UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number:
(Exact Name of Registrant as Specified in Its Charter)
|
||
(State or Other Jurisdiction of Incorporation or Organization) |
|
(I.R.S. Employer Identification Number) |
|
|
|
|
||
(Address of Principal Executive Offices) |
|
(Zip Code) |
(
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
N/A |
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.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
|
☐ |
|
|
|
☒ |
|
|
|
|
|
|
|
|
|
Non-accelerated filer |
|
☐ |
|
|
Smaller reporting company |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Emerging growth company |
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
The number of shares of the registrant’s common stock, no par, outstanding at November 2, 2022 was
MANITEX INTERNATIONAL, INC. AND SUBSIDIARIES
GENERAL
This Quarterly Report on Form 10-Q filed by Manitex International, Inc. speaks as of September 30, 2022 unless specifically noted otherwise. Unless otherwise indicated, Manitex International, Inc., together with its consolidated subsidiaries, is hereinafter referred to as “Manitex,” the “Registrant,” “us,” “we,” “our” or the “Company.”
Forward-Looking Information
Certain information in this Quarterly Report includes forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995). These statements relate to, among other things, the Company’s expectations, beliefs, intentions, future strategies, future events or future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause actual results, levels of activity, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. In addition, when included in this Quarterly Report or in documents incorporated herein by reference the words “may,” “expects,” “should,” “intends,” “anticipates,” “believes,” “plans,” “projects,” “estimates” and the negatives thereof and analogous or similar expressions are intended to identify forward-looking statements. However, the absence of these words does not mean that the statement is not forward-looking. We have based these forward-looking statements on current expectations and projections about future events. These statements are not guarantees of future performance. Such statements are inherently subject to a variety of risks and uncertainties that could cause actual results to differ materially from those reflected in such forward-looking statements. Such risks and uncertainties, many of which are beyond our control, include, without limitation, those described below and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, in the section entitled “Item 1A. Risk Factors”:
1
The risks described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and in this Quarterly Report on Form 10-Q are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or operating results. If any of these risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary significantly from what we projected. We do not undertake, and expressly disclaim, any obligation to update this forward-looking information, except as required under applicable law.
2
MANITEX INTERNATIONAL, INC.
FORM 10-Q INDEX
TABLE OF CONTENTS
3
PART 1—FINANCIAL INFORMATION
Item 1—Financial Statements
MANITEX INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
(Unaudited)
|
|
September 30, |
|
|
December 31, |
|
||
ASSETS |
|
|
|
|
|
|
||
Current assets |
|
|
|
|
|
|
||
Cash |
|
$ |
|
|
$ |
|
||
Cash – restricted |
|
|
|
|
|
|
||
Trade receivables (net) |
|
|
|
|
|
|
||
Other receivables |
|
|
|
|
|
|
||
Related party receivable (net) |
|
|
|
|
|
— |
|
|
Inventory (net) |
|
|
|
|
|
|
||
Prepaid expense and other current assets |
|
|
|
|
|
|
||
Assets held for sale |
|
|
|
|
|
— |
|
|
Total current assets |
|
|
|
|
|
|
||
Total fixed assets, net of accumulated depreciation of $ |
|
|
|
|
|
|
||
Operating lease assets |
|
|
|
|
|
|
||
Intangible assets (net) |
|
|
|
|
|
|
||
Goodwill |
|
|
|
|
|
|
||
Other long-term assets |
|
|
|
|
|
|
||
Deferred tax assets |
|
|
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
|
||
LIABILITIES AND EQUITY |
|
|
|
|
|
|
||
Current liabilities |
|
|
|
|
|
|
||
Accounts payable |
|
$ |
|
|
$ |
|
||
Accrued expenses |
|
|
|
|
|
|
||
Related party payables (net) |
|
|
— |
|
|
|
|
|
Notes payable |
|
|
|
|
|
|
||
Current portion of finance lease obligations |
|
|
|
|
|
|
||
Current portion of operating lease obligations |
|
|
|
|
|
|
||
Customer deposits |
|
|
|
|
|
|
||
Total current liabilities |
|
|
|
|
|
|
||
Long-term liabilities |
|
|
|
|
|
|
||
Revolving term credit facilities (net) |
|
|
|
|
|
|
||
Notes payable (net) |
|
|
|
|
|
|
||
Finance lease obligations (net of current portion) |
|
|
|
|
|
|
||
Non-current operating lease obligations (net of current portion) |
|
|
|
|
|
|
||
Deferred gain on sale of property |
|
|
|
|
|
|
||
Deferred tax liability |
|
|
|
|
|
|
||
Other long-term liabilities |
|
|
|
|
|
|
||
Total long-term liabilities |
|
|
|
|
|
|
||
Total liabilities |
|
|
|
|
|
|
||
and contingencies |
|
|
|
|
|
|
||
Equity |
|
|
|
|
|
|
||
Preferred Stock—Authorized |
|
|
|
|
|
|
||
Common Stock— |
|
|
|
|
|
|
||
Paid in capital |
|
|
|
|
|
|
||
Retained deficit |
|
|
( |
) |
|
|
( |
) |
