March 31, 2023

 

 

20,161,811

 

 

$

133,659

 

 

$

4,622

 

 

$

(73,285

)

 

$

(5,149

)

 

$

9,487

 

 

$

69,334

 

Net income

 

 

 

 

 

 

 

 

 

 

 

404

 

 

 

 

 

 

128

 

 

 

532

 

Gain on foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

22

 

 

 

 

 

 

22

 

Employee incentive plan issuance

 

 

83,820

 

 

 

589

 

 

 

(589

)

 

 

 

 

 

 

 

 

 

 

 

 

Repurchase to satisfy withholding and
   cancelled shares

 

 

(1,875

)

 

 

(9

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9

)

Share-based compensation

 

 

 

 

 

 

 

 

588

 

 

 

 

 

 

 

 

 

 

 

 

588

 

Balance at June 30, 2023

 

 

20,243,756

 

 

$

134,239

 

 

$

4,621

 

 

$

(72,882

)

 

$

(5,127

)

 

$

9,615

 

 

$

70,466

 

Net income

 

 

 

 

 

 

 

 

 

 

 

1,700

 

 

 

 

 

 

194

 

 

 

1,894

 

Loss on foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,134

)

 

 

 

 

 

(1,134

)

Employee incentive plan issuance

 

 

10,085

 

 

 

64

 

 

 

(64

)

 

 

 

 

 

 

 

 

 

 

 

 

Repurchase to satisfy withholding and
   cancelled shares

 

 

(1,727

)

 

 

(9

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9

)

Share-based compensation

 

 

 

 

 

 

 

 

457

 

 

 

 

 

 

 

 

 

 

 

 

457

 

Balance at September 30, 2023

 

 

20,252,114

 

 

$

134,294

 

 

$

5,014

 

 

$

(71,182

)

 

$

(6,261

)

 

$

9,809

 

 

$

71,673

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2021

 

 

19,940,487

 

 

$

132,206

 

 

$

3,264

 

 

$

(68,436

)

 

$

(4,219

)

 

$

 

 

$

62,815

 

Net income

 

 

 

 

 

 

 

 

 

 

 

230

 

 

 

 

 

 

 

 

 

230

 

Loss on foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(635

)

 

 

 

 

 

(635

)

Employee incentive plan issuance

 

 

104,681

 

 

 

734

 

 

 

(734

)

 

 

 

 

 

 

 

 

 

 

 

 

Repurchase to satisfy withholding and
   cancelled shares

 

 

(17,354

)

 

 

(137

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(137

)

Share-based compensation

 

 

 

 

 

 

 

 

232

 

 

 

 

 

 

 

 

 

 

 

 

232

 

Balance at March 31, 2022

 

 

20,027,814

 

 

$

132,803

 

 

$

2,762

 

 

$

(68,206

)

 

$

(4,854

)

 

$

 

 

$

62,505

 

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

(2,257

)

 

 

 

 

 

154

 

 

 

(2,103

)

Loss on foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,754

)

 

 

 

 

 

(1,754

)

Employee incentive plan issuance

 

 

62,740

 

 

 

417

 

 

 

(417

)

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition of noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,964

 

 

 

8,964

 

Repurchase to satisfy withholding and
   cancelled shares

 

 

(12,300

)

 

 

(91

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(91

)

Share-based compensation

 

 

 

 

 

 

 

 

728

 

 

 

 

 

 

 

 

 

 

 

 

728

 

Balance at June 30, 2022

 

 

20,078,254

 

 

$

133,129

 

 

$

3,073

 

 

$

(70,463

)

 

$

(6,608

)

 

$

9,118

 

 

$

68,249

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(3,372

)

 

 

 

 

 

288

 

 

 

(3,084

)

Gain (loss) on foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,007

)

 

 

 

 

 

(2,007

)

Employee incentive plan grant

 

 

26,320

 

 

 

148

 

 

 

(148

)

 

 

 

 

 

 

 

 

 

 

 

 

Repurchase to satisfy withholding and cancelled

 

 

(4,725

)

 

 

(28

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(28

)

Share-based compensation

 

 

 

 

 

 

 

 

749

 

 

 

 

 

 

 

 

 

 

 

 

749

 

Balance at September 30, 2022

 

 

20,099,849

 

 

$

133,249

 

 

$

3,674

 

 

$

(73,835

)

 

$

(8,615

)

 

$

9,406

 

 

$

63,879

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements

7


 

MANITEX INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Nine months ended September 30,

 

 

 

2023

 

 

2022

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income (loss)

 

$

2,400

 

 

$

(4,957

)

Adjustments to reconcile net income (loss) to cash used in operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

8,658

 

 

 

6,531

 

Changes in allowances for credit losses

 

 

79

 

 

 

(678

)

Changes in inventory reserves

 

 

(207

)

 

 

(1,733

)

Deferred income taxes

 

 

(493

)

 

 

25

 

Amortization of deferred debt issuance costs

 

 

34

 

 

 

95

 

Amortization of debt discount

 

 

57

 

 

 

55

 

Loss (gain) on forward currency contract

 

 

321

 

 

 

(267

)

Loss (gain) on disposal of fixed assets

 

 

15

 

 

 

(764

)

Share-based compensation

 

 

1,811

 

 

 

1,710

 

Adjustment to deferred gain on sales lease back

 

 

(60

)

 

 

(60

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

(Increase) decrease in accounts receivable

 

 

(3,350

)

 

 

(4,826

)

(Increase) decrease in other receivables

 

 

688

 

 

 

1,131

 

(Increase) decrease in inventory

 

 

(15,718

)

 

 

(14,607

)

(Increase) decrease in prepaid expenses

 

 

813

 

 

 

(150

)

Increase (decrease) in other assets

 

 

-

 

 

 

(168

)

Increase (decrease) in accounts payables and related party payables

 

 

5,284

 

 

 

6,475

 

Increase (decrease) in accrued expenses

 

 

1,513

 

 

 

4,510

 

Increase (decrease) increase in other current liabilities

 

 

(1,192

)

 

 

(3,218

)

Increase (decrease) in other long-term liabilities

 

 

(481

)

 

 

(357

)

Net cashprovided by (used in) operating activities

 

 

172

 

 

 

(11,253

)

Cash flows from investing activities:

 

 

 

 

 

 

Payments for acquisition, net of cash acquired

 

 

 

 

 

(38,366

)

Proceeds from the sale of fixed assets

 

 

422

 

 

 

1,909

 

Purchase of property and fixed assets

 

 

(4,637

)

 

 

(13,662

)

Investment in intangible assets

 

 

(62

)

 

 

(64

)

Net cash used in investing activities

 

 

(4,277

)

 

 

(50,183

)

Cash flows from financing activities:

 

 

 

 

 

 

Net borrowings on revolving term credit facilities

 

 

6,744

 

 

 

53,357

 

Borrowings on term debt

 

 

 

 

 

15,000

 

Payments on revolving term credit facility

 

 

 

 

 

(12,800

)

Net borrowings on working capital facilities

 

 

(2,859

)

 

 

864

 

New borrowings—other

 

 

 

 

 

903

 

Debt issuance costs incurred

 

 

 

 

 

(125

)

Note payments

 

 

(2,384

)

 

 

(1,096

)

Shares repurchased for income tax withholding on share-based compensation

 

 

(58

)

 

 

(257

)

Payments on finance lease obligations

 

 

(371

)

 

 

(313

)

Net cash provided by financing activities

 

 

1,072

 

 

 

55,533

 

Net decrease in cash and cash equivalents

 

 

(3,033

)

 

 

(5,903

)

Effect of exchange rate changes on cash

 

 

(281

)

 

 

(3,813

)

Cash, cash equivalents and restricted cash at the beginning of the year

 

 

8,190

 

 

 

21,581

 

Cash, cash equivalents and restricted cash at end of period

 

$

4,876

 

 

$

11,865

 

See Note 1 for supplemental cash flow disclosures

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements

8


 

MANITEX INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

 

1. Nature of Operations and Basis of Presentation

The unaudited Condensed Consolidated Balance Sheets at September 30, 2023 and December 31, 2022 and the related Condensed Consolidated Statements of Operations, Condensed Consolidated Statements of Comprehensive Income (Loss), Condensed Consolidated Statements of Shareholders’ Equity and Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022 have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission, and reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the financial condition, results of operations and cash flows of the Company for the interim periods. Interim results may not be indicative of results to be realized for the entire year. The Condensed Consolidated Financial Statements should be read in conjunction with the consolidated financial statements and notes thereto, together with management’s discussion and analysis of financial condition and results of operations, contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022. The Condensed Consolidated Balance Sheet as of December 31, 2022 was derived from our audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States (“GAAP”).

The Company is a leading provider of engineered lifting solutions and equipment rentals. The Company designs, manufactures and distributes a diverse group of products that serve different functions and are used in a variety of industries. Following the completion of the Rabern acquisition, the Company reports in two business segments and has five operating segments, under which there are five reporting units.

On April 11, 2022, the Company entered into a Membership Interest Purchase Agreement (the “Agreement”), with Rabern Rentals, LLC (“Rabern”) and Steven Berner, as owner of 100% of Rabern’s outstanding membership interests. Pursuant to the Agreement, the Company acquired a 70% membership interest in Rabern from Steven Berner for a purchase price of approximately $26 million in cash plus assumed debt of $14 million. Rabern is a construction rental equipment provider, headquartered in Amarillo, Texas, primarily servicing business in the Texas panhandle.

Lifting Equipment Segment

Manitex markets a comprehensive line of boom trucks, truck cranes, aerial platforms, electrical industrial cranes and utility vehicles. Manitex’s boom trucks and crane products are primarily used for industrial projects, energy exploration, energy distribution and infrastructure development, including roads, bridges and commercial construction and the tree care industry. The Company previously announced the closing of the Badger reporting unit which is expected to be finalized in 2023.

PM Oil and Steel S.p.A. (“PM” or “PM Group”), a subsidiary of the Company, is a leading Italian manufacturer of truck- mounted hydraulic knuckle boom cranes with a 50-year history of technology and innovation, and a product range spanning more than 50 models. PM is also a manufacturer of truck-mounted aerial platforms with a diverse product line and an international client base. Through its consolidated subsidiaries, PM Group has locations in Modena, Italy; Valencia, Spain; Arad, Romania; Chassieu, France; Buenos Aires, Argentina; Santiago, Chile; Singapore and Querétaro, Mexico.

