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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

 

ANNUAL REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2021

Commission File No.: 001-32401

 

MANITEX INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

 

 

Michigan

 

42-1628978

(State of incorporation)

 

(I.R.S. Employer

Identification No.)

9725 Industrial Drive

Bridgeview, Illinois

 

60455

(Address of principal executive offices)

 

(Zip Code)

Registrant’s telephone number, including area code: (708430-7500

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

Preferred Share Purchase Rights

 

N/A

 

The NASDAQ Stock Market LLC

 

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

None

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes       No  

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes       No  

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 (Section 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, a 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.  

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

The aggregate market value of the shares of common stock, no par value (“Common Stock”), held by non-affiliates of the registrant as of June 30, 2021 was approximately $105.4 million based upon the closing price for the Common Stock of $7.29 on the NASDAQ Stock Market on such date.

The number of shares of the registrant’s common stock outstanding as of March 1, 2022 was 19,943,787.

DOCUMENTS INCORPORATED BY REFERENCE

Part III of this Annual Report on Form 10-K incorporates by reference information (to the extent specific sections are referred to herein) from the registrant’s Proxy Statement for its 2022 Annual Meeting (the “2022 Proxy Statement”) to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2021.

 

Auditor Name:

Grant Thornton LLP

Auditor Location:

Chicago, IL, United States of America

 

 

 


 

TABLE OF CONTENTS

 

PART I

 

1

ITEM 1.

  

BUSINESS

 

2

ITEM 1A.

  

RISK FACTORS

 

7

ITEM 1B.

  

UNRESOLVED STAFF COMMENTS

 

13

ITEM 2.

  

PROPERTIES

 

14

ITEM 3.

  

LEGAL PROCEEDINGS

 

14

ITEM 4.

  

MINE SAFETY DISCLOSURES

 

14

 

 

 

PART II

 

15

ITEM 5.

  

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 

15

ITEM 6.

  

[RESERVED]

 

15

ITEM 7.

  

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

16

ITEM 7A.

  

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

22

ITEM 8.

  

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

22

ITEM 9.

  

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

60

ITEM 9A.

  

CONTROLS AND PROCEDURES

 

60

ITEM 9B.

  

OTHER INFORMATION

 

60

ITEM 9C.

 

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

 

60

 

 

 

PART III

 

61

ITEM 10.

  

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 

61

ITEM 11.

  

EXECUTIVE COMPENSATION

 

61

ITEM 12.

  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 

61

ITEM 13.

  

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

 

61

ITEM 14.

  

PRINCIPAL ACCOUNTANT FEES AND SERVICES

 

61

 

 

 

PART IV

 

62

ITEM 15.

  

EXHIBITS, AND FINANCIAL STATEMENT SCHEDULES

 

62

ITEM 16

 

FORM 10-K SUMMARY

 

65

 

 

 

 

SIGNATURES

 

67

 

 

 

i


 

PART I

References to the “Company,” “we,” “our” and “us” refer to Manitex International, Inc., together in each case with our subsidiaries and any predecessor entities unless the context suggests otherwise.

Forward-Looking Statements

When reading this Annual Report on Form 10-K, it is important that you also read the financial statements and related notes thereto. This Annual Report on Form 10-K and certain information incorporated herein by reference contain forward-looking statements within the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. All statements contained in this Annual Report on Form 10-K, other than statements that are purely historical, are forward-looking statements and are based upon management’s present expectations, objectives, anticipations, plans, hopes, beliefs, intentions or strategies regarding the future. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements. Forward-looking statements in this Annual Report on Form 10-K include, without limitation: (1) projections of revenue, earnings, capital structure and other financial items, (2) statements of our plans and objectives, (3) statements regarding the capabilities and capacities of our business operations, (4) statements of expected future economic conditions and the effect on us and on our customers, (5) expected benefits of our cost reduction measures, and (6) assumptions underlying statements regarding us or our business. Our actual results may differ from information contained in these forward-looking statements for many reasons, including those described below and in the section entitled “Item 1A. Risk Factors”:

(1)

a future substantial deterioration in economic conditions, especially in the United States and Europe;

(2)

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;

(3)

the reliance of our customers on government spending, fluctuations in activity levels in the construction industry, and capital expenditures in the oil and gas industry;

(4)

our level of indebtedness and our ability to meet financial covenants required by our debt agreements;

(5)

our ability to negotiate extensions of our credit agreements and to obtain additional debt or equity financing when needed;

(6)

any failure on our part to maintain an effective system of internal controls;

(7)

the cyclical nature of the markets we operate in;

(8)

an increase in interest rates;

(9)

our increasingly international operations expose us to additional risks and challenges associated with conducting business internationally, including currency exchange risks;

(10)

difficulties in implementing new systems, integrating acquired businesses, managing anticipated growth, and responding to technological change;

(11)

the availability of the third-party financing that some of our customers rely on to purchase our products;

(12)

our operations are in a highly competitive industry and the Company is particularly subject to the risks of such competition;

(13)

our dependency upon third-party suppliers makes us vulnerable to supply shortages;

(14)

price increases in materials could reduce our profitability;

(15)

the Company faces product liability claims and other liabilities due to the nature of its business;

(16)

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;

(17)

the volatility of our stock price;

(18)

our ability to access the capital markets to raise funds and provide liquidity;

(19)

the willingness of our shareholders and directors to approve mergers, acquisitions, and other business transactions;

(20)

compliance with changing laws and regulations;

(21)

a substantial portion of our revenues are attributed to a limited number of customers which may decrease or cease purchasing at any time;

1


(22)

a disruption or breach in our information technology systems;

(23)

our reliance on the management and leadership skills of our senior executives;

(24)

impairment in the carrying value of goodwill and/or other intangible assets could negatively affect our operating results;

(25)

certain provisions of the Michigan Business Corporation Act and the Company’s Articles of Incorporation, as amended, Amended and Restated Bylaws, and the Company’s Preferred Stock Purchase Rights may discourage or prevent a change in control of the Company;

(26)

the cost of compliance with Section 404 of the Sarbanes-Oxley Act of 2002; and

(27)

other factors.

The risks described in our Annual Report on Form 10-K 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. All forward-looking statements are made only as of the date hereof. We do not undertake, and expressly disclaim, any obligation to update this forward-looking information, except as required under applicable law.

 

ITEM 1.

BUSINESS

Our Business

The Company is a leading provider of engineered lifting solutions. The Company designs, manufactures and distributes a diverse group of products that serve different functions and are used in a variety of industries. The Company reports in a single business segment and has four operating segments, under which there are five reporting units. The Company has integrated Manitex and Badger Equipment Company (“Badger”) reporting units into one operating segment as a substantial portion of the sales from Badger are intercompany sales to Manitex. While the Company continues to report Badger as a separate reporting unit, its results are combined with Manitex and reported at the combined Manitex operating segment.

 

Manitex markets a comprehensive line of boom trucks, truck cranes, aerial platforms, and sign cranes. Manitex’s boom trucks and crane products are primarily used for industrial projects, energy exploration and infrastructure development, including roads, bridges and commercial construction. Truck mounted aerial work platforms are widely used in several diverse applications.  High reach aerial work platforms are used in highway signage maintenance and construction, parking lot lighting applications, as well as telecommunication maintenance and upgrades. Medium reach aerial work platforms cover most retail shopping and commercial advertising.  Larger capacity aerial work platforms are used as support vehicles to service and maintain equipment in mining applications.  Sign cranes are used for sign installation and sign maintenance.

Badger is a manufacturer of specialized rough terrain cranes and material handling products. Badger primarily serves the needs of the construction, municipality and railroad industries.

PM Oil and Steel S.p.A. (“PM” or “PM Group”) is a leading Italian manufacturer of truck- mounted hydraulic knuckle boom cranes with a 63-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.

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

Discontinued Operations

Manitex Sabre, Inc. (‘’Sabre”)

On August 21, 2020, the Company entered into an Asset Purchase Agreement to sell Manitex Sabre, Inc. to an affiliate of Super Steel, LLC for cash proceeds of $1.5 million, subject to certain adjustments based on closing date accounts receivable and inventory. Accordingly, Manitex Sabre, Inc. was reported as a discontinued operation for 2020.

2


In addition to the cash proceeds from sale of $1.5 million in cash received, the Company may receive maximum royalty and earn-out payments of up to approximately $2.9 million for years 2021 through 2023 if certain revenue criteria are met. The Company has received approximately $0.1 million of such payments to date. The Company will account for the contingent consideration as a gain in accordance with ASC 450. Under this approach, we will recognize the contingent consideration in earnings after the contingency is resolved. See Note 22 for additional discussion related to the sale of Sabre’s business and assets.

General Corporate Information

Our predecessor company was formed in 1993 and was purchased in 2003 by Veri-Tek International, Corp., which changed its name to Manitex International, Inc. in 2008. Our principal executive offices are located at 9725 Industrial Drive, Bridgeview, Illinois 60455 and our telephone number is (708) 430-7500. Our website address is www.manitexinternational.com. Information contained on our website is not incorporated by reference into this report and such information should not be considered to be part of this report.