Accumulated other comprehensive loss |
|
|
( |
) |
|
|
( |
) |
Equity attributable to shareholders of Manitex International, Inc. |
|
|
|
|
|
|
||
Equity attributed to noncontrolling interest |
|
|
|
|
|
— |
|
|
Total equity |
|
|
|
|
|
|
||
Total liabilities and equity |
|
$ |
|
|
$ |
|
The accompanying notes are an integral part of these financial statements
4
MANITEX INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except for share and per share amounts)
(Unaudited)
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Net revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Cost of sales |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gross profit |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling, general and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Transaction costs |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Total operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating income (loss) |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Interest income |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Gain on Paycheck Protection Program loan forgiveness |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Foreign currency transaction gain (loss) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Other income (expense) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Total other income (expense) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Income (loss) before income taxes |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Income tax expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Net income attributable to noncontrolling interest |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Net income (loss) attributable to shareholders of |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
Income (loss) per share |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
Diluted |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
Weighted average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements
5
MANITEX INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
(Unaudited)
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Net income (loss) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency translation adjustments |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Total other comprehensive income (loss) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Comprehensive income (loss) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Comprehensive income (loss) attributable to noncontrolling interest |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Total comprehensive income (loss) attributable to shareholders of |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
The accompanying notes are an integral part of these financial statements
6
MANITEX INTERNATIONAL, INC.
(In thousands, except share amounts)
(Unaudited)
|
|
Outstanding |
|
|
Common |
|
|
APIC |
|
|
Retained |
|
|
AOCI |
|
|
Noncontrolling |
|
|
Total |
|
|||||||
Balance at December 31, 2021 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
— |
|
|
$ |
|
||||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Loss on foreign currency translation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Employee incentive plan grant |
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
||
Repurchase to satisfy withholding and |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Share-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Balance at March 31, 2022 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
— |
|
|
$ |
|
||||
Net income (loss) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
|
|
|
( |
) |
|
Gain (loss) on foreign currency translation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Employee incentive plan grant |
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
||
Acquisition of noncontrolling interests |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Repurchase to satisfy withholding and |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Share-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Balance at June 30, 2022 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||||
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Gain (loss) on foreign currency translation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Employee incentive plan grant |
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
||
Repurchase to satisfy withholding and cancelled |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||
Share-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Balance at September 30, 2022 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
Outstanding |
|
|
Common |
|
|
APIC |
|
|
Retained |
|
|
AOCI |
|
|
Noncontrolling |
|
|
Total |
|
|||||||
Balance at December 31, 2020 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
— |
|
|
$ |
|
||||
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Loss on foreign currency translation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Employee incentive plan grant |
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
||
Repurchase to satisfy withholding and |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Share-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Balance at March 31, 2021 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