The Company’s subsidiary, Manitex Valla S.r.L. (“Valla”), produces a full range of precision pick and carry industrial cranes using electric, diesel, and hybrid power options. Its cranes offer wheeled or tracked, and fixed or swing boom configurations, with special applications designed specifically to meet the needs of its customers. These products are sold internationally through dealers and into the rental distribution channel.

Crane and Machinery, Inc. (“C&M”) is a distributor of the Company’s products. Crane and Machinery Leasing, Inc. rents equipment manufactured by the Company as well as a limited amount of equipment manufactured by third parties.

Rental Equipment Segment

The Company’s majority-owned subsidiary, Rabern, rents heavy duty and light duty commercial construction equipment, mainly to commercial contractors on a short-term rental basis. The Company also rents equipment to homeowners for do-it-yourself projects. Rabern has three branches located in the greater Amarillo, Texas market and has recently opened its fourth location in Lubbock, Texas.

 

COVID-19 Pandemic

We are continuing to closely monitor the impact of the COVID-19 pandemic and other economic conditions, including inflation, interest rate increases and various geopolitical factors, on all aspects of our business, including how these factors are impacting our customers, employees, supply chain, and distribution network, as well as the demand for our products in the industries and markets that we serve. While COVID-19 and these other economic factors have had a material impact on our past financial results, we are unable to predict the ultimate impact that they may have on our business, future results of operations, financial position or cash flows. The extent to which

9


 

our operations may be impacted by these factors will depend largely on future developments, which are highly uncertain and cannot be accurately predicted. Furthermore, the impacts of a potential worsening of global economic conditions and the continued disruptions to and volatility in the financial markets remain unknown.

 

The Company is continuing to experience supply chain disruptions and related logistical bottlenecks that have impacted our ability to meet strong industrial demand and have also increased costs related to shipping, warehousing and working capital management. While the Company is actively working to mitigate these expenses and the associated timing issues, certain segments have been more impacted than others. Where appropriate and feasible, we have implemented pricing adjustments to protect margins and, in tandem, continue to build inventory to meet our customer requirements. In addition, the Company is actively managing costs and working to further streamline operations where needed.

 

Supplemental Cash Flow Information

 

Transactions for the periods ended September 30, 2023 and 2022 are as follows:

 

 

 

Nine months ended September 30,

 

 

 

2023

 

 

2022

 

Interest received in cash

 

$

140

 

 

$

3

 

Interest paid in cash

 

 

5,667

 

 

 

2,308

 

Income tax (refunds) payments in cash

 

 

(1

)

 

 

536

 

Recognition of right-of-use asset and right-of-use liability

 

 

3,547

 

 

 

2,699

 

 

 

 

 

 

 

Reconciliation of cash, cash equivalents and restricted cash to consolidated balance sheets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

4,673

 

 

$

11,677

 

Restricted cash

 

 

203

 

 

 

188

 

Cash, cash equivalents and restricted cash at the end of year

 

$

4,876

 

 

$

11,865

 

 

2. Significant Accounting Policies

The summary of the Company’s significant accounting policies is presented to assist in understanding the Company’s Consolidated Financial Statements. The Condensed Consolidated Financial Statements and notes are representations of the Company’s management who is responsible for their integrity and objectivity. These accounting policies conform to generally accepted accounting principles and have been consistently applied in the preparation of the Condensed Consolidated Financial Statements

 

Cash and Cash Equivalents

 

For purposes of the Condensed Consolidated Statements of Cash Flows, the Company considers all short-term securities purchased with maturity dates of three months or less to be cash equivalents. The cash in the Company’s U.S. banks is not fully insured by the FDIC due to the statutory limit of $250.

 

Restricted Cash

 

Certain of the Company’s lending arrangements require the Company to post collateral or maintain minimum cash balances in escrow. These cash amounts are reported as current assets on the Condensed Consolidated Balance Sheets based on when the cash will be contractually released. Total restricted cash was $203 and $217 at September 30, 2023 and December 31, 2022, respectively.

Accounts Receivable and Allowance for Credit Losses

 

Accounts receivable are recorded at invoiced amount and do not bear interest. The Company has adopted a policy consistent with GAAP for the periodic review of its accounts receivable to determine whether the establishment of an allowance for credit losses is warranted based on the Company’s assessment of the collectability of the accounts. The Company established an allowance for credit losses of $1,916 and $1,948 at September 30, 2023 and December 31, 2022, respectively. The Company also has, in some instances, a security interest in its accounts receivable until payment is received.

 

Property, Equipment and Depreciation

 

10


 

Property and equipment are stated at cost or the fair market value at the date of acquisition for property and equipment acquired in connection with the acquisition of a company. Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. Depreciation of property, and equipment is calculated using the straight-line method over the estimated useful lives of the assets. Depreciation expense for the three and nine months ended September 30, 2023 was $1,943 and $6,309, respectively. Depreciation expense for the three and nine months ended September 30, 2022 was $1,899 and $4,388 respectively.

Accrued Warranties

Warranty costs are accrued at the time revenue is recognized. The Company’s products are typically sold with a warranty covering defects that arise during a fixed period of time. The specific warranty offered is a function of customer expectations and competitive forces.

A liability for estimated warranty claims is accrued at the time of sale. Such liability is established using historical warranty claim experience. The current provision may be adjusted to take into account unusual or non-recurring events in the past or anticipated changes in future warranty claims. Adjustments to the initial warranty accrual are recorded if actual claim experience indicates that adjustments are necessary.

As of September 30, 2023 and December 31, 2022, accrued warranties were $1,890 and $1,916 respectively.

 

Advertising

 

Advertising costs are expensed as incurred and were $271 and $890 for the three and nine months ended September 30, 2023, respectively. Advertising costs were $133 and $591 for the three and nine months ended September 30, 2022, respectively.

 

Noncontrolling Interest

 

A noncontrolling interest is the equity interest of consolidated entities that are not owned by the Company. Noncontrolling interest is adjusted for the noncontrolling partners' share of earnings (losses) in accordance with the applicable agreement. Earnings (losses) allocated to such noncontrolling partners are recorded as income applicable to noncontrolling interest in the accompanying Condensed Consolidated Statements of Operations.

 

Share-based Compensation

 

The Company has elected to account for restricted stock awards with market conditions using a graded vesting method. This method recognizes the compensation cost in the Condensed Consolidated Statement of Operations over the requisite service period for each separately-vesting tranche of awards.

 

 

3. Revenue Recognition

The following table disaggregates our revenue for the three and nine months ended September 30, 2023 and 2022:

 

 

 

Three Months Ended
September 30,

 

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

 

 

2023

 

 

2022

 

Boom trucks, knuckle boom & truck cranes

 

$

41,224

 

 

$

32,394

 

 

 

$

126,595

 

 

$

108,361

 

Aerial platforms

 

 

8,203

 

 

 

6,985

 

 

 

 

25,301

 

 

 

24,758

 

Part sales

 

 

7,083

 

 

 

6,653

 

 

 

 

19,942

 

 

 

20,534

 

Rentals

 

 

6,739

 

 

 

6,629

 

 

 

 

18,810

 

 

 

11,865

 

Services

 

 

893

 

 

 

1,088

 

 

 

 

2,824

 

 

 

3,270

 

Merchandise sales and other

 

 

883

 

 

 

1,058

 

 

 

 

2,921

 

 

 

2,245

 

Other equipment

 

 

6,306

 

 

 

10,230

 

 

 

 

16,343

 

 

 

24,001

 

Total Revenue

 

$

71,331

 

 

$

65,037

 

 

 

$

212,736

 

 

$

195,034

 

 

 

11


 

The Company attributes revenue to different geographic areas based on where items are shipped to or services are performed. The following table provides detail of revenues by geographic area for the three and nine months ended September 30, 2023 and 2022:

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

United States

 

$

33,771

 

 

$

35,887

 

 

$

98,866

 

 

$

103,818

 

Italy

 

 

10,032

 

 

 

7,983

 

 

 

38,040

 

 

 

22,649

 

Canada

 

 

6,120

 

 

 

6,129

 

 

 

19,055

 

 

 

15,872

 

Chile

 

 

5,988

 

 

 

3,057

 

 

 

11,843

 

 

 

8,601

 

France

 

 

1,608

 

 

 

1,617

 

 

 

6,982

 

 

 

8,003

 

United Kingdom

 

 

2,836

 

 

 

1,288

 

 

 

6,089

 

 

 

7,680

 

Argentina

 

 

2,505

 

 

 

2,460

 

 

 

4,828

 

 

 

5,624

 

Other

 

 

8,471

 

 

 

6,616

 

 

 

27,033

 

 

 

22,787

 

Total Revenue

 

$

71,331

 

 

$

65,037

 

 

$

212,736

 

 

$

195,034

 

 

 

Customer Deposits

 

At times, the Company may require an upfront deposit related to its contracts. In instances where an upfront deposit has been received by the Company and the revenue recognition criteria have not yet been met, the Company records a contract liability in the form of a customer deposit, which is classified as a short-term liability on the Condensed Consolidated Balance Sheets. That customer deposit is revenue that is deferred until the revenue recognition criteria have been met, at which time, the customer deposit is recognized into revenue.