INFORMATION ABOUT OUR BUSINESS

Boom Trucks

A boom truck is a straight telescopic boom crane outfitted with a hook and winch which is mounted on a standard flatbed commercial (Class 7 or 8) truck chassis. Relative to other lifting equipment, boom trucks provide increased versatility, with some models capable of transporting relatively large payloads from site to site at highway speeds. A boom truck is usually sold with outriggers, pads and devices for reinforcing the chassis in order to improve safety and stability. Although produced in a wide range of models and sizes, boom trucks can be broadly distinguished by their normal lifting capability as light, medium, and heavy-cranes. Various models of medium or heavy-lift boom trucks can safely lift loads from 15- to 80-tons and operating radii can exceed 200 feet. Another advantage of the boom truck is the ability to provide occasional man lift capabilities at a very low cost to height ratio. While it is not uncommon to see a very old boom truck, most replacement cycles seem to trend to seven years. The market for boom trucks has historically been cyclical.

Although the Company offers a complete line of boom trucks from light to heavy capacity cranes, much of our efforts have been devoted to the development of higher capacity boom trucks specifically designed to meet the particular needs of customers including those in energy production and electrical power distribution. We believe it is an advantage to be skewed towards the heavier lifting capacity, since the heavier capacity cranes have higher margins.

Markets that drive demand for boom trucks include power distribution, oil and gas recovery, infrastructure and new home, commercial and industrial construction.  Historically, the new home construction market, which uses lower capacity cranes, has probably been the most cyclical. Over the past few years, demand from the energy sector has become more cyclical in part due to changes in oil prices.

The Company sells its boom trucks through a network of over forty full-service dealers in the United States, Canada, Mexico, South America, and the Middle East. A number of our dealers maintain a rental fleet of their own. Boom trucks can be rented for either short or long-term periods.

Knuckle Boom Cranes

PM knuckle boom cranes are hydraulic folding and articulating cranes, mounted on a commercial chassis, with lifting capacities that range from small (lifting capacity up to three-ton meter) to super heavy (lifting capacity up to two-hundred-and-ten-ton meter), often supplied with a jib for additional reach. The knuckle boom has a compact design and footprint which can be mounted on a chassis to maximize the load carrying capability. Combined with the crane’s ability to operate in a compact footprint the ability to carry a payload provides a competitive advantage over other truck mounted cranes and makes the knuckle boom crane particularly attractive for a variety of end uses in the construction and product delivery sectors.

The knuckle boom crane market is a global market with a wide variety of end sector applications, but focused particularly on residential and non-residential construction, road and bridge infrastructure development, waste management and utility applications. PM knuckle boom cranes are sold into a variety of geographies including West and East Europe, Central Asia, Africa, North and Central America, South America, the Middle East and the Far East and Pacific region. Historically, PM focused on its domestic and local Western European markets, but in recent years has expanded its sales and distribution efforts internationally. PM has six international sales and distribution offices located in several European countries as well as the Far East and Latin America.  

The market for knuckle boom cranes has been growing in recent years as the acceptability of the product has grown and its advantages have been accepted. Growth in North America, where the straight-mast boom truck crane has been the more dominant product, has been more rapid in recent years in combination with the overall improvement in the North American construction sector. PM’s share of the North American market has been historically low; however, we believe that this is an area of growth opportunity for the Company.

3


Aerial Work Platforms

Oil & Steel aerial platforms are self-propelled or truck mounted and places an operator in a basket in the air in order to perform maintenance, repairs or similar activities. The equipment is used in a variety of applications including utilities, sign work and industrial maintenance and is often sold to rental operations.

Oil & Steel serves a number of geographies in North America, Western and Eastern Europe but also the Near and Far East and sells through dealers as well as its own sales and distribution offices. In North America, the product sold under the Manitex brand and sold through its distribution network. The market generally follows the domestic economic cycle for any particular country. Consequently, the market has shown a positive trend in the past several years.

Industrial Cranes

Badger sells specialized industrial cranes through a network of dealers. The Badger product line includes specialized 15- and 30-ton industrial cranes (which can be used as dedicated rail cranes by the railroad industry) as well as a 10-ton carry deck crane which are all sold under both the Badger and Manitex names.  Additionally, Badger sells lattice cranes with 20- to 30-ton lifting capacity marketed under the Little Giant trade name.  The Little Giant line has five lattice boom models, three of which are dedicated rail cranes. In addition, Badger also sells a 30-ton truck crane and a 25-ton crawler crane under the Little Giant name.  Badger also has the capability to manufacture certain of our lower capacity boom trucks and provides expanded boom truck manufacturing capacity when needed.

The products are used by railroads, refineries, states, municipalities, and for general construction.  The Company believes it has an advantage over its competitors in selling to the railroad industry as it is the only crane manufacturer that has integrated the installation of rail gear into its production process. Competitors send their cranes to a third-party to have rail gear added which both increases cost and delays deliveries.

As of January 2022, the Company had discontinued the industrial crane product line. See Note 23 for further information.

Valla Cranes

Valla product line of industrial cranes is a full range of precision pick and carry cranes from 2- to 44-tons, 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. The product is sold internationally through dealers and into the rental distribution channel.

Equipment Distribution

C&M is a distributor of the Company’s products. C&M Leasing rents equipment manufactured by the Company as well as a limited amount of equipment manufactured by third parties.  

Part Sales

As part of our operations, we supply repair and replacement parts for our products. The parts business margins are generally higher than our overall margins. Part sales as a percentage of revenues tend to increase when there is a down-turn in the industry. Part sales as a percentage of revenues are approximately 12% and 16% for the years ended December 31, 2021 and 2020, respectively.

Company Revenues by Sources

The sources of the Company’s revenues are summarized below:

 

 

 

2021

 

 

2020

 

Boom trucks, knuckle boom & truck cranes

 

 

61

%

 

 

57

%

Aerial platforms

 

 

13

%

 

 

12

%

Part sales

 

 

12

%

 

 

15

%

Other equipment

 

 

11

%

 

 

10

%

Services

 

 

3

%

 

 

2

%

Rough terrain cranes

 

 

0

%

 

 

4

%

Net Revenue

 

 

100

%

 

 

100

%

 

4


 

In 2021 and 2020, no customer accounted for 10% or more of the Company’s revenue.

Raw Materials

The Company purchases a variety of components used in the production of its products.  The Company purchases steel and a variety of machined parts, components and subassemblies including weldments, winches, cylinders, frames, rims, axles, wheels, tires, suspensions, cables, booms and cabs, as well as engines, transmissions and cabs.  Additionally, Manitex and PM mount their cranes on commercial truck chassis, which are either purchased by the Company or supplied by the customer. Lead times for these materials (including chassis) historically varied from several weeks to many months. The Company is vulnerable to a supply interruption in instances when only one supplier has been qualified. Identifying and qualifying alternative suppliers can be very time consuming, and in some cases, could take longer than a year.  The Company has been working on qualifying secondary sources of some products to assure supply consistency and to reduce costs. The degree to which our supply base can respond to changes in market demand directly affects our ability to increase production and the Company attempts to maintain some additional inventory in order to react to unexpected increases in demand.

Supply chain issues have impacted the Company and we expect this to continue to cause disruption in 2022. The disruptions continue to put a strain on our team and resources, specifically on our electronic components and truck chassis. Future supply chain issues that might impact the Company will in part depend on how fast the rate of growth is for a product. Strong general economic growth could put us in competition for parts with other industries. Additionally, events or circumstances at a particular supplier could impact the availability of a necessary component.

Patents and Trademarks

The Company protects its trade names and trademarks through registration. Its technology consists of bill of materials, drawings, plans, vendor sources and specifications and although the Company’s technology has considerable value, it does not generally have patent protection. The Company has (on rare occasions) filed for patent protection on a specific feature. In the future, the Company will consider seeking patent protection on any new design features believed to present a significant future benefit.

The Company owns and uses several trademarks relating to its brands that have significant value and are instrumental to the Company’s ability to market its products. The Company’s most significant trademark is “Manitex” (presently registered with the United States Patent and Trademark Office until 2027).  Badger Equipment Company previously marketed its products under the “Little Giant” and Badger trade names which were discontinued during January 2022. Valla markets its products under the “Valla” tradename. PM sells its products using the trademark “PM” and PM subsidiary, PM Oil & Steel S.p.A. sells its products using the “OIL & STEEL” trademark.  The Manitex, Badger, Valla, Little Giant, PM and OIL & STEEL trademarks and trade names are important to the marketing and operation of the Company’s business as a significant number of our products are sold under those names.  PM has three patents. One is registered with the Italian Patents and Trademarks Office until 2028.  PM has two additional patents registered with OHIM that are in force until 2031 and 2034, respectively.

Seasonality

Traditionally, the Company’s peak selling periods for cranes are the second and fourth quarters of a calendar year. A significant portion of cranes sold over the last several years have been deployed in specialized industries or applications, such as residential and commercial construction. Sales in these markets are subject to significant fluctuations which correlate more with general economic conditions and the prices of commodities and generally are not of a seasonal nature.

Sales of cranes from the Equipment Distribution division mirror the seasonality of the sales of the overall Company. However, the sale of parts is much less seasonal given the geographic breadth of the customer base. Crane repairs are performed by the Equipment Distribution division throughout the year but are somewhat affected by the slowdown in construction activity during the typically harsh winters in the Midwestern United States.

Competition

Lifting Equipment

The market for the Company’s boom trucks, knuckle boom cranes, and industrial cranes is highly competitive. The Company competes based on product design, quality of products and services, product performance, maintenance costs and price. Several competitors have greater financial, marketing, manufacturing and distribution resources than we do. The Company believes that it effectively competes with its competitors.