— |
|
|
$ |
|
||||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Gain (loss) on foreign currency translation |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Employee incentive plan grant |
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
||
Share-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Balance at June 30, 2021 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
— |
|
|
$ |
|
||||
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Gain (loss) on foreign currency translation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
Employee incentive plan grant |
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
||
Share-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Balance at September 30, 2021 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
- |
|
|
$ |
|
The accompanying notes are an integral part of these financial statements
7
MANITEX INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
|
|
Nine months ended September 30, |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
Cash flows from operating activities: |
|
|
|
|
|
|
||
Net income (loss) |
|
$ |
( |
) |
|
$ |
|
|
Adjustments to reconcile net income (loss) to cash used for operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Gain on Paycheck Protection Program loan forgiveness |
|
|
— |
|
|
|
( |
) |
Changes in allowances for doubtful accounts |
|
|
( |
) |
|
|
|
|
Changes in inventory reserves |
|
|
( |
) |
|
|
( |
) |
Deferred income taxes |
|
|
|
|
|
|
||
Amortization of deferred debt issuance costs |
|
|
|
|
|
|
||
Amortization of debt discount |
|
|
|
|
|
|
||
Gain on forward currency contract |
|
|
( |
) |
|
|
( |
) |
Share-based compensation |
|
|
|
|
|
|
||
Adjustment to deferred gain on sales and lease back |
|
|
( |
) |
|
|
( |
) |
Gain on disposal of assets |
|
|
( |
) |
|
|
— |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||
Increase in accounts receivable |
|
|
( |
) |
|
|
( |
) |
Decrease (increase) in other receivables |
|
|
|
|
|
( |
) |
|
Increase in inventory |
|
|
( |
) |
|
|
( |
) |
Increase in prepaid expenses |
|
|
( |
) |
|
|
( |
) |
Increase in other assets |
|
|
( |
) |
|
|
( |
) |
Increase in accounts payables and related party payables |
|
|
|
|
|
|
||
Increase in accrued expenses |
|
|
|
|
|
|
||
(Decrease) increase in other current liabilities |
|
|
( |
) |
|
|
|
|
Decrease in other long-term liabilities |
|
|
( |
) |
|
|
( |
) |
Net cash (used in) provided by operating activities |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
||
Cash flows from investing activities: |
|
|
|
|
|
|
||
Payments for acquisition, net of cash acquired |
|
|
( |
) |
|
|
— |
|
Proceeds from the sale of fixed assets |
|
|
|
|
|
— |
|
|
Purchase of property and equipment |
|
|
( |
) |
|
|
( |
) |
Investment in intangible assets |
|
|
( |
) |
|
|
( |
) |
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
||
Borrowings on revolving term credit facility |
|
|
|
|
|
— |
|
|
Payments on revolving term credit facility |
|
|
( |
) |
|
|
— |
|
Borrowings on term debt |
|
|
|
|
|
— |
|
|
Net borrowings (repayments) on working capital facilities |
|
|
|
|
|
( |
) |
|
New borrowings—other |
|
|
|
|
|
|
||
Debt issuance costs incurred |
|
|
( |
) |
|
|
— |
|
Note payments |
|
|
( |
) |
|
|
( |
) |
Shares repurchased for income tax withholding on share-based compensation |
|
|
( |
) |
|
|
( |
) |
Payments on capital lease obligations |
|
|
( |
) |
|
|
( |
) |
Net cash provided by (used in) financing activities |
|
|
|
|
|
( |
) |
|
Net (decrease) increase in cash and cash equivalents |
|
|
( |
) |
|
|
|
|
Effect of exchange rate changes on cash |
|
|
( |
) |
|
|
( |
) |
Cash, cash equivalents and restricted cash at the beginning of the year |
|
|
|
|
|
|
||
Cash, cash equivalents and restricted cash at end of period |
|
$ |
|
|
$ |
|
||
See Note 1 for supplemental cash flow disclosures |
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements
8
MANITEX INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
1. Nature of Operations and Basis of Presentation
The unaudited Condensed Consolidated Balance Sheets at September 30, 2022 and December 31, 2021 and the related Condensed Consolidated Statements of Operations, Condensed Consolidated Statement of Comprehensive Income (Loss), Condensed Consolidated Statements of Shareholders’ Equity and Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021 have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission, and reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the financial condition, results of operations and cash flows of the Company for the interim periods. Interim results may not be indicative of results to be realized for the entire year. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto, together with management’s discussion and analysis of financial condition and results of operations, contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021. The Condensed Consolidated Balance Sheet as of December 31, 2021 was derived from our audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States (“GAAP”).