 

The following table summarizes changes in customer deposits for the nine months ended September 30 as follows:

 

 

 

September 30,
2023

 

 

September 30,
2022

 

Customer deposits January 1,

 

$

3,407

 

 

$

7,121

 

Additional customer deposits received where revenue has not yet been recognized

 

 

6,325

 

 

 

9,438

 

Revenue recognized from customer deposits

 

 

(7,428

)

 

 

(12,472

)

Effect of change in exchange rates

 

 

(84

)

 

 

(336

)

Total customer deposits

 

$

2,220

 

 

$

3,751

 

 

4. Fair Value Measurements

The following tables set forth the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2023 and December 31, 2022 by level within the fair value hierarchy. As required by ASC 820-10, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

The following is summary of items that the Company measures at fair value on a recurring basis:

 

 

 

Fair Value at September 30, 2023

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Forward currency exchange contracts

 

$

 

 

$

141

 

 

$

 

 

$

141

 

Total recurring liabilities at fair value

 

$

 

 

$

141

 

 

$

 

 

$

141

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value at December 31, 2022

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Forward currency exchange contracts

 

$

 

 

$

124

 

 

$

 

 

$

124

 

Total current assets at fair value

 

$

 

 

$

124

 

 

$

 

 

$

124

 

 

 

 

12


 

Fair Value Measurements

ASC 820-10 classifies the inputs used to measure fair value into the following hierarchy:

 

Level 1 — Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

 

Level 2 — Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability and

 

Level 3 — Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

The fair value of the forward currency contracts is determined on the last day of each reporting period using observable inputs, which are supplied to the Company by the foreign currency trading operation of its bank and are Level 2 items.

 

5. Derivative Financial Instruments

The Company’s risk management objective is to use the most efficient and effective methods available to us to minimize, eliminate, reduce or transfer the risks which are associated with fluctuation of exchange rates between the Euro, Chilean peso and the U.S. dollar.

Forward Currency Contracts

The Company enters into forward currency exchange contracts such that the exchange gains and losses on the assets and liabilities denominated in other than the reporting units’ functional currency would be offset by the changes in the market value of the forward currency exchange contracts it holds. The forward currency exchange contracts that the Company has to offset existing assets and liabilities denominated in other than the reporting units’ functional currency have been determined not to be considered a hedge under ASC 815-10. The Company records the forward currency exchange contracts at its market value with any associated gain or loss being recorded in current earnings. Both realized and unrealized gains and losses related to forward currency contracts are included in current earnings and are reflected in the Condensed Consolidated Statements of Operations in the other income (expense) section on the line titled foreign currency transaction gain (loss). Items denominated in other than a reporting unit functional currency include certain intercompany receivables due from the Company’s Italian subsidiaries and accounts receivable and accounts payable of our Italian subsidiaries and their subsidiaries.

 

PM Group has an intercompany receivable denominated in Euros from its Chilean subsidiary. At September 30, 2023, the Company had entered into forward currency exchange contracts for the purpose of mitigating the income effect related to this intercompany receivable that results with a change in the exchange rate between the Euro and the Chilean peso.

The following table provides the location and fair value amounts of derivative instruments that are reported in the Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022:

 

 

 

 

Fair Value

 

 

 

Balance Sheet Location

 

September 30,
2023

 

 

December 31,
2022

 

Asset Derivatives

 

 

 

 

 

 

 

 

Foreign currency exchange contract

 

Prepaid expense and other current assets

 

$

 

 

$

124

 

Liabilities Derivatives

 

 

 

 

 

 

 

 

Foreign currency exchange contract

 

Accrued expenses

 

$

141

 

 

$

 

 

13


 

The following tables provide the effect of derivative instruments on the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022:

 

 

 

 

 

Gain (loss)

 

 

Gain (loss)

 

 

 

Location of gain or
(loss) recognized
in Statements of Operations

 

Three Months Ended
September 30,

 

 

Nine Months Ended September 30,

 

 

 

 

 

2023

 

 

2022

 

2023

 

 

2022

 

Derivatives Not Designated
   as Hedge Instruments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Forward currency contract

 

Foreign currency
transaction gains (loss)

 

$

(104

)

 

$

(107

)

 

$

(266

)

 

$

(267

)

 

 

 

 

$

(104

)

 

$

(107

)

 

$

(266

)

 

$

(267

)

 

 

During the three and nine months ended September 30, 2023 and 2022, there were no forward currency contracts designated as cash flow hedges. As such, all gains and losses related to forward currency contracts during the three and nine months ended September 30, 2023 and 2022 were recorded in current earnings and did not impact other comprehensive income.

 

6. Inventory, net

The components of inventory are as follows:

 

 

 

September 30,
2023

 

 

December 31,
2022

 

Raw materials and purchased parts, net

 

$

60,031

 

 

$

47,168

 

Work in process

 

 

7,697

 

 

 

6,015

 

Finished goods, net

 

 

17,458

 

 

 

16,618

 

Inventory, net

 

$

85,186

 

 

$

69,801

 

 

The Company has established reserves for obsolete and excess inventory of $7,722 and $7,791 as of September 30, 2023 and December 31, 2022, respectively.

7. Goodwill and Intangible Assets

 

Intangible assets and accumulated amortization by category as of September 30, 2023 is as follows:

 

 

 

Weighted Average

 

Gross

 

 

 

 

 

Net

 

 

 

Amortization

 

Carrying

 

 

Accumulated

 

 

Carrying

 

 

 

Period (in years)

 

Amount

 

 

Amortization

 

 

Amount

 

Patented and unpatented technology

 

2

 

$

17,205

 

 

$

(15,285

)

 

$

1,920

 

Customer relationships

 

8

 

 

21,894

 

 

 

(15,583

)

 

 

6,311

 

Trade names and trademarks

 

15

 

 

5,469

 

 

 

(2,970

)

 

 

2,499

 

Software

 

4

 

 

612

 

 

 

(462

)

 

 

150

 

Indefinite lived trade names

 

 

 

 

1,889

 

 

 

 

 

 

1,889

 

Total intangible assets, net

 

 

 

 

 

 

 

 

 

$

12,769

 

 

 

 

Intangible assets and accumulated amortization by category as of December 31, 2022 is as follows:

 

 

 

 

Weighted Average

 

Gross

 

 

 

 

 

Net

 

 

 

Amortization

 

Carrying

 

 

Accumulated

 

 

Carrying

 

 

 

Period (in years)

 

Amount

 

 

Amortization

 

 

Amount

 

Patented and unpatented technology

 

2

 

$

16,469

 

 

$

(14,553

)

 

$

1,916

 

Customer relationships

 

9

 

 

22,000

 

 

 

(14,344

)

 

 

7,656

 

Trade names and trademarks

 

15

 

 

5,469

 

 

 

(2,804

)

 

 

2,665

 

Software

 

4

 

 

236

 

 

 

(56

)

 

 

180

 

Indefinite lived trade names

 

 

 

 

1,950

 

 

 

 

 

 

1,950

 

Total intangible assets, net

 

 

 

 

 

 

 

 

 

$

14,367

 

 

 

 

 

14


 

Amortization expense for intangible assets was $793 and $2,349 for the three and nine months ended September 30, 2023 respectively. Amortization expense for intangible assets was $716 and $2,143 for the three and nine months ended September 30, 2022 respectively.

 

 

 

Estimated amortization expense for the next five years and subsequent is as follows:

 

 

 

Amount

 

2023

 

$

532

 

2024

 

 

2,121

 

2025

 

 

2,121

 

2026

 

 

1,397

 

2027

 

 

812

 

2028

 

 

489

 

And subsequent

 

 

3,408

 

Total intangible assets currently to be amortized

 

 

10,880

 

Intangible assets with indefinite lives not amortized

 

 

1,889

 

Total intangible assets

 

$

12,769

 

 

 

 

Changes in goodwill for the nine months ended September 30, 2023 and 2022 are as follows:





2023

 

 

2022

 

Balance January 1,



$

36,916

 

 

$

24,949

 

Goodwill for Rabern acquisition



 

(80

)

 

 

12,850

 

Effect of change in exchange rates



 

(162

)

 

 

(883

)

Balance September 30,



$

36,674

 

 

$

36,916

 

The Company performed an impairment assessment as of December 31, 2022. No additional triggers for an interim impairment test have been identified as of September 30, 2023.

8. Accrued Expenses

 

 

September 30,
2023

 

 

December 31,
2022

 

Accrued payroll and benefits

 

$

5,766

 

 

$

4,929

 

Accrued warranty

 

 

1,890

 

 

 

1,916

 

Accrued vacation

 

 

1,693

 

 

 

1,635

 

Accrued income tax and other taxes

 

 

1,519

 

 

 

841

 

Accrued legal settlement

 

 

870

 

 

 

1,160

 

Accrued expenses—other

 

 

2,042

 

 

 

1,898

 

Total accrued expenses

 

$

13,780

 

 

$

12,379

 

 

9. Accrued Warranty

 

The liability for estimated warranty claims is accrued at the time of sale and the expense is recorded in the Condensed Consolidated Statement of Operations in Cost of Sales. The liability is established using historical warranty claim experience. The current provision may be adjusted to take into account unusual or non-recurring events in the past or anticipated changes in future warranty claims. Adjustments to the warranty accrual are recorded if actual claim experience indicates that adjustments are necessary. Warranty reserves are reviewed to ensure critical assumptions are updated for known events that may impact the potential warranty liability.

 

The following table summarizes the changes in product warranty liability:

 

 

 

For the nine months ended

 

 

 

September 30,

 

 

 

2023

 

 

2022

 

Balance January 1,

 

$

1,916

 

 

$

1,578

 

Provision for warranties issued during the year

 

 

1,573

 

 

 

1,250

 

Warranty services provided

 

 

(1,590

)

 

 

(958

)

Foreign currency translation

 

 

(9

)

 

 

(40

)

Balance September 30,

 

$

1,890

 

 

$

1,830

 

 

15


 

 

10. Credit Facilities and Debt

 

Debt is summarized as follows:

 

 

 

September 30, 2023

 

 

December 31, 2022

 

U.S. Credit Facilities

 

$

48,276

 

 

$

41,521

 

U.S. Term Loan

 

 

13,371

 

 

 

14,721

 

Italy Group Short-Term Working Capital Borrowings

 

 

16,287

 

 

 

19,365

 

Italy Group Term Loan

 

 

9,774

 

 

 

9,675

 

Other

 

 

119

 

 

 

1,223

 

   Total debt

 

 

87,827

 

 

 

86,505

 

   Less: Debt issuance costs

 

 

(71

)

 

 

(99

)

   Debt, net of issuance costs

 

$

87,756

 

 

$

86,406

 

 

U.S. Credit Facilities and Term Loan

 

On April 11, 2022, the Company entered into a Commercial Credit Agreement (the “Credit Agreement”), by and among the Company, the Company’s domestic subsidiaries and Amarillo National Bank. The Credit Agreement provides for a $40,000 revolving credit facility, a $30,000 revolving credit facility and a $15,000 term loan.