5


The Company’s boom cranes compete with cranes manufactured by National Crane, Custom Truck One Source, Elliott and Altec and Weldco Beales. The Company’s knuckle boom cranes compete with Palfinger, Fassi, Effer and HIAB. The Company competes primarily with Broderson in selling rough terrain and industrial cranes.  

Equipment Distribution

The Equipment Distribution division’s primary business is facilitation of sale of products manufactured by the Company. As such, it faces the same competition described above for products manufactured by the Company.  Additionally, the Equipment Distribution division has a dealership arrangement with Terex Corporation and must compete against dealers of other crane manufacturers.  Locally, the Equipment Distribution division competes against Runnion Equipment (dealer for National Crane), Power Equipment Leasing (dealer for Elliott) and Guiffre Cranes (dealer for Manitex).

While no geographic limitations exist regarding the Equipment Distribution business’s ability to sell cranes internationally, the lack of any barriers to entry and the heavy use of the Internet make this a highly active and competitive market in which to distribute cranes.

Competition for our Equipment Distribution repair business is even more intense since it is limited geographically due to the necessity of having physical access to the cranes. Most of the above referenced companies also compete in this aspect of the business, as do other types of crane and equipment dealers from nearby areas such as Indiana or Wisconsin.

Equipment Distribution parts sales are global in scope and benefit greatly from the Internet and the tenure and expertise of our employees. While competition in this area is extensive, we believe that the breadth of the products offered and our long history in this part of the business is a competitive advantage.

Our Equipment Distribution business competes based on the design, quality and performance of the products it distributes, price and the supporting repair and part services that it provides. Several competitors have greater financial, marketing and distribution resources than we do. The Company, however, believes that it effectively competes with its competitors.

Backlog

The backlog at December 31, 2021 was approximately $189 million, compared to a backlog of approximately $68 million at December 31, 2020.  The December 31, 2021 backlog has increased by $76 million since September 30, 2021 when it was approximately $113 million. The Company expects to ship a majority of its products to fulfill its existing backlog within the next twelve months.

Revenue Recognition

The information regarding revenue, and the basis for attributing revenue from external customers to individual countries, is found in Note 4 “Revenue Recognition” to our consolidated financial statements, which is hereby incorporated by reference into this Part I, Item 1.

Employees

As of December 31, 2021, the Company had 514 full-time employees and 12 part-time employees. The Company has not experienced any work stoppages and anticipates continued good employee relations. Eighteen (18) of our employees are covered by collective bargaining agreements. Fourteen (14) of our employees at our Badger subsidiary are represented by International Union, United Automobile, Aerospace, and Agricultural Implement Workers of America, (“UAW”) and its local No. 316. The current union contract expires on January 21, 2023. Four (4) employees are currently represented by Automobile Mechanics’ Local 701. The union contract expires on September 30, 2023. The employees represented by the Automobile Mechanics’ Local 701 are mechanics that work in our Equipment Distribution business.  Several of our Equipment Distribution customers in the Chicago metropolitan area mandate usage of union mechanics for any service/repair jobs.

Governmental Regulation

The Company is subject to various governmental regulations, such as environmental regulations, employment and health regulations, and safety regulations. We have various internal controls and procedures designed to maintain compliance with these regulations. The cost of compliance programs is not material but is subject to additions to or changes in federal, state or local legislation or changes in regulatory implementation or interpretation of government regulations.

Available Information

The Company makes available free of charge our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished as required by Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), through our Internet Website (www.manitexinternational.com) as soon as is reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (the “SEC”). The SEC also maintains a website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. Information contained in or incorporated into our Internet Website or the SEC’s website is not incorporated by reference herein.

6


ITEM 1A.

RISK FACTORS

The reader should carefully consider the following risks, together with the cautionary statement under the caption “Forward-Looking Statements” and the other information included in this report. The risks described below represent all of the material risks currently known to us; however, they are not the only ones the Company faces. Additional risks that are currently unknown to the Company or that the Company currently considers to be immaterial may also impair its business or adversely affect the Company’s financial condition or results of operations. If any of the following risks actually occur, the Company’s business, financial condition or results of operation could be adversely affected.

 

Risks Relating to the Company’s Business and Operations

A future substantial deterioration in economic conditions, especially in the United States and Europe, would adversely impact the Company’s results of operations and cash flows.

Economic conditions affect the Company’s sales volumes, pricing levels and overall profitability. Demand for many of the Company’s products depends on end-use markets. Challenging economic conditions may reduce demand for our products and may also impair the ability of customers to pay for products they have purchased. As a result, the Company’s reserves for doubtful accounts and write-offs for accounts receivable may increase. Significant deterioration in economic conditions, especially in the United States and Europe, has had and may again have negative effects on the Company’s results of operations and cash flows.

A significant deterioration in economic conditions has caused and may again cause deterioration in the credit quality of our customers and the estimated residual value of our equipment. This could further negatively impact the ability of our customers to obtain the resources they need to make purchases of our equipment. Reduced credit availability will diminish our customers’ ability to invest in their businesses, refinance maturing debt obligations, and meet ongoing working capital needs. If customers do not have sufficient access to credit, demand for the Company’s products will likely decline. Reduced access to credit and the capital markets will also negatively affect the Company’s ability to invest in strategic growth initiatives such as acquisitions.

 

The COVID-19 pandemic has had, and is expected to continue to have, a negative impact on our business, financial condition, cash flows, results of operations and supply chain.

 

The COVID-19 pandemic resulted in national, state and local government authorities implementing numerous measures to try to contain the virus, such as travel bans and restrictions, border closings, restrictions on public gatherings, quarantining of people who may have been exposed to the virus, shelter-in-place restrictions, and limitations or shutdowns of business operations. These measures, some of which are continuing or being re-implemented in light of new variants of the virus, have impacted and may further impact our workforce and operations, the operations of our customers, and those of our dealers and suppliers. We have significant operations worldwide, including in the United States, Italy and Romania and each of these countries have been affected by the pandemic and have taken measures to try to contain it, resulting in disruptions at some of our manufacturing facilities and support operations. There is still uncertainty regarding the full impact and duration of such measures and potential future measures, and restrictions on our access to our facilities or on our support operations or workforce, or similar limitations for our customers, dealers and suppliers.

 

The COVID-19 pandemic has disrupted our supply chain and resulted in higher material costs as well as delays in scheduled shipments of our products. The COVID-19 pandemic has had, and is expected to continue to have, a negative impact on our business, financial condition, cash flows and results of operations, although the full extent is still uncertain. As the pandemic continues to evolve and new variants continue to emerge, the extent of the impact on our business, financial condition, cash flows and results of operations will depend on future developments, including, but not limited to, the continued duration of the pandemic, government actions to contain the virus and/or treat its impact, restrictions on travel, the duration, timing and severity of the impact on customer demand, and how quickly and to what extent normal economic and operating conditions can resume, all of which are still uncertain and cannot be predicted.

Our revenues and profitability are impacted by government spending and fluctuations in the construction industry.

Many of the Company’s customers depend substantially on government spending, including highway construction and maintenance and other infrastructure projects by U.S. federal and state governments as well as foreign governments. Any decrease or delay in government funding of highway construction and maintenance and other infrastructure projects could cause the Company’s revenues and profits to decrease.

7


The Company’s level of indebtedness reduces our financial flexibility and meeting financial covenants required by our debt agreements could impede our ability to successfully operate.

As of December 31, 2021, the Company’s total debt was $45.4 million, which includes notes payable and finance lease obligations.

Our level of debt affects our operations in several important ways, including the following:

 

a significant portion of our cash flow from operations is likely to be dedicated to the payment of the principal and interest on our indebtedness;

 

our ability to obtain additional financing in the future for working capital, capital expenditures or acquisitions may be limited;

 

we may be unable to refinance our indebtedness on terms acceptable to us or at all;

 

our cash flow may be insufficient to meet our required principal and interest payments; and

 

we may be unable to obtain additional loans as a result of covenants and agreements with existing debt holders.

The Company’s existing debt agreements contain a number of significant covenants which may limit our ability to, among other things, borrow additional money, make capital expenditures, pay dividends, dispose of assets and acquire new businesses. These covenants also require the Company to meet certain financial and non-financial tests. A default or other event of non-compliance, if not waived or otherwise permitted by the Company’s lenders, could result in acceleration of the Company’s debt and possibly bankruptcy.

The Company may be unable to negotiate extensions of our credit agreements and to obtain additional debt or equity financing when needed.

Our future capital requirements will depend on the amount of cash generated or required by our current operations, as well as additional funds which may be needed to finance future acquisitions. Future cash needs are subject to substantial uncertainty.

Adequate funds may not be available when needed, and if we do not receive sufficient capital, we may be required to alter or reduce the scope of our operations or to forego making future acquisitions. If we raise additional funds by issuing equity securities, existing stockholders may be diluted.

If we fail to maintain an effective system of internal controls, we may not be able to accurately and timely report our financial results, which could negatively impact our business, investor confidence, and the price of our common stock.

As previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020, we previously did not maintain an effective control environment over information technology and general controls, based on the criteria established in the COSO framework, to enable identification and mitigation of risks of material accounting errors. We completed remediation measures related to the material weaknesses and concluded that our internal control over financial reporting was effective as of December 31, 2021. However, completion of remediation does not provide assurance that our remediation or other controls will continue to operate properly or remain adequate. Accordingly, if we are unable to maintain effective internal control over financial reporting or disclosure controls and procedures in the future, our ability to record, process, and report financial information accurately and to prepare financial statements within required time periods could be adversely affected, which could subject us to litigation, investigations, or penalties; negatively affect our liquidity, our access to capital markets, our ability to maintain compliance with covenants, any of which may require substantial management resources or cause our stock price to decline.

The Company’s business is affected by the cyclical nature of its markets.

A substantial portion of our revenues are attributed to a limited number of customers which may decrease or cease purchasing any time, since the Company’s products depend upon the general economic conditions of the markets in which the Company competes. The Company’s sales depend in part upon its customers’ replacement or repair cycles. Adverse economic conditions, including a decrease in commodity prices, may cause customers to forego or postpone new purchases in favor of repairing existing machinery. Downward economic cycles may result in reductions in sales of the Company’s products, which may reduce the Company’s profits.

8


The Company’s business is sensitive to increases in interest rates.

The Company is exposed to interest rate volatility with regard to future issuances of fixed rate debt and existing issuances of variable rate debt. If interest rates rise, it becomes costlier for the Company’s customers to borrow money to pay for the equipment they buy from the Company. Should the United States Federal Reserve Board decide to increase rates, as it has indicated it intends to do in March 2022, prospects for business investment and manufacturing could deteriorate sufficiently and impact sales opportunities.

Our increasingly international operations expose us to additional risks and challenges associated with conducting business internationally.

The international expansion of our business may expose us to risks inherent in conducting foreign operations. These risks include:

 

challenges associated with managing geographically diverse operations, which require an effective organizational structure and appropriate business processes, procedures and controls;

 

the increased cost of doing business in foreign jurisdictions, including compliance with international and U.S. laws and regulations that apply to our international operations;

 

currency exchange and interest rate fluctuations and the resulting effect on our revenue and expenses, and the cost and risk of entering into hedging transactions, if we continue to do so in the future;

 

cash requirements to finance business growth;

 

potentially adverse tax consequences;

 

complexities and difficulties in obtaining protection and enforcing our intellectual property;

 

compliance with additional regulations and government authorities in a highly regulated business;

 

general economic and political conditions internationally; and

 

public health concerns, including the ongoing COVID-19 pandemic.

Additionally, changes to the United States’ participation in, withdrawal from, renegotiation of certain international trade agreements or other major trade related issues including the non-renewal of expiring favorable tariffs granted to developing countries, tariff quotas, and retaliatory tariffs, trade sanctions, new or onerous trade restrictions, embargoes and other stringent government controls could have a material adverse effect on our business, results of operations and financial condition.

The reporting currency for our consolidated financial statements is the U.S. Dollar. Certain of our assets, liabilities, expenses, revenues and earnings are denominated in other countries’ currencies, including the Euro, Chilean Peso, and Argentinean Peso. Those assets, liabilities, expenses, revenues and earnings are translated into U.S. Dollars at the applicable exchange rates to prepare our consolidated financial statements. Therefore, increases or decreases in exchange rates between the U.S. Dollar and those other currencies affect the value of those items as reflected in our consolidated financial statements, even if their value remains unchanged in their original currency. Such fluctuations in foreign currency rates relative to the U.S. Dollar caused a loss of approximately $0.5 million on our actual results.

The risks that the Company faces in its international operations may continue to intensify if the Company further develops and expands its international operations.

The Company may face limitations on its ability to integrate acquired businesses and manage anticipated growth and may be unable to effectively respond to technological change and implementing new systems.

The successful integration of new business depends on the Company’s ability to manage these new businesses and cut excess costs. The Company cannot ensure that these acquired companies will operate profitably or that the intended beneficial effect from these acquisitions will be realized.

If the Company fails to manage growth, the Company’s financial results and business prospects may be harmed. To manage the Company’s growth and to execute its business plan efficiently, the Company will need to institute, maintain and continue to improve operational, financial and management controls, as well as reporting systems and procedures. The Company also must effectively expand, train and manage its employee base. The Company may not be successful in any of these endeavors.

9


The markets served by the Company are not historically characterized by rapidly changing technology. Nevertheless, the Company’s future success will depend in part upon the Company’s ability to enhance its current products and to develop and introduce new products. If the Company fails to anticipate or respond adequately to competitors’ product improvements and new production introductions, future results of operations and financial condition will be negatively affected.

Some of our customers rely on financing with third parties to purchase our products.

We rely on sales of our products to generate cash from operations. Significant portions of our sales are financed by third-party finance companies on behalf of our customers. The availability and terms of financing by third parties are affected by general economic conditions, credit worthiness of our customers and estimated residual value of our equipment. Deterioration in credit quality of our customers or estimated residual value of our equipment, increases in interest rates or changes in the terms of third-party financing agreements could negatively impact the ability or willingness of our customers to obtain resources they need to purchase our equipment. There can be no assurance third-party finance companies will continue to extend credit to our customers.

The Company operates in a highly competitive industry and the Company is particularly subject to the risks of such competition.

The Company competes in a highly competitive industry and the competition which the Company encounters has an effect on its product prices, market share, revenues and profitability. Because certain competitors have substantially greater financial, production, research and development resources and substantially greater name recognition than the Company, the Company is particularly subject to the risks inherent in competing with them and may be put at a competitive disadvantage. To compete successfully, the Company’s products must excel in terms of quality, price, product line, ease of use, safety and comfort, and the Company must also provide excellent customer service. The greater financial resources of the Company’s competitors may put it at a competitive disadvantage. If competition in the Company’s industry intensifies or if the Company’s current competitors enhance their products or lower their prices for competing products, the Company may lose sales or be required to lower its prices. This may reduce revenue from the Company’s products and services, lower its gross margins or cause the Company to lose market share. The Company may not be able to differentiate its products from those of competitors, successfully develop or introduce less costly products, offer better performance than competitors or offer purchasers of our products payment and other commercial terms as favorable as those offered by competitors.

The Company is dependent upon third-party suppliers, making us vulnerable to supply shortages.

The Company obtains materials and manufactured components from third-party suppliers. Any delay in the ability of the Company’s suppliers to provide the Company with necessary materials and components may affect the Company’s capabilities at a number of its manufacturing locations, or may require the Company to seek alternative supply sources. Delays in obtaining supplies may result from a number of factors affecting the Company’s suppliers including capacity constraints, labor disputes, the impaired financial condition of a particular supplier, suppliers’ allocations to other purchasers, difficulties in obtaining raw materials, shipping delays or disruptions, public health emergencies, weather emergencies or acts of war or terrorism. Any delay in receiving supplies could impair the Company’s ability to deliver products to its customers and, accordingly, could have a material adverse effect on business, results of operations and financial condition.

In addition, the Company purchases materials and services from suppliers on extended terms based on the Company’s overall credit rating. Negative changes in the Company’s credit rating may impact suppliers’ willingness to extend terms and increase the cash requirements of the business.

Price increases in materials could reduce our profitability.

We use large amounts of steel and other items in the manufacture of our products. In the past, market prices of some of our key raw materials increased significantly. If we experience future significant increases in material costs, including steel, we may not be able to reduce product cost in other areas or pass raw material price increases on to our customers and our margins could be adversely affected.

The Company faces product liability claims and other liabilities due to the nature of its business.

In the Company’s lines of business numerous suits have been filed alleging damages for accidents that have occurred during the use or operation of the Company’s products. The Company is self-insured, up to certain limits, for these product liability exposures, as well as for certain exposures related to general, workers’ compensation and automobile liability. Insurance coverage is obtained for catastrophic losses as well as those risks required to be insured by law or contract. Any material liabilities not covered by insurance could have an adverse effect on the Company’s financial condition.

10


The Company’s success depends upon the continued protection of its trademarks and the Company may be forced to incur substantial costs to maintain, defend, protect and enforce its intellectual property rights.

The Company’s registered and common law trademarks, as well as certain of the Company’s licensed trademarks, have significant value and are instrumental to the Company’s ability to market its products. The Company’s trademarks “Manitex”, “Badger”, “Valla”, “PM” and “O&S” are important to the Company’s business as the majority of the Company’s products are sold under those names. The Company has not registered all of its trademarks in the United States nor in the foreign countries where it does business. Third parties could assert claims against such intellectual property that the Company could be unable to successfully resolve. If the Company has to change the names of any of its products, it may experience a loss of goodwill associated with its brand names, customer confusion and a loss of sales.

In addition, international protection of the Company’s intellectual property may not be available in some foreign countries to the same extent permitted by the laws of the United States. The Company could also incur substantial costs to defend legal actions relating to use of its intellectual property, which could have a material adverse effect on the Company’s business, results of operations or financial condition.

The Company may be unable to access the capital markets to raise funds and provide liquidity when needed.

Our access to capital markets to raise funds through the sale of equity or debt securities is subject to various factors, including general economic and/or financial market conditions which are outside our control, as well as our historical and expected future financial performance and perceived credit worthiness. Significant changes in market liquidity conditions or our actual or perceived financial condition could impact access to funding and associated funding costs, which could reduce our earnings and cash flows.

Compliance with changing laws and regulations may increase our costs or reduce our business flexibility.