On April 11, 2022, Manitex International, Inc. (the “Company”) entered into a Membership Interest Purchase Agreement (the “Agreement”), with Rabern Rentals, LLC (“Rabern”) and Steven Berner, as owner of
The Company is a leading provider of engineered lifting solutions and equipment rentals. Following the completion of the Rabern acquisition noted above, the Company reports in
Lifting Equipment Segment
Manitex markets a comprehensive line of boom trucks, truck cranes and sign cranes, including via its partially and wholly-owned subsidiaries and distributors, as described below. Manitex’s boom trucks and crane products are primarily used for industrial projects, energy exploration and infrastructure development, including roads, bridges and commercial construction.
The Company’s subsidiary, Badger Equipment Company (“Badger”) is a manufacturer of specialized rough terrain cranes and material handling products.
PM Oil and Steel S.p.A. (“PM” or “PM Group”), a subsidiary of the Company, is a leading Italian manufacturer of truck- mounted hydraulic knuckle boom cranes with a 50-year history of technology and innovation, and a product range spanning more than 50 models. PM is also a manufacturer of truck-mounted aerial platforms with a diverse product line and an international client base. Through its consolidated subsidiaries, PM Group has locations in Modena, Italy; Valencia, Spain; Arad, Romania; Chassieu, France; Buenos Aires, Argentina; Santiago, Chile; Singapore and Querétaro, Mexico.
The Company’s subsidiary, Manitex Valla S.r.L. (“Valla”), produces a full range of precision pick and carry industrial cranes using electric, diesel, and hybrid power options. Its cranes offer wheeled or tracked, and fixed or swing boom configurations, with special applications designed specifically to meet the needs of its customers. These products are sold internationally through dealers and into the rental distribution channel.
Crane and Machinery, Inc. (“C&M”) is a distributor of the Company’s products. Crane and Machinery Leasing, Inc. rents equipment manufactured by the Company as well as a limited amount of equipment manufactured by third parties.
Rental Equipment Segment
The Company’s majority-owned subsidiary, Rabern, rents heavy duty and light duty commercial construction equipment, mainly to commercial contractors on a short-term rental basis. The Company also rents equipment to homeowners for do-it-yourself projects.
9
COVID-19 Pandemic
We are continuing to closely monitor the impact of the COVID-19 pandemic on all aspects of our business, including how it is impacting our customers, employees, supply chain, and distribution network, as well as the demand for our products in the industries and markets that we serve. Our first priority is the health and safety of our employees, customers and business partners, and we believe that we have taken the necessary steps to keep our facilities clean and safe during the COVID-19 pandemic. While COVID-19 has had a material impact on our past financial results, we are unable to predict the ultimate impact that it may have on our business, future results of operations, financial position or cash flows. The extent to which our operations may be impacted by the COVID-19 pandemic will depend largely on future developments, which are highly uncertain and cannot be accurately predicted, including new information that may emerge concerning the ultimate severity and duration of the pandemic (including the spread and impact of new COVID-19 variants) and actions by government authorities to contain the pandemic or treat its impact. Furthermore, the impacts of a potential worsening of global economic conditions and the continued disruptions to and volatility in the financial markets remain unknown.
The Company is continuing to experience supply chain disruptions and related logistical bottlenecks that have impacted our ability to meet strong industrial demand and have also increased costs related to shipping, warehousing and working capital management. While the Company is actively working to mitigate these expenses and the associated timing issues, certain segments – such as truck chassis – have been more impacted than others. Where appropriate and feasible, we have implemented pricing adjustments to protect margins and, in tandem, continue to build inventory to meet our customer requirements. In addition, the Company is actively managing costs and working to further streamline operations where needed. Furthermore, the Company has modified its business practices to manage expenses (including practices regarding employee travel, employee work locations, and cancellation of physical participation in meetings, events and conferences). We continue to take steps intended to minimize the negative impact of the COVID-19 pandemic on our business and to protect the safety of our employees and customers, but we cannot predict the duration or severity of the ongoing COVID-19 pandemic or reasonably estimate the financial impact that it will have on our results and significant estimates going forward.