 

Borrowings under the $40,000 revolving credit facility bear interest at a floating rate equal to the Prime Rate as of June 12, 2023. Previously, the rate was Prime plus 0.50%. The $40,000 revolving credit facility requires monthly interest payments with the full principal balance coming due at maturity. The facility originally provided for maturity on April 11, 2024. On January 25, 2023, the lender agreed to extend the maturity date to April 11, 2025, with a rolling two-year maturity extension provided there is no event of default. The rolling two-year maturity extension repeats on April 11 each year following 2025 unless the lender provides 120 days’ written notice of non-extension.

 

Borrowings under the $30,000 revolving credit facility bear interest at a floating rate equal to the Prime Rate as of June 12, 2023. Previously, the rate was Prime plus 0.50%. The $30,000 facility requires quarterly interest payments and principal payments in the amount of 3% of the outstanding balance thereunder on a quarterly basis beginning on January 1, 2023. The facility originally provided for maturity on April 11, 2024. On January 25, 2023, the maturity date was extended to April 11, 2025.

 

The term loan requires monthly interest payments at a floating rate equal to the Prime Rate. Previously, the rate was Prime plus 0.50%. Monthly installments of principal and interest based on an 84-month amortization are payable beginning on November 11, 2022 with the remaining principal balance coming due at maturity on October 11, 2029.

The unused balance of the revolving credit facilities incurs a 0.125% fee that is payable semi-annually. At September 30, 2023 and December 31, 2022, the Company had $48,276 and $41,521 in borrowings under the revolving credit facilities and $13,371 and $14,721 in borrowings under the term loan.

The Credit Agreement requires the Company to maintain a debt service coverage ratio of at least 1.25:1.00 measured on the last day of each calendar quarter, beginning June 30, 2022, and each measurement is based on a rolling 12-month basis. The Credit Agreement also requires the Company to maintain a U.S. net worth of at least $80,000, measured as of the last day of each calendar quarter, beginning June 30, 2022. The Company was in compliance with its covenants under the Credit Agreement as of September 30, 2023.

PM Group Short-Term Working Capital Borrowings

At September 30, 2023 and December 31, 2022, respectively, the PM Group had established demand credit and overdraft facilities with five banks in Italy, one bank in Spain, twelve banks in South America and one bank in Romania. Under these facilities, as of September 30, 2023 and December 31, 2022 respectively, the PM Group can borrow up to $23,636 and $24,127 for advances against invoices, letter of credit and bank overdrafts. As of September 30, 2023 and December 31, 2022 , the interest on the Italian working capital facilities is charged at the 3-month Euribor plus a spread ranging from 175 to 355 basis points and 3-month Euribor plus 450 basis points. Interest on the South American facilities is charged at a flat rate for advances on invoices. Interest on the Romanian facility ranges from 4.9% to 5.1%.

 

At September 30, 2023 and December 31, 2022, the banks had advanced PM Group $16,306 and $19,130, respectively.

Valla Short-Term Working Capital Borrowings

16


 

At September 30, 2023 and December 31, 2022, respectively, Valla had established demand credit and overdraft facilities with two Italian banks. Under the facilities, Valla can borrow up to $593 and $599 for advances against orders, invoices and bank overdrafts. Interest on the Italian working capital facilities is charged at a flat percentage rate for advances on invoices and orders ranging from 1.67% - 12% for both 2023 and 2022. At September 30, 2023 and December 31, 2022, the Italian banks had advanced Valla $79 and $235, respectively.

PM Group Term Loans

At September 30, 2023 and December 31, 2022 respectively, the PM Group has a $5,002 and $5,038 term loan that is split into a note and a balloon payment and is secured by the PM Group’s common stock. The term loan is charged interest at a fixed rate of 3.5%, has annual principal payments of approximately $600 per year and has a balloon payment of $3,180 due in 2026.

At September 30, 2023 and December 31, 2022 respectively, the PM Group has unsecured borrowings totaling $4,588 and $4,637, respectively. The borrowings have a fixed rate of interest of 3.5%. Annual payments of approximately $1,500 are payable ending in 2026.

As of September 30, 2023 and December 31, 2022 the PM Group has a loan in Romania in the amount of $125 and $175 with a fixed interest of 2.75% rate maturing in 2027.

 

11. Leases

 

The Company leases certain warehouses, office space, machinery, vehicles and equipment. Leases with an initial term of 12 months or shorter are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the applicable lease term.

 

The Company is not aware of any variable lease payments, residual value guarantees, covenants or restrictions imposed by the leases. Most leases include one or more options to renew, with renewal terms that can extend the lease term. The exercise of these lease renewal options is at the Company's sole discretion. The depreciable life of assets is limited by the expected lease term for finance leases.

 

If there was a discount rate explicit in the lease, then such discount rate was used. For those leases with no explicit or implicit interest rate, an incremental borrowing rate was used. The weighted average remaining useful life for operating and finance leases were 5.6 and 5 years, respectively. The weighted average discount rate for operating and finance leases was 5.2% and 12.4% respectively.

 

 

Leases

 

Classification

 

September 30, 2023

 

 

December 31, 2022

 

Assets

 

 

 

 

 

 

 

 

Operating lease assets

 

Operating lease assets

 

$

7,498

 

 

$

5,667

 

Financing lease assets

 

Fixed assets, net

 

 

1,710

 

 

 

2,005

 

Total leased assets

 

 

 

$

9,208

 

 

$

7,672

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

 

 

 

Operating

 

Current liabilities

 

$

1,998

 

 

$

1,758

 

Financing

 

Current liabilities

 

 

579

 

 

 

509

 

 

 

 

 

 

 

 

 

Non-current

 

 

 

 

 

 

 

 

Operating

 

Non-current liabilities

 

 

5,500

 

 

 

3,909

 

Financing

 

Non-current liabilities

 

 

2,940

 

 

 

3,382

 

Total lease liabilities

 

 

 

$

11,017

 

 

$

9,558

 

 

17


 

 

 

 

 

 

Three months ended September 30,

 

 

Nine months ended September 30,

 

Lease Cost

 

Classification

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Operating lease costs

 

Operating lease assets

 

$

597

 

 

$

459

 

 

$

1,703

 

 

$

969

 

Finance lease cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of
   leased assets

 

Amortization

 

 

91

 

 

 

100

 

 

 

273

 

 

 

287

 

Interest on lease liabilities

 

Interest expense

 

 

112

 

 

 

126

 

 

 

347

 

 

 

385

 

Lease cost

 

 

 

$

800

 

 

$

685

 

 

$

2,323

 

 

$

1,641

 

 

 

 

Three months ended September 30,

 

 

For the nine months ended

 

Other Information

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Cash paid for amounts included in the
   measurement of lease liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Operating cash flows from operating
   leases

 

$

597

 

 

$

459

 

 

$

1,703

 

 

$

969

 

Operating cash flows from finance
   leases

 

 

112

 

 

 

126

 

 

 

347

 

 

 

385

 

Financing cash flows from finance
   leases

 

 

127

 

 

 

113

 

 

 

371

 

 

 

313

 

 

Future principal minimum lease payments for the next five years and subsequent are:

 

 

 

Operating Leases

 

 

Finance Leases

 

2023

 

$

586

 

 

$

241

 

2024

 

 

2,031

 

 

 

972

 

2025

 

 

1,709

 

 

 

1,012

 

2026

 

 

1,638

 

 

 

1,018

 

2027

 

 

890

 

 

 

1,049

 

2028

 

 

528

 

 

 

356

 

And subsequent

 

 

1,532

 

 

 

-

 

Total undiscounted lease payments

 

 

8,914

 

 

 

4,648

 

Less interest

 

 

(1,416

)

 

 

(1,129

)

Total liabilities

 

$

7,498

 

 

$

3,519

 

Less current maturities

 

 

(1,998

)

 

 

(579

)

Non-current lease liabilities

 

$

5,500

 

 

$

2,940

 

 

In connection with our acquisition of Rabern, the Company became the lessee of four locations from HTS Management LLC (“HTS”), an entity controlled by Steven Berner, who is a key member of Rabern management. HTS operates as a holding company for property and as a single lessor leasing company for business use property for Rabern. HTS’s ongoing activities preceding and succeeding the Rabern acquisition relate to financing, purchasing, leasing and holding property leased to Rabern.

 

12. Income Taxes

For the three months ended September 30, 2023, the Company recorded an income tax provision of $0.7 million, which includes a discrete income tax benefit of less than $0.1 million. The calculation of the overall income tax provision for the three months ended September 30, 2023 primarily consists of U.S. federal income taxes for Rabern which is a separate taxpayer for U.S. federal tax purposes, foreign income taxes, and a discrete tax income tax benefit related to the expiration of the statute of limitations for a foreign jurisdiction offset by an accrual of interest related to unrecognized tax benefits. For the three months ended September 30, 2022, the Company recorded an income tax provision of $0.2 million, which includes a discrete income tax benefit of less than $0.1 million. The calculation of the overall income tax provision for the three months ended September 30, 2022 primarily consists of U.S. federal income taxes for Rabern which is a separate taxpayer for U.S. federal tax purposes, foreign income taxes, a discrete income tax benefit for a reduction in the valuation allowance recorded against state tax credits in connection with the Rabern acquisition and a discrete income tax benefit related to the expiration of the statute of limitations for a foreign jurisdiction.

The effective tax rate for the three months ended September 30, 2023 was an income tax provision of 28.1% on pretax income of $2.6 million compared to an income tax provision of 7.2% on a pretax loss of $2.9 million in the comparable prior period. The effective tax rate for the three months ended September 30, 2023 differs from the U.S. statutory rate of 21% primarily due to a valuation allowance

18


 

in the U.S., a partial valuation allowance in Italy, nondeductible foreign permanent differences, income taxed in foreign jurisdictions at varying tax rates and a reduction in the uncertain tax position liability related to the expiration of the statute of limitations for a foreign jurisdiction, offset by an accrual of interest related to unrecognized tax benefits.