Our operations are subject to a number of potential risks. Such risks principally include:

 

trade protection measures and currency exchange controls;

 

labor unrest;

 

global and regional economic conditions;

 

political instability;

 

terrorist activities and the U.S. and international response thereto;

 

restrictions on the transfer of funds into or out of a country;

 

export duties and quotas;

 

domestic and foreign customs and tariffs;

 

current and changing regulatory environments;

 

difficulties protecting our intellectual property;

 

transportation delays and interruptions;

 

difficulty in obtaining distribution support;

 

natural disasters; and

 

current and changing tax laws.

The Company must comply with all applicable laws, including the Foreign Corrupt Practices Act (“FCPA”) and other laws that prohibit engaging in corruption for the purpose of obtaining or retaining business. These anti-corruption laws prohibit companies and their intermediaries from making improper payments or providing anything of value to improperly influence government officials or private individuals for the purpose of obtaining or retaining a business advantage regardless of whether those practices are legal or culturally expected in a particular jurisdiction. Our global activities and distribution model are subject to risk of corruption by our employees and in addition, our sales agents, distributors, dealers and other third parties that transact Manitex business particularly because these parties are generally not subject to our control.

The Company’s revenues are attributed to limited number of customers which may decrease or cease purchasing any time.

The Company’s revenues are attributed to a limited number of customers. We generally do not have long-term supply agreements with our customers. Even if a multi-year contract exists, the customer is not required to commit to minimum purchases and can cease

11


purchasing at any time. If we were to lose either a significant customer or several smaller customers our operating results and cash flows would be adversely impacted.

The Company depends on its information technology systems. If its information technology systems do not perform in a satisfactory manner or if the security of them is breached, it could be disruptive and or adversely affect the operations and results of operations of the Company.

The Company depends on its information technology systems, some of which are managed by third parties, to process, transmit and store electronic information (including sensitive data such as confidential business information and personally identifiable data relating to employees, customers and other business partners), and to manage or support a variety of critical business processes and activities. If our information technology systems do not perform in a satisfactory manner, it could be disruptive and or adversely affect the operations and results of operations of the Company, including the ability of the Company to report accurate and timely financial results.  

Furthermore, our information technology systems may be damaged, disrupted or shut down due to attacks by computer hackers, computer viruses, employee error or malfeasance, power outages, hardware failures, telecommunication or utility failures, catastrophes or other unforeseen events, and in any such circumstances our system redundancy and other disaster recovery planning may be ineffective or inadequate. A failure of or breach in information technology security could expose us and our customers, distributors and suppliers to risks of misuse of information or systems, the compromise of confidential information, manipulation and destruction of data, defective products, production downtimes and operations disruptions. In addition, such breaches in security could result in litigation, regulatory action and potential liability, as well as the costs and operational consequences of implementing further data protection measures, each of which could have a material adverse effect on our business or results of operations.

The Company relies on key management.

The Company relies on the management and leadership skills of Steve Filipov, its Chief Executive Officer. Mr. Filipov entered into an employment agreement commencing on September 1, 2019. Under the employment agreement, Mr. Filipov’s employment term automatically extends for successive periods of three years unless either the Company or Mr. Filipov gives written notice to the other party of non-renewal at least 90 days prior to the end of the then current employment term.  The loss of his services could have a significant and negative impact on the Company’s business. In addition, the Company relies on the management and leadership skills of other senior executives. The Company could be harmed by the loss of key personnel in the future.

The Company may be required to record goodwill, other intangibles and fixed assets impairment charges on all or a significant amount of the goodwill, other intangibles and fixed assets on its Consolidated Balance Sheets.

As of December 31, 2021, the Company recognized approximately $2.1 million of impairment charges in goodwill, other intangibles and fixed assets. The Company tests goodwill and other intangibles for impairment at least annually. If the carrying value of goodwill or other intangibles exceeds the implied fair value of the goodwill or intangibles, an impairment charge is recorded for the excess, as occurred in 2021. An impairment of a significant portion of goodwill could materially negatively affect the Company’s results of operations.

 

 

Risks Relating to Our Common Stock

The Company’s principal shareholders, executive officers and directors hold a significant percentage of the Company’s common stock, and these shareholders may take actions that may be adverse to your interests.

The Company’s principal shareholders, executive officers and directors beneficially own, in the aggregate, approximately 39% of the Company’s common stock as of January 25, 2022. As a result, these shareholders, acting together, will be able to significantly influence all matters requiring shareholder approval, including the election and removal of directors and approval of significant corporate transactions such as mergers, consolidations, sales and purchases of assets. They also could dictate the management of the Company’s business and affairs. This concentration of ownership could have the effect of delaying, deferring or preventing a change in control or impeding a merger or consolidation, takeover or other business combination, even if smaller shareholders support such a transaction, which could cause the market price of our common stock to fall or prevent smaller shareholders from receiving a premium in such a transaction.

12


Provisions of the Michigan Business Corporation Act and the Company’s Articles of Incorporation, Amended and Restated Bylaws, and Rights Agreement may discourage or prevent a takeover of the Company.

Provisions of the Company’s Articles of Incorporation and Amended and Restated Bylaws, Michigan law, and the Rights Agreement, as amended, between the Company and Broadridge Corporate Issuer Solution, Inc., as rights agent, could make it more difficult for a third-party to acquire the Company, even if doing so would be perceived to be beneficial to you. These provisions could discourage potential takeover attempts and could adversely affect the market price of the Company’s shares. Because of these provisions, you might not be able to receive a premium on your investment. These provisions:

 

authorize the Company’s Board of Directors, with approval by a majority of its independent directors but without requiring shareholder consent, to issue shares of “blank check” preferred stock that could be issued by the Company’s Board of Directors to significantly dilute the ownership percentage of existing shareholders and prevent a takeover attempt;

 

limit our shareholders’ ability to call a special meeting of the Company’s shareholders;

 

limit the Company’s shareholders’ ability to amend, alter or repeal the Company bylaws; and

 

restrict business combinations with certain shareholders.

The provisions described above could prevent, delay or defer a change in control of the Company or its management.

 

General Risk Factors

The trading price of our common stock is highly volatile.

The trading price of the Company’s common stock is highly volatile and could be subject to wide fluctuations in price in response to various factors, many of which are beyond the Company’s control, including:

 

the degree to which the Company successfully implements its business strategy;

 

actual or anticipated variations in quarterly or annual operating results;

 

changes in recommendations by the investment community or in their estimates of the Company’s revenues or operating results;

 

failure to meet expectations of industry analysts;

 

speculation in the press or investment community;

 

strategic actions by the Company’s competitors;

 

announcements of technological innovations or new products by the Company or its competitors;

 

changes in business conditions affecting the Company and its customers; and

 

potential to be delisted.

In the past, following periods of volatility in the market price of a company’s securities, class action litigation has often been brought against companies. If a securities class action suit is filed against us, whether or not meritorious, we would incur substantial legal fees and our management’s attention and resources would be diverted from operating our business in order to respond to the litigation.

The cost of compliance with Section 404 of the Sarbanes-Oxley Act of 2002 may negatively impact the Company’s income.

The Company is subject to the rules and regulations of the SEC, including those rules and regulations mandated by the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act requires all reporting companies to include in their annual report a statement of management’s responsibilities for establishing and maintaining adequate internal control over financial reporting, together with an assessment of the effectiveness of those internal controls. Section 404 further requires that the reporting company’s independent auditors attest to, and report on, this management assessment. The Company expects its expenses related to its internal and external auditors to be significant.

ITEM 1B.

UNRESOLVED STAFF COMMENTS

None

13


ITEM 2.

PROPERTIES

The Company’s executive offices are located at 9725 Industrial Drive, Bridgeview, Illinois 60455. The Company has six principal operating plants. The Company builds boom trucks and sign cranes in its 188,000 sq. ft. leased facility located in Georgetown, Texas. The Company manufactures its knuckle boom cranes in two owned facilities, the 542,000 sq. ft. plant located in S. Cesario sul Panaro, Italy and the 213,000 sq. ft. facility located in Arad, Romania.  The Romania facility also produces sub-assemblies that are incorporated into PM products manufactured in Italy.  The Company manufactures its precision pick and carry cranes in a 58,000 sq. ft. facility located in Piacenza, Italy. The Company had previously built specialized rough terrain cranes and material handling product in its 170,000 sq. ft. owned facility located in Winona, Minnesota through January 2022.

The Company operates its crane distribution business from a 39,000 sq. ft. leased facility located in Bridgeview, Illinois.  The Bridgeview facility also houses our corporate offices.

The Company believes that its facilities are suitable for its business and will be adequate to meet our current needs.

ITEM 3.

The information set forth in Note 21 (Legal Proceedings and Other Contingencies) to the accompanying Condensed Consolidated Financial Statements included in Part II.  Item 8 “Financial Statements” on Form 10-K is incorporated herein by reference.

ITEM 4.

MINE SAFETY DISCLOSURES

Not applicable.

14


PART II

ITEM 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market for the Company’s Common Stock

The Company’s common stock is listed on The NASDAQ Capital Market trading under the symbol MNTX.

 

Number of Common Stockholders

As of February 3, 2022, there were 162 record holders of the Company’s common stock.

Dividends

During the fiscal years ended December 31, 2021 and 2020, the Company did not declare or pay any cash dividends on its common stock and the Company does not intend to pay any cash dividends in the foreseeable future. Furthermore, the terms of our credit facility do not allow us to declare or pay dividends without the prior written consent of the lender.