Supplemental Cash Flow Information
Transactions for the periods ended September 30, 2022 and 2021 are as follows:
|
|
Nine months ended September 30, |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
Interest received in cash |
|
$ |
|
|
$ |
|
||
Interest paid in cash |
|
|
|
|
|
|
||
Income tax payments in cash |
|
|
|
|
|
|
||
Recognition of right-of-use asset and right-of-use liability |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
||
Reconciliation of cash, cash equivalents and restricted cash to consolidated balance sheets: |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Restricted cash |
|
|
|
|
|
|
||
Cash, cash equivalents and restricted cash at the end of year |
|
$ |
|
|
$ |
|
2. Significant Accounting Policies
The summary of the Company’s significant accounting policies is presented to assist in understanding the Company’s consolidated financial statements. The financial statements and notes are representations of the Company’s management who is responsible for their integrity and objectivity. These accounting policies conform to generally accepted accounting principles and have been consistently applied in the preparation of the financial statements.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all short-term securities purchased with maturity dates of three months or less to be cash equivalents. The cash in the Company’s U.S. banks is not fully insured by the FDIC due to the statutory limit of $
Restricted Cash
Certain of the Company’s lending arrangements require the Company to post collateral or maintain minimum cash balances in escrow. These cash amounts are reported as current assets on the balance sheets based on when the cash will be contractually released. Total restricted cash was $
10
Accounts Receivable and Allowance for Doubtful Accounts
Trade accounts receivable are recorded at invoiced amount and do not bear interest. Allowance for doubtful accounts is the Company’s estimate of current expected credit losses on its existing accounts receivable and determined based on historical customer assessments and current financial conditions. Account balances are charged off against the allowance when the Company determines the receivable will not be recovered. There can be no assurance that the Company’s estimate of accounts receivable collection will be indicative of future results. The Company established an allowance for bad debt of $
Property, Equipment and Depreciation
Accrued Warranties
Warranty costs are accrued at the time revenue is recognized. The Company’s products are typically sold with a warranty covering defects that arise during a fixed period of time. The specific warranty offered is a function of customer expectations and competitive forces.
A liability for estimated warranty claims is accrued at the time of sale. Such liability is established using historical warranty claim experience. The current provision may be adjusted to take into account unusual or non-recurring events in the past or anticipated changes in future warranty claims. Adjustments to the initial warranty accrual are recorded if actual claim experience indicates that adjustments are necessary.
As of September 30, 2022 and December 31, 2021, accrued warranties were $
Advertising
Business Combinations
The Company accounts for acquisitions in accordance with guidance found in ASC 805, Business Combinations. The guidance requires consideration given, including contingent consideration, assets acquired and liabilities assumed to be valued at their fair market values at the acquisition date. The guidance further provides that: (1) acquisition costs will generally be expensed as incurred and (2) changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally will affect income tax expense.
The Company records identifiable assets acquired and liabilities assumed at their estimated fair values as of the acquisition date. Goodwill is calculated as the excess of the aggregate of the fair value of the consideration transferred over the fair value of the net assets recognized.
Noncontrolling Interest
A noncontrolling interest is the equity interest of consolidated entities that is not owned by the Company. Noncontrolling interest is adjusted for the noncontrolling partners' share of earnings (losses) in accordance with the applicable agreement. Earnings allocated to such noncontrolling partners are recorded as income applicable to noncontrolling interest in the accompanying condensed consolidated statements of operations.
Share-based Compensation
The Company has elected to account for restricted stock awards with market conditions using a graded vesting method. This method recognizes the compensation cost in the statement of operations over the requisite service period for each separately-vesting tranche of awards.