For the nine months ended September 30, 2023, the Company recorded an income tax provision of $1.0 million, which includes a discrete income tax benefit less than of $0.1 million. The calculation of the overall income tax provision for the nine months ended September 30, 2023 primarily consists of U.S. federal income taxes for Rabern which is a separate taxpayer for U.S. federal tax purposes, foreign income taxes, and a discrete income tax benefit related to the expiration of the statutes of limitations for various states and a foreign jurisdiction offset by an accrual of interest related to unrecognized tax benefits. For the nine months ended September 30, 2022, the Company recorded an income tax provision of $0.6 million, which includes a discrete income tax benefit of $0.2 million. The calculation of the overall income tax provision for the nine months ended September 30, 2022 primarily consists of U.S. federal income taxes for Rabern which is a separate taxpayer for U.S. federal tax purposes, foreign income taxes, and a discrete income tax benefit for a reduction in the valuation allowance recorded against state tax credits in connection with the Rabern acquisition, and a discrete income tax benefit related to the expiration of the statutes of limitations for various states and a foreign jurisdiction.

The effective tax rate for the nine months ended September 30, 2023 was an income tax provision of 28.05% on a pretax income of $3.4 million compared to an income tax provision of 13.0% on a pretax loss of $4.4 million in the comparable prior period. The effective tax rate for the nine months ended September 30, 2023 differs from the U.S. statutory rate of 21% primarily due to a valuation allowance in the U.S., a partial valuation allowance in Italy, nondeductible foreign permanent differences, income taxed in foreign jurisdictions at varying tax rates, a reduction in the uncertain tax position liability related to the expiration of the statutes of limitations for various states and a foreign jurisdiction, offset by an accrual of interest related to unrecognized tax benefits.

 

13. Net Earnings (Loss) per Common Share

Basic net earnings per share is computed by dividing net income by the weighted average number of common shares outstanding for the period. Details of the calculations are as follows:

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net income (loss)

 

$

1,894

 

 

$

(3,084

)

 

$

2,400

 

 

$

(4,957

)

Net income attributable to noncontrolling interest

 

 

194

 

 

 

288

 

 

 

243

 

 

 

442

 

Net income (loss) attributable to shareholders of
   Manitex International, Inc.

 

$

1,700

 

 

$

(3,372

)

 

$

2,157

 

 

$

(5,399

)

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) per share

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

0.09

 

 

$

(0.15

)

 

$

0.12

 

 

$

(0.25

)

Net income (loss) attributable to shareholders of
   Manitex International, Inc.

 

$

0.08

 

 

$

(0.17

)

 

$

0.11

 

 

$

(0.27

)

Diluted

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

0.09

 

 

$

(0.15

)

 

$

0.12

 

 

$

(0.25

)

Net income (loss) attributable to shareholders of
   Manitex International, Inc.

 

$

0.08

 

 

$

(0.17

)

 

$

0.11

 

 

$

(0.27

)

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

20,252,114

 

 

 

20,094,475

 

 

 

20,193,696

 

 

 

20,039,981

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

20,252,114

 

 

 

20,094,475

 

 

 

20,193,696

 

 

 

20,039,981

 

Dilutive effect of restricted stock units and stock options

 

 

2,716

 

 

 

 

 

 

2,559

 

 

 

 

Dilutive

 

 

20,254,830

 

 

 

20,094,475

 

 

 

20,196,255

 

 

 

20,039,981

 

 

19


 

 

The following securities were not included in the computation of diluted earnings per share as their effect would have been antidilutive:

 

 

 

September 30,

 

 

 

2023

 

 

2022

 

Unvested restricted stock units

 

 

262,989

 

 

 

296,725

 

Options to purchase common stock

 

 

213,437

 

 

 

197,437

 

 

 

 

476,426

 

 

 

494,162

 

 

14. Equity

Stock Issued to Employees and Directors

The Company issued shares of common stock to employees and Directors as restricted stock units issued under the Company’s 2019 Incentive Plan vest. Upon issuance, entries were recorded to increase common stock and decrease paid in capital for the amounts shown below. The following is a summary of stock issuances that occurred during the nine months ended September 30, 2023:

Date of Issue

 

Employees or
Director

 

Shares Issued

 

 

Value of
Shares Issued

 

March 6, 2023

 

Employees

 

 

14,064

 

 

 

82,837

 

March 7, 2023

 

Directors

 

 

18,000

 

 

 

92,700

 

March 8, 2023

 

Employees

 

 

18,338

 

 

 

141,753

 

March 8, 2023

 

Directors

 

 

12,000

 

 

 

92,760

 

April 11, 2023

 

Employees

 

 

33,000

 

 

 

250,800

 

June 1, 2023

 

Directors

 

 

17,520

 

 

 

101,591

 

June 2, 2023

 

Employees

 

 

13,200

 

 

 

93,324

 

June 2, 2023

 

Directors

 

 

20,100

 

 

 

143,229

 

July 1, 2023

 

Employees

 

 

10,085

 

 

 

64,443

 

 

 

 

 

156,307

 

 

 

1,063,437

 

 

Stock Repurchases

The Company purchases shares of Common Stock from certain employees at the closing share price on the date of purchase. The stock is purchased from the employees to satisfy employees’ withholding tax obligations related to stock issuances described above. The below table summarizes shares repurchased from employees during the current year through September 30, 2023:

 

Date of Purchase

 

Shares
Purchased

 

 

Closing Price
on Date of
Purchase

 

March 6, 2023

 

 

3,801

 

 

$

5.12

 

March 8, 2023

 

 

3,804

 

 

$

5.32

 

June 2, 2023

 

 

1,875

 

 

$

4.82

 

July 1, 2023

 

 

1,727

 

 

$

5.43

 

 

 

 

11,207

 

 

 

 

 

 

Restricted Stock Awards

The following table contains information regarding restricted stock units during the current year through September 30, 2023:

 

 

 

September 30,
2023

 

Outstanding on January 1, 2023

 

 

288,904

 

Units granted during the period

 

 

141,800

 

Vested and issued

 

 

(145,100

)

Vested-issued and repurchased for income tax withholding

 

 

(11,207

)

Forfeited

 

 

(8,450

)

Outstanding on September 30, 2023

 

 

265,947

 

20


 

The value of the restricted stock is being charged to compensation expense over the vesting period. Compensation expense includes expense related to restricted stock units of $215 and $856 for the three and nine months ended September 30, 2023 and $298 and $1,026 for the three and nine months ended September 30, 2022. Additional compensation expense related to restricted stock units will be $222, $716 and $295 for the remainder of 2023, 2024 and 2025, respectively.

 

Restricted Stock Award with Market Conditions

 

On May 3, 2022, in connection with J. Michael Coffey’s appointment as the Company’s Chief Executive Officer as of April 11, 2022, he was granted 490,000 restricted stock units that vest upon attainment of certain stock price hurdles of the Company’s stock. The restricted stock units can only be received on an annual basis from the vesting start date. The fair value of the market conditions award was $2.2 million calculated by using the Monte Carlo Simulation based on the average of 20,000 simulation runs. The requisite service period used was three years, expected volatility was 60% and the risk-free rate of return was 2.94%. The value of the restricted stock units granted to Mr. Coffey is being charged to compensation expense over the requisite service period. Under ASC 718-10-35-2, compensation cost for the award of share-based compensation is recognized over the derived service periods (the time from the service inception date to the expected date of satisfaction) of either 12 or 24 months depending on the particular tranche based on the median number of days it takes for the award to vest in scenarios where they meet their threshold. Compensation expense related to restricted stock units was $208 and $820 for the three and nine months ended September 30, 2023 and $386 and $566 for both the three and nine months ended September 30, 2022. Additional compensation expense related to Mr. Coffey’s restricted stock units will be $208 and $231 for the remainder of 2023 and 2024, respectively.

 

 

Restricted Stock Award with Market and Performance Conditions

 

On May 3, 2022, in connection with his appointment, Mr. Coffey was also granted 100,000 restricted stock units that vest upon a change in control in which the per share consideration for the Company’s common stock exceeds $10.00. The fair value of the market and performance conditions award was $481, calculated by using the Black-Scholes Option Pricing Model. The requisite service period used for the calculation was three years, expected volatility was 60% and the risk-free rate of return was 2.95%. The fair value of stock-based compensation for market and performance conditions will be recognized in the Company’s financial statements only if it is probable that the conditions will be satisfied.

 

 

Stock Options

 

On May 3, 2022, in connection with his appointment, Mr. Coffey was also granted 100,000 stock options with an exercise price of $4.13 per share. The options vest ratably on each of the first three anniversary dates of Mr. Coffey’s appointment date, subject to his continued service with the Company on each vesting date.

 

On May 1, 2023, 16,000 stock options were granted at $5.18 per share and vest ratably on each of the first three anniversary dates.

 

 

 

Grant date
5/3/2022

 

 

Grant date
5/1/2023

 

Dividend yields

 

 

 

 

 

 

Expected volatility

 

 

55.0

%

 

 

55.0

%

Risk free interest rate

 

 

3.02

%

 

 

3.63

%

Expected life (in years)

 

 

6

 

 

 

6

 

Fair value of the option granted

 

$

4.13

 

 

$

2.87

 

 

Compensation expense related to the Company’s stock options was $34 and $136 and $66 and $118 for the three and nine months ended September 30, 2023 and 2022. Additional compensation expense related to Mr. Coffey’s options will be $33 $82 and $28 for the remainder of 2023, 2024 and 2025, respectively.

 

15. Legal Proceedings and Other Contingencies

The Company is involved in various legal proceedings, including product liability, employment related issues, and workers’ compensation matters that have arisen in the normal course of operations. The Company has product liability insurance with self-insurance retention that range from $50 to $500.

21


 

When it is probable that a loss has been incurred and it is possible to make a reasonable estimate of the Company’s liability with respect to such matters, a provision is recorded for the amount of such estimate that is most likely to occur. Certain legal proceedings are at a preliminary stage, and it is not possible to estimate the amount or timing of any cost, if any, to the Company for these cases. However, the Company does not believe that these contingencies, in the aggregate, will have a material adverse effect on the Company.

The Company has been named as a defendant in several multi-defendant asbestos-related product liability lawsuits. In certain instances, the Company is indemnified by a former owner of the product line involved. In the remaining cases the plaintiff has, to date, not been able to establish any exposure by the plaintiff to the Company’s products. The Company is uninsured with respect to these claims but believes that it will not incur any material liability with respect to these claims.