Issuer Purchases of Equity Securities

 

The following table provides information about the Company’s purchases of equity securities during the year ended December 31, 2021:

 

Period

 

Total

number

of shares

purchased (1)

 

 

Average

price

paid per

share

 

 

Total number

of shares

purchased as

part of publicly

announced

plans or programs

 

 

Maximum number

or approximate

dollar value of

shares that may

yet be purchased

under the

plans or programs

 

January 1— January 31, 2021

 

 

 

 

$

 

 

 

 

 

 

 

February 1—February 28, 2021

 

 

 

 

 

 

 

 

 

 

 

 

March 1—March 31, 2021

 

 

6,183

 

 

 

7.84

 

 

 

 

 

 

 

April 1—April 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

May 1—May 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

June 1—June 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

July 1—July 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

August 1—August 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

September 1—September 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

October 1 through October 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

November 1 through November 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

December 1 through December 31, 2021

 

 

1,124

 

 

 

6.99

 

 

 

 

 

 

 

Total

 

 

7,307

 

 

$

7.71

 

 

 

 

 

 

 

 

(1)

The Company purchased and cancelled 7,307 shares of its common stock. The shares were purchased from employees throughout the year at an average market closing price of $7.71. The employees used the proceeds from the sale of shares to satisfy their withholding tax obligations that arose when restricted shares vested on that date.

ITEM 6.

[RESERVED]

15


 

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Recent Developments

Impact of COVID-19

During 2020, the COVID-19 pandemic significantly impacted demand for the Company’s products. While these impacts subsided in 2021, the Company experienced, and is still experiencing, supply chain and logistic constraints that negatively impacted its ability to manufacture and ship products.

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 Report.

 

When reading this section of this Annual Report on Form 10-K, it is important that you also read the financial statements and related notes thereto. This Annual Report on Form 10-K and certain information incorporated herein by reference contain forward-looking statements within the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. See “Forward-Looking Statements”.  

 

The following table sets forth certain financial data for the years ended December 31, 2021, and 2020:

Results of Consolidated Operations

MANITEX INTERNATIONAL, INC.

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Years Ended December 31,

 

 

 

 

 

 

 

 

 

 

 

2021

 

 

2020

 

 

$ Change

 

 

% Change

 

Net revenues

 

$

211,539

 

 

$

167,498

 

 

$

44,041

 

 

 

26.29

%

Cost of sales

 

 

175,377

 

 

 

136,632

 

 

 

38,745

 

 

 

28.36

 

Cost of sales - inventory write-down

 

 

3,226

 

 

 

 

 

 

3,226

 

 

 

(100.00

)

Gross profit

 

 

32,936

 

 

 

30,866

 

 

 

2,070

 

 

 

6.71

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development costs

 

 

3,332

 

 

 

3,227

 

 

 

105

 

 

 

3.26

 

Selling, general and administrative expenses

 

 

31,948

 

 

 

28,743

 

 

 

3,205

 

 

 

11.15

 

Impairment of intangibles and fixed assets

 

 

2,078

 

 

 

6,722

 

 

 

(4,644

)

 

 

(69.09

)

Total operating expenses

 

 

37,358

 

 

 

38,692

 

 

 

(1,336

)

 

 

(3.45

)

Operating income (loss)

 

 

(4,422

)

 

 

(7,826

)

 

 

3,406

 

 

 

(43.52

)

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(2,084

)

 

 

(3,595

)

 

 

1,511

 

 

 

(42.03

)

Interest income

 

 

43

 

 

 

97

 

 

 

(54

)

 

 

(55.85

)

Gain on extinguishment of debt

 

 

 

 

 

595

 

 

 

(595

)

 

 

(100.00

)

Gain on Paycheck Protection Program loan forgiveness

 

 

3,747

 

 

 

 

 

 

3,747

 

 

 

100.00

 

Foreign currency transaction loss

 

 

(543

)

 

 

(813

)

 

 

270

 

 

 

(33.19

)

Other income (expense)

 

 

(97

)

 

 

(503

)

 

 

406

 

 

 

(80.73

)

Total other income (expense)

 

 

1,066

 

 

 

(4,219

)

 

 

5,285

 

 

 

(125.27

)

Income (loss) before income taxes from

   continuing operations

 

 

(3,356

)

 

 

(12,045

)

 

 

8,689

 

 

 

(72.14

)

Income tax expense from continuing operations

 

 

1,217

 

 

 

674

 

 

 

543

 

 

 

80.46

 

Net income (loss) from continuing operations

 

 

(4,573

)

 

 

(12,719

)

 

 

8,146

 

 

 

(64.05

)

Discontinued operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from discontinued operations, net of income tax expense

 

 

 

 

 

(891

)

 

 

891

 

 

 

(100.00

)

Net income (loss)

 

$

(4,573

)

 

$

(13,610

)

 

$

9,037

 

 

 

(66.4

)%

16


 

 

Year Ended December 31, 2021 Continuing Operations Compared to Year Ended December 31, 2020

Net income (loss) from continuing operations

For the year ended December 31, 2021, net loss was $4.6 million, compared to net loss of $12.7 million for 2020.

Net revenue and gross profit —For the year ended December 31, 2021, net revenue and gross profit were $211.5 million and $32.9 million, respectively. Gross profit as a percent of net revenues was 15.6% for the year ended December 31, 2021.  For the year ended December 31, 2020, net revenue and gross profit were $167.5 million and $30.9 million, respectively. Gross profit as a percent of net revenues was 18.4% for the year ended December 31, 2020.  

For 2021, revenues increased $44.0 million or 26.3% from $167.5 million for 2020. The increase in revenues is primarily due to increases in sales of straight mast cranes from the Company’s United States subsidiaries and knuckle boom cranes and aerial platforms from the Company’s foreign subsidiaries, which was largely driven by the partial recovery in the global market from the COVID-19 pandemic and market demand.

Gross profit as a percent of net revenues was 15.6% for the year ended December 31, 2021, which decreased from 18.4% for the year ended December 31, 2020. The increase in gross profit is attributable to increases in revenues partially offset by the inventory write-down of $3.2 million at Badger, which was driven by the closure of the Badger facility and higher material costs due to steel surcharges. The decrease in gross profit percentage is primarily driven by the inventory write-down at Badger driven by the closure of the Badger facility, product mix as lower margin products were sold and material cost inflation due to disruptions in the supply chain.

Research and development —Research and development for the year ended December 31, 2021 was $3.3 million compared to $3.2 million for the comparable period in 2020. The Company’s research and development spending continues to reflect our commitment to develop and introduce new products that give the Company a competitive advantage.

Selling, general and administrative expense — Selling, general and administrative expense for the year ended December 31, 2021 was $31.9 million compared to $28.7 million for the comparable period in 2020, an increase of $3.2 million. The increases are primarily related to higher salaries and wages, professional fees, advertising expenses, and negative impacts in foreign exchange rates offset by lower trade show expenses. 

Impairment of intangibles and fixed assets – Impairment expense for the year ended December 31, 2021, was $2.1 million. Valla recorded a full impairment of goodwill and intangible assets of $1.7 million driven by net losses in the business. In addition, the restructuring plan that resulted in the closure of the Badger facility drove an impairment to its intangible and fixed assets of $0.4 million. Impairment expense for the year ended December 31, 2020, was $6.7 million. The impairment was driven by the COVID-19 pandemic which caused a decrease in the Company’s market capitalization causing a triggering event which resulted in a $6.6 million goodwill impairment charge and a $0.1 million tradename impairment charge during 2020.

Interest expense —Interest expense was $2.1 million and $3.6 million for the years ended December 31, 2021 and 2020, respectively.  The decrease in interest expense is due to lower debt driven by the pay-off of the convertible notes in December 2020 and principal payments made on the term debt in 2020.

 

Gain on extinguishment of debt— For 2020, the Company paid off a portion of the PM term loan and unsecured debt at a 15% discount to its face value which resulted in a gain of $0.6 million.

 

Gain on Paycheck Protection Program loan forgiveness —Gain on loan forgiveness was $3.7 million for the year ended December 31, 2021 due to the forgiveness of the Paycheck Protection Program loan by the SBA. The gain on loan forgiveness is not subject to U.S. taxation. This deductible permanent difference is offset by a change in the U.S. valuation allowance and therefore has no impact on the effective tax rate.

Foreign currency transaction loss —The Company had a foreign currency loss of $0.5 million and $0.8 million for the years ended December 31, 2021 and 2020, respectively. A substantial portion of the losses relate to changes in the Chilean Peso.

Other income (expense)— For the year ended December 31, 2021, the Company had other expenses of $0.1 million compared to other expenses of $0.5 million for the comparable period in 2020, a decrease of $0.4 million. The decreases are primarily related to a legal settlement and a facility closure recorded in 2020.

17


 

Discontinued operations— For the year ended December 31, 2020, the Company had a net loss from discontinued operations of $0.9 million related to the Sabre operations.

 

Income tax — On March 27, 2020, the “Coronavirus Aid, Relief and Economic Security (CARES) Act” was enacted. The CARES Act, among other things, includes provisions relating to net operating loss carrybacks, alternative minimum tax credit refunds, a modification to the net interest deduction limitations and a technical correction to tax depreciation methods for qualified improvement property. The CARES Act did not have a material impact on the Company’s consolidated financial statements.