11
GAAP guidance requires the use of highly inflationary accounting for countries whose cumulative three-year inflation exceeds 100 percent. Under highly inflationary accounting, PM Group’s Argentina subsidiary’s functional currency became the Euro (its parent company’s reporting currency), and its income statement and balance sheet have been measured in Euros using both current and historical rates of exchange. The effect of changes in exchange rates on peso-denominated monetary assets and liabilities has been reflected in earnings in other (income) and expense, net and was not material. As of September 30, 2022, PM Group’s Argentina subsidiary had an insignificant net peso monetary position. Net sales of PM Group’s Argentina subsidiary were less than
3. Revenue Recognition
The following table disaggregates our revenue for the three and nine months ended September 30, 2022:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Equipment sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Part sales |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Rentals |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Services |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Merchandise sales and other |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Total Revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
The Company attributes revenue to different geographic areas based on where items are shipped to or services are performed. The following table provides detail of revenues by geographic area for the three and nine months ended September 30, 2022:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
United States |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Italy |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Canada |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Chile |
|
|
|
|
|
|
|
|
|
|
|
|
||||
France |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
Total Company Revenues by Sources
The sources of the Company’s revenues are summarized below for the three and nine months ended September 30, 2022:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Boom trucks, knuckle boom & truck cranes |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Aerial platforms |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Part sales |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Rentals |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Services |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other equipment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Merchandise sales and other |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Total Revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
12
Customer Deposits
At times, the Company may require an upfront deposit related to its contracts. In instances where an upfront deposit has been received by the Company and the revenue recognition criteria have not yet been met, the Company records a contract liability in the form of a customer deposit, which is classified as a short-term liability on the Condensed Consolidated Balance Sheets. That customer deposit is revenue that is deferred until the revenue recognition criteria have been met, at which time, the customer deposit is recognized into revenue. Substantially all of the $
The following table summarizes changes in customer deposits for the nine months ended September 30 as follows:
|
|
September 30, |
|
|
September 30, |
|
||
Customer deposits |
|
$ |
|
|
$ |
|
||
Additional customer deposits received where revenue has not yet been recognized |
|
|
|
|
|
|
||
Revenue recognized from customer deposits |
|
|
( |
) |
|
|
( |
) |
Effect of change in exchange rates |
|
|
( |
) |
|
|
( |
) |
Total customer deposits |
|
$ |
|
|
$ |
|
4. Fair Value Measurements
The following tables set forth the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2022 and December 31, 2021 by level within the fair value hierarchy. As required by ASC 820-10, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
The following is summary of items that the Company measures at fair value on a recurring basis:
|
|
Fair Value at September 30, 2022 |
|
|||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Forward currency exchange contracts |
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||
Total recurring liabilities at fair value |
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Fair Value at December 31, 2021 |
|
|||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Forward currency exchange contracts |
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||
Total current assets at fair value |
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Valla contingent consideration |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
||
Total liabilities at fair value |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
|
Fair Value |
|
|
|
|
Valla |
|
|
Liabilities: |
|
|
|
|
Balance at January 1, 2022 |
|
$ |
|
|
Change in contingent liability consideration |
|
|
( |
) |
Effect of changes in exchange rates |
|
|
( |
) |
Balance at September 30, 2022 |
|
$ |
— |
|
13
Fair Value Measurements
ASC 820-10 classifies the inputs used to measure fair value into the following hierarchy:
Level 1 — Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2 — Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability and
Level 3 — Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).
The fair value of the forward currency contracts is determined on the last day of each reporting period using observable inputs, which are supplied to the Company by the foreign currency trading operation of its bank and are Level 2 items.
The Company’s risk management objective is to use the most efficient and effective methods available to us to minimize, eliminate, reduce or transfer the risks which are associated with fluctuation of exchange rates between the Euro, Chilean peso and the U.S. dollar.
Forward Currency Contracts
The Company enters into forward currency exchange contracts such that the exchange gains and losses on the assets and liabilities denominated in other than the reporting units’ functional currency would be offset by the changes in the market value of the forward currency exchange contracts it holds. The forward currency exchange contracts that the Company has to offset existing assets and liabilities denominated in other than the reporting units’ functional currency have been determined not to be considered a hedge under ASC 815-10. The Company records the forward currency exchange contracts at its market value with any associated gain or loss being recorded in current earnings. Both realized and unrealized gains and losses related to forward currency contracts are included in current earnings and are reflected in the Condensed Consolidated Statements of Operations in the other income (expense) section on the line titled foreign currency transaction gain (loss). Items denominated in other than a reporting unit functional currency include certain intercompany receivables due from the Company’s Italian subsidiaries and accounts receivable and accounts payable of our Italian subsidiaries and their subsidiaries.