On May 5, 2011, Company entered into two separate settlement agreements with two plaintiffs. As of September 30, 2023, the Company has a remaining obligation under these agreements to pay the plaintiffs $855 without interest in 9 annual installments of $95 on or before May 22 of each year. The Company has recorded a liability for the net present value of the liability. The difference between the net present value and the total payment will be charged to interest expense over the payment period.

It is reasonably possible that the estimated reserve for product liability claims may change within the next 12 months. A change in estimate could occur if a case is settled for more or less than anticipated, or if additional information becomes known to the Company.

The Company has accrued $335 for settling a litigation matter involving a product liability case. In addition, the Company has recorded a charge of $369 for the estimated withdrawal liability for pension payments that it may owe under a collective bargaining agreement with the unions. These amounts are recorded in other expense in the Condensed Consolidated Statement of Operations for the nine months ended September 30, 2023 and 2022.

 

16. Transactions between the Company and Related Parties

 

In the course of conducting its business, the Company has entered into certain related party transactions.

 

C&M conducts business with RAM P&E LLC for the purposes of obtaining parts business as well as buying, selling and renting equipment.

 

C&M is a distributor of Terex rough terrain and truck cranes. As such, C&M purchases cranes and parts from Terex.

 

PM is a manufacturer of cranes. PM sold cranes, parts, and accessories to Tadano during 2023.

Rabern rents heavy duty and light duty commercial construction equipment, mainly to commercial contractors on a short-term rental basis. Rabern sold a fixed asset to Steven Berner, the general manager of Rabern, in April 2022, in connection with the Rabern acquisition.

In 2022, the Company became the lessee of four buildings from HTS Management LLC (“HTS”), an entity controlled by Mr. Berner, who is a key member of Rabern management. HTS operates as a holding company for property and as a single lessee leasing company for business use property for Rabern. HTS’s ongoing activities preceding and succeeding the Rabern acquisition relate to financing, purchasing, leasing and holding property leased to Rabern. Based on these activities, HTS would be subject to interest rate risk and real estate investment pricing risk related to holding the real estate as an investment. These risks represent the potential variability to be considered as passed to interest holders. Although we have a variable interest through our relationship with Steven Berner, such variability is not passed on to Rabern in connection with the arrangement, and therefore Rabern is not the primary beneficiary of the VIE. Furthermore, all risks and benefits of the significant activities of HTS are passed to Steven Berner directly and do not represent a direct or an indirect obligation for Rabern.

 

As of September 30, 2023 and December 31, 2022, the Company had accounts receivable and payable with related parties as shown below:

 

 

 

 

 

September 30, 2023

 

 

December 31, 2022

 

Accounts Receivable

 

Tadano (2)

 

$

3

 

 

$

 

 

 

 

 

 

 

 

 

 

Accounts Payable

 

Terex (1)

 

$

16

 

 

$

60

 

Net Related Party Accounts
   Receivable/(Payable), net

 

 

 

$

(13

)

 

$

(60

)

 

22


 

The following is a summary of the amounts attributable to certain related party transactions as described in the footnotes to the table, for the periods indicated:

 

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended September 30,

 

 

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Rent paid:

 

Rabern Facility (4)

 

$

242

 

 

$

160

 

 

$

675

 

 

$

302

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales to:

 

Terex (1)

 

$

10

 

 

$

75

 

 

$

137

 

 

$

165

 

 

Tadano (2)

 

 

11

 

 

 

10

 

 

 

73

 

 

 

34

 

 

 

RAM P&E (3)

 

 

 

 

 

 

 

 

 

 

 

27

 

 

Steven Berner (5)

 

 

 

 

 

 

 

 

 

 

 

80

 

Total Sales

 

 

 

$

21

 

 

$

85

 

 

$

210

 

 

$

306

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases from:

 

Terex (1)

 

$

32

 

 

$

64

 

 

$

67

 

 

$

203

 

 

Tadano (2)

 

 

 

 

 

 

 

 

7

 

 

 

137

 

Total Purchases

 

 

 

$

32

 

 

$

64

 

 

$

74

 

 

$

340

 

 

(1)
Terex is a significant shareholder of the Company and conducts business with the Company in the ordinary course of business.
(2)
Tadano is a significant shareholder of the Company and conducts business with the Company in the ordinary course of business.
(3)
RAM P&E is owned by the Company’s Executive Chairman’s daughter.
(4)
The Company leases its Rabern facilities from HTS, an entity controlled by Steven Berner, the General Manager of Rabern. Pursuant to the terms of the lease, the Company makes monthly lease payments to HTS. The Company is also responsible for all the associated operations expenses, including insurance, property taxes and repairs. The leases contain additional renewal options at the Company's discretion.
(5)
The Company sold an automobile to Steven Berner, the General Manager of Rabern for approximately $80 in April 2022, in connection with the Rabern Acquisition.

Note 17. Restructuring

 

On January 12, 2022, the Company announced a restructuring plan (the “Restructuring”) that will result in the closure of its Badger facility in Winona, Minnesota. As part of the Restructuring, the Company intends to move the manufacturing of its straight mast boom cranes and aerial platforms now produced in Winona, Minnesota, to its Georgetown, Texas, facility. The Restructuring is expected to be completed during 2023.

 

 

 

Note 18. Segment Information

 

The Company reports segment information based on the “management” approach. The management approach designates the internal reporting used by the Chief Executive Officer, who is also the Company’s Chief Operating Decision Maker, for making decisions about the allocation of resources and assessing performance as the source of the Company’s reportable operating segments.

 

The Company is a leading provider of engineered lifting solutions and equipment rentals. The Company operates in two business segments: the Lifting Equipment segment and the Rental Equipment segment.

 

Lifting Equipment Segment

 

The Lifting Equipment segment is a leading provider of engineered lifting solutions. The Company manufactures a comprehensive line of boom trucks, articulating cranes, truck cranes and sign cranes. The Company is also a manufacturer of specialized rough terrain cranes and material handling products. Through PM and Valla, two of the Company's Italian subsidiaries, the Company manufacturers truck- mounted hydraulic knuckle boom cranes and a full range of precision pick and carry industrial cranes using electric, diesel and hybrid power options.

 

Rental Equipment Segment

 

23


 

The Company’s Rental Equipment segment rents heavy duty and light duty commercial construction equipment, mainly to commercial contractors on a short-term rental basis. The Company also rents equipment to homeowners for do-it-yourself projects.

 

The following is financial information for our two operating segments: Lifting Equipment and Rental Equipment:

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net revenues

 

 

 

 

 

 

 

 

 

 

 

 

Lifting Equipment

 

$

63,738

 

 

$

57,433

 

 

$

191,114

 

 

$

181,190

 

Rental Equipment

 

 

7,593

 

 

 

7,604

 

 

 

21,622

 

 

 

13,844

 

Total revenue

 

$

71,331

 

 

$

65,037

 

 

$

212,736

 

 

$

195,034

 

Operating income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

Lifting Equipment

 

$

4,300

 

 

$

(394

)

 

$

9,319

 

 

$

(1,925

)

Rental Equipment

 

 

879

 

 

 

1,602

 

 

 

1,757

 

 

 

2,113

 

Total operating income

 

$

5,179

 

 

$

1,208

 

 

$

11,076

 

 

$

188

 

Depreciation and amortization

 

 

 

 

 

 

 

 

 

 

 

 

Lifting Equipment

 

$

1,261

 

 

$

1,042

 

 

$

3,435

 

 

$

3,288

 

Rental Equipment

 

 

1,475

 

 

 

1,573

 

 

 

5,223

 

 

 

3,243

 

Total depreciation and amortization

 

$

2,736

 

 

$

2,615

 

 

$

8,658

 

 

$

6,531

 

Capital expenditures

 

 

 

 

 

 

 

 

 

 

 

 

Lifting Equipment

 

$

656

 

 

$

189

 

 

$

1,668

 

 

$

1,039

 

Rental Equipment

 

 

475

 

 

 

3,663

 

 

 

2,969

 

 

 

12,623

 

Total capital expenditures

 

$

1,131

 

 

$

3,852

 

 

$

4,637

 

 

$

13,662

 

 

 

 

 

 

 

 

 

24


 

Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations

Recent Developments

 

Impact of COVID-19

 

The COVID-19 pandemic has significantly impacted our ability to meet demand for the Company’s products. While these impacts began to subside in 2023 and continue to decrease in 2023, the Company experienced, and is still experiencing, supply chain and logistic constraints and increased costs that negatively impact its ability to manufacture and ship products to meet customer requirements.

Business Overview

 

The following management’s discussion and analysis of financial condition and results of continuing operations should be read in conjunction with the Company’s financial statements and notes and other information included elsewhere in this Quarterly Report on Form 10-Q.

 

Backlog

 

The Company’s backlog was approximately $197 million and $230 million at September 30, 2023 and December 31, 2022, respectively.

 

 

25


 

Results of Condensed Consolidated Operations

MANITEX INTERNATIONAL, INC.

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
September 30,

 

 

 

 

 

 

 

 

 

2023

 

 

2022

 

 

$ Change

 

 

% Change

 

Net revenues

 

$

71,331

 

 

$

65,037

 

 

$

6,294

 

 

 

9.7

%

Cost of sales

 

 

54,746

 

 

 

52,693

 

 

 

2,053

 

 

 

3.9

 

Gross profit

 

 

16,585

 

 

 

12,344

 

 

 

4,241

 

 

 

34.4

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

Research and development costs

 

 

861

 

 

 

659

 

 

 

202

 

 

 

30.7

 

Selling, general and administrative expenses

 

 

10,545

 

 

 

10,440

 

 

 

105

 

 

 

1.0

 

Transaction costs

 

 

 

 

 

37

 

 

 

(37

)

 

 

(100.0

)

Total operating expenses

 

 

11,406

 

 

 

11,136

 

 

 

270

 

 

 

2.4

 

Operating income

 

 

5,179

 

 

 

1,208

 

 

 

3,971

 

 

 

328.7

 

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(1,997

)

 

 

(1,409

)

 

 

(588

)

 

 

41.7

 

Interest income

 

 

141

 

 

 

 

 

 

141

 

 

 

100.0

 

Foreign currency transaction gain (loss)

 

 

(883

)

 

 

175

 

 

 

(1,058

)

 

 

(604.6

)

Other expense

 

 

196

 

 

 

(2,852

)

 

 

3,048

 

 

 

(106.9

)

Total other expense

 

 

(2,543

)

 

 

(4,086

)

 

 

1,543

 

 

 

(37.8

)

Income (loss) before income taxes

 

 

2,636

 

 

 

(2,878

)

 

 

5,514

 

 

 

(191.6

)

Income tax expense

 

 

742

 

 

 

206

 

 

 

536

 

 

 

260.2

 

Net income (loss)

 

 

1,894

 

 

 

(3,084

)

 

 

4,978

 

 

 

(161.4

)

Net income attributable to noncontrolling interest

 

 

194

 

 

 

288

 

 

 

(94

)

 

 

(32.6

)

Net income (loss) attributable to shareholders of
   Manitex International, Inc.