 

The calculation of the overall income tax provision for the 12 months ended December 31, 2021 primarily consists of a domestic income tax provision resulting from state and local taxes, foreign income taxes, the change in unrecognized tax benefits and valuation allowance.

The Company’s effective tax rate from continuing operations was an income tax provision of 36.3% on a pretax loss of $3.4 million compared to an income tax provision of 5.6% on a pretax loss of $12.0 million from the prior year. The effective tax rate for the year ended December 31, 2021 differs from the U.S. statutory rate of 21% primarily due to the tax effects related to the mix of domestic and foreign earnings, nondeductible permanent differences, domestic and foreign losses for which the Company is not recognizing an income tax benefit, the change in unrecognized tax benefits and valuation allowance.

Liquidity and Capital Resources

The ultimate duration and severity of the COVID-19 pandemic remains highly uncertain at this time.  Accordingly, its impact on the global economy generally and our customers and suppliers specifically, as well as the ultimate potential negative financial impact to our results of operations and liquidity position cannot be reasonably estimated at this time, but have been and could continue to 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.

 

Cash, cash equivalents and restricted cash were $21.6 million and $17.4 million at December 31, 2021 and December 31, 2020, respectively. In addition, the Company has a U.S. revolving credit facility with a maturity date of July 20, 2023. At December 31, 2021 the Company had $11.2 million available to borrow under its U.S. revolving credit facility.

    

At December 31, 2021, the PM Group had established working capital facilities with five Italian, one Spanish and twelve South American banks. Under these facilities, the PM Group can borrow $21.4 million against orders, invoices and letters of credit. At December 31, 2021, the PM Group had availability under these facilities of $4.8 million. Future advances are dependent on having available collateral.

 

Cash Flows for 2021 and 2020

Operating Activities

For 2021, operating activities provided $7.5 million in cash compared to $12.0 million cash provided during 2020. Cash provided by working capital was $1.1 million for 2021 compared to $10.9 million for 2020. Working capital decreases were primarily from less cash generated from accounts receivable and higher inventory purchases. During April 2020, the Company was granted $3.7 million from a bank under the Paycheck Protection Program. During June 2021, the entire $3.7 million balance of the Company’s loan was forgiven.

Investing Activities

Cash used by investing activities was $1.1 million in 2021 which included $0.2 million investment in intangible assets. Cash provided from investing activities was $0.8 million in 2020 which included $1.6 million in proceeds from the sale of the Sabre business unit. Cash payments for plant, property and equipment were $0.9 million in 2021 compared to payments of $0.7 million in 2020.

Financing Activities

Cash flows from financing activities was an inflow of less than $0.1 million for the year ended December 31, 2021 which included an increase in working capital borrowings of $3.1 million and insurance premium financings of $1.1 million offset by the principal loan payments of $3.7 million and payments under finance leases of $0.3 million. Cash flows from financing activities was an outflow of

18


$20.8 million for the year ended December 31, 2020 which included the payoff of the convertible notes for $22.5 million, principal loan payments of $8.3 million, a reduction in working capital borrowings of $2.3 million and payments under finance leases of $0.5 million. These were partially offset by net borrowings under the revolving credit facility of $12.8 million.  

Contingencies

The Company is involved in various legal proceedings, including product liability and workers’ compensation matters which have arisen in the normal course of operations. Certain cases are at a preliminary stage, and it is not possible to estimate the amount or timing of any cost to the Company.

The Company does not believe that these contingencies in aggregate will have a material adverse effect on the Company.

Additionally, 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 in question. 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 to claims.

When it is probable that a loss has been incurred and 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 or the minimum amount of a range of estimates when it is not possible to estimate the amount within the range that is most likely to occur.

 

Off Balance Sheet Arrangements

CIBC Bank USA (“CIBC”) issued 2 standby letters of credit during 2021.  The first standby letter of credit was for $0.2 million in favor of an insurance carrier to secure obligations which may have arisen in connection with future deductible payments that may have incurred under the Company’s worker’s compensation insurance policies.  The second standby letter of credit was for less than $0.1 million in favor of a governmental agency to secure obligations which may have arisen in connection with worker’s compensation claims. As of December 31, 2021, the standby letters of credit were released.

 

See Note 21 – “Legal Proceedings and Other Contingencies.”

 

Critical Accounting Policies and Estimates

The preparation of our financial statements and related disclosures in conformity with generally accepted accounting principles in the United States of America (“GAAP”) requires management to make estimates and judgments that affect our reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an on-going basis, we evaluate our estimates and assumptions based upon historical experience and various other factors and circumstances. Management believes that our estimates and assumptions are reasonable under the circumstances; however, actual results may vary from these estimates and assumptions under different future circumstances. We have identified the following critical accounting policies that affect the more significant judgments and estimates used in the preparation of our consolidated financial statements.

 

Revenue Recognition. Revenue is recognized when obligations under the terms of the contract with our customer are satisfied; generally, this occurs with the transfer of control of our equipment, parts or installation services (typically completed within one day), which occurs at a point in time.  Equipment can be redirected during the manufacturing phase such that over time revenue recognition is not appropriate.  Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services.  Our contracts are non-cancellable, and returns are only allowed in limited instances. Value added tax and other taxes we collect concurrent with revenue-producing activities are excluded from revenue. The expected costs associated with our base warranties continue to be recognized as expense when the products are sold and do not constitute a separate performance obligation.  

For instances where equipment and installation services are sold together, the Company accounts for the equipment and installation services separately.  The consideration (including any discounts) is allocated between the equipment and installation services based on their stand-alone selling prices. The stand-alone selling prices are determined based on the prices at which the Company separately sells the equipment.

In some instances, the Company fulfills its obligations and bills the customer for the work performed but does not ship the goods until a later date. These arrangements are considered bill-and-hold transactions.  In order to recognize revenue on the bill-and-hold transactions, the Company ensures the customer has requested the arrangement, the product is identified separately as belonging to the customer, the product is ready for shipment to the customer in its current form, and the Company does not have the ability to direct the

19


product to a different customer.  A portion of the transaction price is not allocated to the custodial services due to the immaterial value assigned to that performance obligation.

Payment terms offered to customers are defined in contracts and purchase orders and do not include a significant financing component.  At times, the Company may offer discounts which are considered variable consideration however, the Company applies the constraint guidance when determining the transaction price to be allocated to the performance obligations.

 

Assets and Liabilities Classified as Held for Sale. The Company classifies assets (or disposal groups comprised of assets and liabilities) as held for sale when they are expected to be recovered primarily through sale rather than through continuing use. They are stated at the lower of carrying amount or fair value less costs to sell. Upon reclassification, we cease to depreciate or amortize non-current assets classified as held for sale. A discontinued operation is a component of our business that represents a separate major line of business or geographical area of operation that has been disposed of or is held for sale and a strategic shift that will have a major effect on our operations and financial results. Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. When an operation is classified as a discontinued operation, the comparative statement of comprehensive income (loss) is revised as if the operation had been discontinued from the start of the comparative period. We have elected to not revise consolidated statements of cash flows to split operating, investing and financing activities between continuing and discontinued operations, but instead provide certain required cash flow information. The Company will account for the contingent consideration as a gain in accordance with ASC 450. Under this approach, we will recognize the contingent consideration in earnings after the contingency is resolved. As part of the discontinued operations classification, we review the allocation of corporate expenses, interest expense and entity-wide goodwill and intangible assets. In addition, income taxes are calculated on a stand-alone basis for both continuing and discontinued operations.

 

Inventories and Related Reserve for Obsolete and Excess Inventory. Inventories are valued at the lower of cost or net realizable value and are reduced by a reserve for excess and obsolete inventories. The estimated reserve is based upon historical experiences and/or specific identification of excess or obsolete inventories.

Goodwill. Goodwill, representing the difference between the total purchase price and the fair value of assets (tangible and intangible) and liabilities at the date of acquisition, is reviewed for impairment annually, and more frequently as circumstances warrant, and written down only in the period in which the recorded value of such assets exceed their fair value. The Company does not amortize goodwill in accordance with Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC”) 350, “Intangibles—Goodwill and Other” (“ASC 350”). 

Under ASC 350, entities are provided with the option of first performing a qualitative assessment on none, some, or all of its reporting units to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If after completing a qualitative analysis, it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value a quantitative analysis is required.

Goodwill is tested for impairment at the reporting unit level, which is defined as an operating segment or a component of an operating segment that constitutes a business for which discrete financial information with similar economic characteristics is available and operating results are regularly reviewed by our chief operating decision maker.

The Company evaluates its consolidated goodwill using the quantitative two step approach. The first step used to identify potential impairment involves comparing the reporting unit’s estimated fair value to its carrying value, including goodwill. During the first step testing, the Company evaluates goodwill for impairment using a business valuation method, which is calculated as of a measurement date by determining the present value of debt-free, after-tax projected future cash flows, discounted at the weighted average cost of capital of a hypothetical third-party buyer. The market approach was also considered in evaluating the potential for impairment by calculating fair value based on multiples of earnings before interest, taxes, depreciation and amortization (“EBITDA”) of comparable, publicly traded companies. The Company also observed implied EBITDA multiples from relatively recent merger and acquisition activity in the industry, which was used to test the reasonableness of the results.