PM Group has an intercompany receivable denominated in Euros from its Chilean subsidiary. At September 30, 2022, the Company had entered into a forward currency exchange contract that matured on
The following table provides the location and fair value amounts of derivative instruments that are reported in the Condensed Consolidated Balance Sheet as of September 30, 2022:
Total derivatives NOT designated as a hedge instrument
|
|
|
|
Fair Value |
|
|||||
|
|
Balance Sheet Location |
|
September 30, |
|
|
December 31, |
|
||
Asset Derivatives |
|
|
|
|
|
|
|
|
||
Foreign currency exchange contract |
|
Prepaid expense and other current assets |
|
$ |
— |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
||
Liabilities Derivatives |
|
|
|
|
|
|
|
|
||
Foreign currency exchange contract |
|
Accrued expenses |
|
$ |
|
|
$ |
— |
|
14
The following tables provide the effect of derivative instruments on the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2022 and 2021:
|
|
|
|
Gain (loss) |
|
|
Gain (loss) |
|
||||||||||
|
|
Location of gain or |
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Derivatives Not Designated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
ward currency contract |
|
Foreign currency |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
|
|
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
During the three and nine months ended September 30, 2022 and 2021, there were
6. Inventory, net
The components of inventory are as follows:
|
|
September 30, |
|
|
December 31, |
|
||
Raw materials and purchased parts, net |
|
$ |
|
|
$ |
|
||
Work in process, net |
|
|
|
|
|
|
||
Finished goods, net |
|
|
|
|
|
|
||
Inventory, net |
|
$ |
|
|
$ |
|
The Company has established reserves for obsolete and excess inventory of $
7. Goodwill and Intangible Assets
Intangible assets and accumulated amortization by category as of September 30, 2022 is as follows:
|
|
Weighted Average |
|
Gross |
|
|
|
|
|
Net |
|
|||
|
|
Amortization |
|
Carrying |
|
|
Accumulated |
|
|
Carrying |
|
|||
|
|
Period (in years) |
|
Amount |
|
|
Amortization |
|
|
Amount |
|
|||
Patented and unpatented technology |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Customer relationships |
|
|
|
|
|
|
( |
) |
|
|
|
|||
Trade names and trademarks |
|
|
|
|
|
|
( |
) |
|
|
|
|||
Software |
|
|
|
|
|
|
( |
) |
|
|
|
|||
Indefinite lived trade names |
|
|
|
|
|
|
|
|
|
|
|
|||
Total intangible assets, net |
|
|
|
|
|
|
|
|
|
$ |
|
Intangible assets and accumulated amortization by category as of December 31, 2021 is as follows:
|
|
Weighted Average |
|
Gross |
|
|
|
|
|
Net |
|
|||
|
|
Amortization |
|
Carrying |
|
|
Accumulated |
|
|
Carrying |
|
|||
|
|
Period (in years) |
|
Amount |
|
|
Amortization |
|
|
Amount |
|
|||
Patented and unpatented technology |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Customer relationships |
|
|
|
|
|
|
( |
) |
|
|
|
|||
Trade names and trademarks |
|
|
|
|
|
|
( |
) |
|
|
|
|||
Software |
|
|
|
|
|
|
( |
) |
|
|
|
|||
Indefinite lived trade names |
|
|
|
|
|
|
|
|
|
|
|
|||
Total intangible assets, net |
|
|
|
|
|
|
|
|
|
$ |
|
In connection with the Rabern acquisition, the Company recognized customer relationships intangible assets of $
15
Amortization expense for intangible assets was $
Estimated amortization expense for the period ending September 30 for the next five years and subsequent is as follows:
|
|
Amount |
|
|
2023 |
|
$ |
|
|
2024 |
|
|
|
|
2025 |
|
|
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
And subsequent |
|
|
|
|
Total intangible assets currently to be amortized |
|
|
|
|
Intangible assets with indefinite lives not amortized |
|
|
|
|
Total intangible assets |
|
$ |
|
Changes in goodwill for the nine months ended September 30, 2022 are as follows:
|
|
2022 |
|
|
2021 |
|
||
Balance January 1, |
|
$ |
|
|
$ |
|
||
Goodwill for Rabern acquisition |