 

$

1,700

 

 

$

(3,372

)

 

$

5,072

 

 

(150.4)%

 

 

Three Months Ended September 30, 2023 Compared to Three Months Ended September 30, 2022

Net revenues and gross profit

Net revenues increased $6.3 million or 9.7% to $71.3 million for the three months ended September 30, 2023 from $65.0 million for the comparable period in 2022. The increase in revenues is primarily due to increase in sales of articulated cranes by the Company's PM business, aerial work platforms from the Oil & Steel business and straight mast cranes from the Manitex business. These are partially offset by $4 million in lower chassis sales as compared with the prior year.

 

Our gross profit increased $4.3 million to $16.6 million, for the three months ended September 30, 2023 from $12.3 million for the comparable period in 2022. The increase in gross profit is driven by increased sales volume, higher selling prices and sales mix in the PM and Manitex businesses. The gross profit percentage increased from 19.0% for the three months ended September 30, 2022 to 23.0% for the three months ended September 30, 2023. The increase is driven by increased pricing, lowered costs and favorable sales mix.

 

Research and development — Research and development expense was $0.9 million for the three months ended September 30, 2023 compared to $0.7 million for the same period in 2022. The Company’s research and development spending reflects our continued commitment to develop and introduce new products that give the Company a competitive advantage.

Selling, general and administrative expense — SG&A expense for the three months ended September 30, 2023 was $10.5 million compared to $10.4 million for the comparable period in 2022, a decrease of $0.1 million. The increase of salaries and benefits and insurance costs in 2023 are offset by lower stock compensation and lower severance expenses incurred in the prior year.

Interest expense — Interest expense was $2.0 million for the three months ended September 30, 2023 compared to $1.4 million for the comparable period in 2022. The increase in interest expense is due to higher debt incurred to finance inventory and increases in the rental fleet as well as increased interest rates.

Foreign currency transaction losses — For the three months ended September 30, 2023, the Company had foreign currency losses of $0.9 million compared to a gain of $0.2 million for the comparable period in 2022. A substantial portion of the losses relate to changes in the Argentine and Chilean peso.

 

26


 

Other income (expense) — Other income was less than $0.2 million for the three months ended September 30, 2023 compared to other expense of $2.9 million for the comparable period in 2022. The prior year expense is mainly due to a legal settlement.

Income taxes —For the three months ended September 30, 2023, the Company recorded an income tax provision of $0.7 million, which includes a discrete income tax benefit of less than $0.1 million. The calculation of the overall income tax provision for the three months ended September 30, 2023 primarily consists of U.S .federal income taxes for Rabern which is a separate taxpayer for US federal tax purposes, foreign income taxes, and a discrete tax income tax benefit related to the expiration of the statute of limitations for a foreign jurisdiction offset by an accrual of interest related to unrecognized tax benefits. For the three months ended September 30, 2022, the Company recorded an income tax provision of $0.2 million, which includes a discrete income tax benefit of less than $0.1 million. The calculation of the overall income tax provision for the three months ended September 30, 2022 primarily consists of U.S. federal income taxes for Rabern which is a separate taxpayer for U.S. federal tax purposes, foreign income taxes, a discrete income tax benefit for a reduction in the valuation allowance recorded against state tax credits in connection with the Rabern acquisition and a discrete income tax benefit related to the expiration of the statute of limitations for a foreign jurisdiction.

The effective tax rate for the three months ended September 30, 2023 was an income tax provision of 28.1% on pretax income of $2.6 million compared to an income tax provision of 7.2% on a pretax loss of $2.9 million in the comparable prior period. The effective tax rate for the three months ended September 30, 2023 differs from the U.S. statutory rate of 21% primarily due to a valuation allowance in the U.S., a partial valuation allowance in Italy, nondeductible foreign permanent differences, income taxed in foreign jurisdictions at varying tax rates and a reduction in the uncertain tax position liability related to the expiration of the statute of limitations for a foreign jurisdiction offset by an accrual of interest related to unrecognized tax benefits.

 

 

 

 

Nine Months Ended
September 30,

 

 

 

 

 

 

 

 

 

2023

 

 

2022

 

 

$ Change

 

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenues

 

$

212,736

 

 

$

195,034

 

 

$

17,702

 

 

 

9.1

%

Cost of sales

 

 

166,806

 

 

 

160,198

 

 

 

6,608

 

 

 

4.1

 

Gross profit

 

 

45,930

 

 

 

34,836

 

 

 

11,094

 

 

 

31.8

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

Research and development costs

 

 

2,512

 

 

 

2,095

 

 

 

417

 

 

 

19.9

 

Selling, general and administrative expenses

 

 

32,342

 

 

 

30,317

 

 

 

2,025

 

 

 

6.7

 

Transaction costs

 

 

 

 

 

2,236

 

 

 

(2,236

)

 

 

(100.0

)

Total operating expenses

 

 

34,854

 

 

 

34,648

 

 

 

206

 

 

 

0.6

 

Operating income

 

 

11,076

 

 

 

188

 

 

 

10,888

 

 

N/M

 

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(5,658

)

 

 

(2,982

)

 

 

(2,676

)

 

 

89.7

 

Interest income

 

 

141

 

 

 

3

 

 

 

138

 

 

N/M

 

Foreign currency transaction gain (loss)

 

 

(1,656

)

 

 

268

 

 

 

(1,924

)

 

 

(717.9

)

Other expense

 

 

(541

)

 

 

(1,864

)

 

 

1,323

 

 

 

(71.0

)

Total other expense

 

 

(7,714

)

 

 

(4,575

)

 

 

(3,139

)

 

 

68.6

 

Income (loss) before income taxes

 

 

3,362

 

 

 

(4,387

)

 

 

7,749

 

 

 

(176.6

)

Income tax expense

 

 

962

 

 

 

570

 

 

 

392

 

 

 

68.8

 

Net income (loss)

 

 

2,400

 

 

 

(4,957

)

 

 

7,357

 

 

 

(148.4

)

Net income attributable to noncontrolling interest

 

 

243

 

 

 

442

 

 

 

(199

)

 

 

(45.0

)%

Net income (loss) attributable to shareholders of
   Manitex International, Inc.

 

$

2,157

 

 

$

(5,399

)

 

$

7,556

 

 

(140.0)%

 

Nine Months Ended September 30, 2023 Compared to nine Months Ended September 30, 2022

Net revenues and gross profit

Net revenues increased $17.7 million to $212.7 million from $195.0 million for the comparable period in 2022. The increase is due to higher sales of articulated cranes and aerial platforms by our PM business, the acquisition of Rabern in April of 2022, and increased revenue from sales of straight mast cranes in the Manitex business. These are partially offset by nearly $8 million in lower chassis sales as compared with the prior year.

 

Gross profit increased $11.1 million to $45.9 million for the nine months ended September 30, 2023 from $34.8 million for the comparable period in 2022. The increase is due to higher sales of articulated cranes and aerial platforms by our PM and Oil & Steel businesses, the acquisition of Rabern in April of 2022 and increased revenue from sales of straight mast cranes in the Manitex business. The gross profit percentage increased from 17.9% to 21.6% driven by higher margins across most businesses due to increased pricing and favorable sales mix in our manufacturing businesses and a full year of results in 2023 from the rental business.

27


 

Research and development — Research and development expense was $2.5 million for the nine months ended September 30, 2023 compared to $2.1 million for the same period in 2022. The Company’s research and development spending reflects our continued commitment to develop and introduce new products that give the Company a competitive advantage.

Selling, general and administrative expense — SG&A expense for the nine months ended September 30, 2023 was $32.3 million compared to $30.3 million for the comparable period in 2022, an increase of $2.0 million. The increase is driven by an additional three months of expense in the rental segment, the acquisition having occurred in April 2022, trade show expenses, increases in salaries and benefits and legal settlement costs partially offset by decreased severance costs incurred in 2022.

 

Transactions Costs - Transaction costs for the nine months ended September 30, 2022 were $2.2 million related to deal costs in connection with the Rabern acquisition.

Interest expense — Interest expense was $5.7 million for the nine months ended September 30, 2023 compared to $3.0 million for the comparable period in 2022. The increase in interest expense is due to higher debt and interest rates due to the new credit facilities and term debt added in connection with the Rabern acquisition.

 

Foreign currency transaction losses — For the nine months ended September 30, 2023, the Company had foreign currency losses of $1.7 million compared to currency gain of $0.3 million for the comparable period in 2022. A substantial portion of the losses relate to changes in the Argentine and Chilean peso.

 

Other income (expense) — Other expense was $0.5 million for the nine months ended September 30, 2023 compared to other expense of $1.9 million for the comparable period in 2022. The expense in 2023 relates to a pension settlement obligation of $0.3 million related to the termination of services provided by union members and $0.3 million of legal settlement charges offset by royalty income. The amount for 2022 relates to a legal settlement, partially offset by a gain on the sale of a Badger facility and the reversal of a previous recorded contingent liability.