The second step of the process involves the calculation of an implied fair value of goodwill for each reporting unit for which step one indicated impairment. The implied fair value of goodwill is determined by measuring the excess of the estimated fair value of the reporting unit over the estimated fair values of the individual assets, liabilities and identifiable intangibles as if the reporting unit was being acquired in a business combination. If the implied fair value of goodwill exceeds the carrying value of goodwill assigned to the reporting unit, there is no impairment. If the carrying value of goodwill assigned to a reporting unit exceeds the implied fair value of the goodwill, an impairment charge is recorded for the excess. An impairment loss cannot exceed the carrying value of goodwill assigned to a reporting unit and the subsequent reversal of goodwill impairment losses is not permitted.

20


The determination of fair value requires the Company to make significant estimates and assumptions. These estimates and assumptions primarily include, but are not limited to, revenue growth and operating earnings projections, discount rates, terminal growth rates, and required capital expenditure projections. In the event the Company determines that goodwill is impaired in the future the Company would need to recognize a non-cash impairment charge. 

Impairment of Long-Lived Assets. The Company’s policy is to assess the realizability of its long-lived assets, including intangible assets, and to evaluate such assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets (or group of assets) may not be recoverable. Impairment is determined to exist if the estimated future undiscounted cash flows are less than the carrying value. Future cash flow projections include assumptions for future sales levels, the impact of cost reduction programs, and the level of working capital needed to support each business. The amount of any impairment then recognized would be calculated as the difference between the estimated fair value and the carrying value of the asset.

Litigation Claims. In determining whether liabilities should be recorded for pending litigation claims, the Company must assess the allegations and the likelihood that it will successfully defend itself. When the Company believes it is probable that it will not prevail in a particular matter, it will then make an estimate of the amount of liability based, in part, on the advice of legal counsel.

Income Taxes.

The Company accounts for income taxes under the provisions of ASC 740 “Income Taxes,” which requires recognition of income taxes based on amounts payable with respect to the current year and the effects of deferred taxes for the expected future tax consequences of events that have been included in the Company’s financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial accounting and tax basis of assets and liabilities, as well as for operating losses and tax credit carryforwards using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are recorded to reduce deferred tax assets when it is more-likely-than-not a tax benefit will not be realized. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income prior to the expiration of any net operating loss carryforwards.

 

The Jobs Act also establishes global intangible low-taxed income (“GILTI”) provisions that impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. The Company has elected to recognize GILTI as a period cost as incurred, therefore there are no deferred taxes recognized for basis differences that are expected to impact the amount of the GILTI inclusion upon reversal.

ASC 740 also prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return, as well as guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company records interest and penalties related to income tax matters in the provision for income taxes.

Recently Issued Pronouncements – Not Yet Adopted

In March 2020, the FASB issued guidance under ASC 848, Reference Rate Reform. This guidance provides optional expedients and exceptions to account for debt, leases, contracts, hedging relationships and other transactions that reference LIBOR or another reference rate if certain criteria are met. The guidance is effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. The Company determined there was no material effect on the Company’s financial statements related to Reference Rate Reform guidance.

 

In January 2021, the FASB issued ASU 2021-01, which refines the scope of ASC 848 and clarifies some of its guidance as part of the FASB’s monitoring of global reference rate reform activities. The ASU permits entities to elect certain optional expedients and exceptions when accounting for derivative contracts and certain hedging relationships affected by changes in the interest rates used for discounting cash flows, for computing variation margin settlements, and for calculating price alignment interest (PAI) in connection with reference rate reform activities under way in global financial markets (the “discounting transition”). We are currently evaluating the potential effects of the adoption of this guidance on our Consolidated Financial Statements.

 

There have been no other accounting pronouncements issued, but not yet adopted by us, which are expected to have a material impact on our Condensed Consolidated Financial Statements.

 

21


 

Recently Adopted Accounting Guidance

In December 2019, the FASB issued ASU 2019-12, “Income Taxes Topic 740-Simplifying the Accounting for Income Taxes” (“ASU 2019-12”), which intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application of Topic 740. The effective date for ASU 2019-12 was the first quarter of fiscal year 2021 and the Company adopted this guidance as of January 1, 2021. The adoption of this guidance did not have a significant impact on our operating results.

Except as noted above, the guidance issued by the FASB is not expected to have a material effect on the Company’s consolidated financial statements.

ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not required for Smaller Reporting Companies.

 

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The report of the Company’s independent registered public accounting firm and the Company’s Consolidated Financial Statements are filed pursuant to this Item 8 and are included in this report. See the Index to Financial Statements.

 

 

22


 

Index to Financial Statements

The financial statements of the registrant required to be included in Item 8 are listed below:

 

 

 

Page

Reference

 

Report of Independent Registered Public Accounting Firm (PCAOB ID Number 248)

 

24

 

 

 

Consolidated Financial Statements:

 

 

 

 

 

Consolidated Balance Sheets as of December 31, 2021 and 2020

 

28

 

 

 

Consolidated Statements of Operations for the Years Ended December 31, 2021 and 2020

 

29

 

 

 

Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2021 and 2020

 

30

 

 

 

Consolidated Statements of Shareholders’ Equity for Years Ended December 31, 2021 and 2020  

 

31

 

 

 

Consolidated Statements of Cash Flows for the Years Ended December 31, 2021 and 2020  

 

32

 

 

 

Notes to Consolidated Financial Statements

 

33-59

 

 

23


 

Report of Independent Registered Public Accounting Firm

 

Board of Directors and Shareholders

Manitex International, Inc.

 

Opinion on the financial statements

We have audited the accompanying consolidated balance sheets of Manitex International, Inc. and subsidiaries  (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income, shareholders’ equity, and cash flows for each of the two years in the period ended December 31, 2021, and the related notes and financial statement schedule(s) included under Item 15(a) (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated March 9, 2022 expressed an unqualified opinion.

Basis for opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical audit matters

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill impairment analysis

As described further in Note 3 to the financial statements, the Company evaluates goodwill for impairment at the reporting unit level annually or more frequently if indicators of impairment exist. During the course of the year, the Company performed a quantitative goodwill impairment assessment for the Company’s three reporting units of Manitex, PM, and Valla. The quantitative impairment assessment involves the comparison of the fair value of a reporting unit to its carrying amount. The Company used a weighting of the income and market approaches to determine the fair value of the reporting unit.

We identified the goodwill impairment analysis as a critical audit matter for the Manitex reporting unit because evaluating management's quantitative goodwill impairment test involved a high degree of auditor judgment due to the significant estimation required to determine the fair value of each reporting unit.  

The principal considerations for our determination that the goodwill impairment analysis is a critical audit matter are that the fair value estimate was sensitive to significant assumptions, such as forecasted revenues, operating income margins, discount rate, and estimated valuation multiples.

 

 

24


 

Our audit procedures related to the goodwill impairment analysis included the following, among others:

We tested the design and operating effectiveness of key controls over the Company's goodwill impairment assessment process including review of the valuation model and significant assumptions used.  

We tested the significant assumptions discussed above by assessing the reasonableness of management’s forecasts compared to current results and forecasted industry trends.  

With the assistance of our valuation specialists, we evaluated the selection of the discount rate, including testing the underlying source information and the mathematical accuracy of the calculations by developing a range of independent estimates and comparing those to the rates selected by management.

We also involved our valuation specialists to evaluate the market approach, including evaluating the reasonableness of estimated valuation multiples.

We also involved our valuation specialist to evaluate the market capitalization reconciliation and implied control premium performed by the Company.

 

 

 

/s/ GRANT THORNTON LLP

 

 

We have served as the Company’s auditor since 2018.

 

Chicago, Illinois

March 9, 2022

25


 

Report of Independent Registered Public Accounting Firm

 

 

Board of Directors and Shareholders

Manitex International, Inc.

 

Opinion on internal control over financial reporting

We have audited the internal control over financial reporting of Manitex International, Inc and subsidiaries (the “Company”) as of December 31, 2021, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2021, and our report dated March 9, 2022 expressed an unqualified opinion on those financial statements.

Basis for opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

26


Definition and limitations of internal control over financial reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

/s/ GRANT THORNTON LLP

 

 

Chicago, Illinois

March 9, 2022

 

 

27


 

MANITEX INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

 

 

 

As of December 31,

 

 

 

2021

 

 

2020

 

ASSETS

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash

 

$

21,359

 

 

$

17,161

 

Cash - restricted

 

 

222

 

 

 

240

 

Trade receivables (net)

 

 

30,515

 

 

 

30,418

 

Other receivables

 

 

2,039

 

 

 

179

 

Inventory (net)

 

 

64,965

 

 

 

56,055

 

Prepaid expense and other current assets

 

 

2,436

 

 

 

2,218

 

Total current assets

 

 

121,536

 

 

 

106,271

 

Total fixed assets, net of accumulated depreciation of $18,662 and $17,444, at December 31, 2021 and

   2020, respectively

 

 

16,460

 

 

 

18,723

 

Operating lease assets

 

 

3,563

 

 

 

4,068

 

Intangible assets (net)

 

 

11,946

 

 

 

15,671

 

Goodwill

 

 

24,949

 

 

 

27,472

 

Other long-term assets

 

 

1,143

 

 

 

1,143

 

Deferred tax assets

 

 

178

 

 

 

247

 

Total assets

 

$

179,775

 

 

$

173,595

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

44,136

 

 

$

32,429

 

Accrued expenses

 

 

10,539