 

Income taxes —For the nine months ended September 30, 2023, the Company recorded an income tax provision of $0.9 million, which includes a discrete income tax benefit less than of $0.1 million. The calculation of the overall income tax provision for the nine months ended September 30, 2023 primarily consists of US federal income taxes for Rabern which is a separate taxpayer for US federal tax purposes, foreign income taxes, and a discrete income tax benefit related to the expiration of the statutes of limitations for various states and a foreign jurisdiction offset by an accrual of interest related to unrecognized tax benefits. For the nine months ended September 30, 2022, the Company recorded an income tax provision of $0.6 million, which includes a discrete income tax benefit of $0.2 million. The calculation of the overall income tax provision for the nine months ended September 30, 2022 primarily consists of US federal income taxes for Rabern which is a separate taxpayer for US federal tax purposes, foreign income taxes, and a discrete income tax benefit for a reduction in the valuation allowance recorded against state tax credits in connection with the Rabern acquisition, and a discrete income tax benefit related to the expiration of the statutes of limitations for various states and a foreign jurisdiction.

The effective tax rate for the nine months ended September 30, 2023 was an income tax provision of 28.05% on a pretax income of $3.4 million compared to an income tax provision of 13.0% on a pretax loss of $4.4 million in the comparable prior period. The effective tax rate for the nine months ended September 30, 2023 differs from the U.S. statutory rate of 21% primarily due to a valuation allowance in the U.S., a partial valuation allowance in Italy, nondeductible foreign permanent differences, income taxed in foreign jurisdictions at varying tax rates and a reduction in the uncertain tax position liability related to the expiration of the statutes of limitations for various states and a foreign jurisdiction offset by an accrual of interest related to unrecognized tax benefits.

Liquidity and Capital Resources

 

The global economy generally and our customers and suppliers specifically are being significantly impacted by a number of factors, including the ongoing impacts of the COVID-19 pandemic, increasing inflation and interest rates and general economic uncertainty. While the potential negative financial impact that these factors will have on our results of operations and liquidity position cannot be reasonably estimated at this time, such impacts could be material. In the context of these uncertain conditions, we are actively managing the business to maintain cash flow and ensure that we have sufficient liquidity for a variety of scenarios. We believe that such strategy will allow us to meet our anticipated funding requirements.

 

On April 11, 2022, the Company entered into an $85 million credit facility with Amarillo National Bank consisting of a working capital facility of $40 million secured by assets of Manitex U.S. businesses, working capital facility of $30 million secured by assets of Rabern, and $15 million term loan facility. This new banking facility provided the funds for the Rabern acquisition and working capital facilities for both the Manitex U.S. and Rabern businesses. At September 30, 2023 the PM Group had established working capital facilities with five Italian, one Spanish, twelve South American banks and one Romanian bank. Under these facilities, the PM Group can borrow $20.3 million against orders, invoices and letters of credit.

 

28


 

Cash, cash equivalents and restricted cash were $4.9 million and $8.2 million at September 30, 2023 and December 31, 2022, respectively At September 30, 2023, the Company had global liquidity of approximately $29 million based on the cash balance and availability under its working capital facilities. Future advances are dependent on having available collateral.

 

If our revenues were to increase significantly in the future, the provision limiting borrowing against accounts receivable and inventory would limit future borrowings. If this were to occur, we would attempt to negotiate higher inventory caps with our banks. There is, however, no assurance that the banks would agree to increase the caps.

The Company expects cash flows from operations and existing availability under the current revolving credit and working capital facilities will be adequate to fund future operations. If, in the future, we were to determine that additional funding is necessary, we believe that it would be available. There is, however, no assurance that such financing will be available or, if available, on acceptable terms.

At September 30, 2023 and December 31, 2022, no customer accounted for 10% or more of the Company’s accounts receivable.

 

Cash flows for the nine-month period ended September 30, 2023 compared to the nine-month period ended September 30, 2022

 

 

Operating Activities - For the nine months ended September 30, 2023 and 2022, cash flow provided by operating activities was $0.2 million compared to cash used in operating activities of $11.3 million for the same period in the prior year. Cash used for working capital was $14.1 million for the nine months ended September 30, 2023 compared to cash used for working capital of $13.0 million for the same period in the prior year. The change is primarily related to increased collections on accounts receivable, the paydown of accounts payable, and inventory purchases to support production

Investing Activities - Cash used in investing activities was $4.3 million in the first nine months of 2023, compared to $50.2 million used in investing activities in the same period a year ago. Cash used in the nine-month period ended September 30, 2023 was primarily related to purchases of assets for growth in the rental segment. Cash used in the nine-month period ended September 30, 2022 was primarily related to cash payments for the Rabern acquisition of $38.4 million, property and equipment purchases of $13.7 million, offset by $1.9 million in proceeds from the sale of the Badger facility and other equipment.

Financing Activities - Cash provided by financing activities was an inflow of $1.1 million for the nine months ended September 30, 2023 which included an increase in borrowings on the revolving credit facility of $6.7 million, partially offset by a decrease in borrowings on the working capital facilities of $2.9 million and note payments of $2.4 million. Cash provided by financing activities was an inflow of $55.5 million for the nine months ended September 30, 2022 which included an increase in borrowings on the revolving credit facility in connection with the Rabern acquisition of $46.7 million, borrowings on the term loan in connection with the Rabern acquisition of $15.0 million, additional borrowings on the revolving credit facility of $6.7 million, working capital borrowings of $0.9 million and borrowings for insurance agreements and finance leases of $0.9 million, offset by repayment of previous revolving credit facility of $12.8 million and notes of $1.1 million.

Critical Accounting Policies

The Company’s critical accounting policies have not materially changed since the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 was filed. See Item 7, Management’s Discussion and Analysis of Results of Operations and Financial Condition, in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 for a discussion of the Company’s critical accounting policies.

 

29


 

Item 3—Quantitative and Qualitative Disclosures about Market Risk

Not required for Smaller Reporting Companies.

Item 4—Controls and Procedures

Disclosure Controls and Procedures

With the participation of our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer) and under the supervision of the Audit Committee of the Board of Directors, our management conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, as of September 30, 2023. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures, as of September 30, 2023, were effective and provided reasonable assurance that the information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosure.

 

Changes in Internal Control Over Financial Reporting

The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). During the period covered by this report, the Company made no changes that have materially affected, or that are reasonably likely to materially affect, its internal control over financial reporting.

 

 

30


 

PART II—OTHER INFORMATION

Item 1—Legal Proceedings

The information set forth in Note 15 (Legal Proceedings and Other Contingencies) to the accompanying Condensed Consolidated Financial Statements included in Part I. Item 1 “Financial Statements” of this Quarterly Report on Form 10-Q is incorporated herein by reference.

Item 1A—Risk Factors

As of the date of this filing, there have been no material changes from the risk factors disclosed in the Company’s Annual Report on Form 10-K filed for the fiscal year ended December 31, 2022.

 

 

Item 2—Unregistered Sales of Equity Securities and Use of Proceeds.

The Company’s Credit Agreement with Amarillo National Bank directly restricts the Company’s ability to declare or pay dividends without Amarillo’s consent. In addition, pursuant to the Company’s Credit Agreement with Amarillo National Bank, the Company’s U.S. subsidiaries must maintain a debt service coverage ratio of at least 1.25:1.00 and a net worth for U.S. entities of at least $80 million, each as measured on the last date of each calendar quarter, beginning September 30, 2023.

 

ISSUER PURCHASES OF EQUITY SECURITIES

 

Period

 

(a) Total
Number of
Shares
(or Units)
Purchased

 

 

(b) Average
Price Paid
per Share
(or Unit)

 

 

(c) Total
Number of
Shares
(or Units)
Purchased as
Part of
Publicly
Announced
Plans or
Programs

 

 

(d) Maximum
Number (or
Approximate
Dollar Value)
of Shares
(or Units) that
May Yet Be
Purchased
Under the
Plans or
Programs

 

January 1 - January 31, 2023

 

 

 

 

$

 

 

 

 

 

 

 

February 1 - February 28, 2023

 

 

 

 

 

 

 

 

 

 

 

 

March 1 - March 31, 2023

 

 

7,605

 

 

 

5.22

 

 

 

 

 

 

 

April 1- April, 2023

 

 

 

 

 

 

 

 

 

 

 

 

May 1 - May 31, 2023

 

 

 

 

 

 

 

 

 

 

 

 

June 1 - June 30, 2023

 

 

1,875

 

 

 

4.82

 

 

 

 

 

 

 

July 1 - July 31, 2023

 

 

1,727

 

 

 

5.43

 

 

 

 

 

 

 

 

 

11,207

 

 

$

5.19

 

 

 

 

 

 

 

 

Item 3—Defaults Upon Senior Securities

None.

Item 4—Mine Safety Disclosures

Not applicable.

Item 5—Other Information

 

None.

 

Item 6—Exhibits

See the Exhibit Index set forth below for a list of exhibits included with this Quarterly Report on Form 10-Q.

31


 

EXHIBIT INDEX

Exhibit

Number

Exhibit Description

 

 

 

10.1

 

Third Amendment to Rights Agreement dates as of September 19, 2022, by and between the Company and American Stock Transfer and Trust Company, LLC, as Rights Agent (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed on September 20, 2022).

 

 

 

31.1*

Certification by the Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

31.2*

Certification by the Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

32.1**

Certification by the Chief Executive Officer and the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

101.INS*

 

Inline XBRL Instance Document- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

 

 

 

101.SCH*

 

Inline XBRL Taxonomy Extension Schema Document.

 

 

 

101.CAL*

 

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

 

 

 

101.LAB*

 

Inline XBRL Taxonomy Extension Label Linkbase Document.

 

 

 

101.PRE*

 

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

 

 

 

101.DEF*

 

Inline XBRL Taxonomy Extension Definition Linkbase Document.

 

 

 

104

 

Cover Page Interactive Data File-The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

 

* Filed herewith

** Furnished herewith

32


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

November 2, 2023

 

 

By:

 

/s/ MICHAEL COFFEY

 

 

 

 

Michael Coffey

 

 

 

 

Chief Executive Officer

 

 

 

 

(Principal Executive Officer)

November 2, 2023

 

 

By:

 

/s/ JOSEPH DOOLAN

 

 

 

 

Joseph Doolan

 

 

 

 

Chief Financial Officer

(Principal Financial and Accounting Officer)

 

33