|
|
|
|
|
— |
|
|
Effect of change in exchange rates |
|
|
( |
) |
|
|
( |
) |
Balance September 30, |
|
$ |
|
|
$ |
|
The Company performed an impairment assessment as of December 31, 2021. No additional triggers for an interim impairment test have been identified as of September 30, 2022. While there was $
8. Accrued Expenses
|
|
September 30, |
|
|
December 31, |
|
||
Accrued payroll and benefits |
|
$ |
|
|
$ |
|
||
Accrued legal settlement |
|
|
|
|
|
- |
|
|
Accrued expenses—other |
|
|
|
|
|
|
||
Accrued warranty |
|
|
|
|
|
|
||
Accrued vacation |
|
|
|
|
|
|
||
Accrued income tax and other taxes |
|
|
|
|
|
|
||
Total accrued expenses |
|
$ |
|
|
$ |
|
9. Accrued Warranty
The liability for estimated warranty claims is accrued at the time of sale and the expense is recorded in the Condensed Consolidated Statement of Operations in Cost of Sales. The liability is established using historical warranty claim experience. The current provision may be adjusted to take into account unusual or non-recurring events in the past or anticipated changes in future warranty claims. Adjustments to the warranty accrual are recorded if actual claim experience indicates that adjustments are necessary. Warranty reserves are reviewed to ensure critical assumptions are updated for known events that may impact the potential warranty liability.
16
The following table summarizes the changes in product warranty liability:
|
|
For the nine months ended |
|
|||||
|
|
September 30, |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
Balance January 1, |
|
$ |
|
|
$ |
|
||
Provision for warranties issued during the year |
|
|
|
|
|
|
||
Warranty services provided |
|
|
( |
) |
|
|
( |
) |
Foreign currency translation |
|
|
( |
) |
|
|
( |
) |
Balance September 30, |
|
$ |
|
|
$ |
|
10. Credit Facilities and Debt
Debt is summarized as follows:
|
|
September 30, 2022 |
|
|
December 31, 2021 |
|
||
U.S. Credit Facilities |
|
$ |
|
|
$ |
|
||
U.S Term Loan |
|
|
|
|
|
— |
|
|
PM Group Short-Term Working Capital Borrowings |
|
|
|
|
|
|
||
PM Group Term Loan |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total debt |
|
|
|
|
|
|
||
Less: Debt issuance costs |
|
|
( |
) |
|
|
( |
) |
Debt, net of issuance costs |
|
$ |
|
|
$ |
|
U.S. Credit Facilities and Term Loan
On April 11, 2022, the Company entered into a Commercial Credit Agreement (the “Credit Agreement”), by and among the Company, the Company’s domestic subsidiaries and Amarillo National Bank. The Credit Agreement provides for a $
The Credit Agreement requires the Company to maintain a debt service coverage ratio of at least
The Company and its U.S. subsidiaries were parties to a Loan and Security Agreement, as amended (the “Loan Agreement”) with CIBC Bank USA (“CIBC”). The Loan Agreement provided a revolving credit facility with a maturity date of
17
PM Group Short-Term Working Capital Borrowings
At September 30, 2022 and December 31, 2021, respectively, the PM Group had established demand credit and overdraft facilities with
At September 30, 2022, the Italian banks had advanced PM Group $
Valla Short-Term Working Capital Borrowings
At September 30, 2022 and December 31, 2021, respectively, Valla had established demand credit and overdraft facilities with
PM Group Term Loans
At September 30, 2022 and December 31, 2021, respectively, the PM Group has a $
At September 30, 2022 and December 31, 2021, respectively, the PM Group has unsecured borrowings totaling $
11. Leases
The Company leases certain warehouses, office space, machinery, vehicles and equipment. Leases with an initial term of 12 months or shorter are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the applicable lease term.
The Company is not aware of any variable lease payments, residual value guarantees, covenants or restrictions imposed by the leases.
18
If there was a discount rate explicit in the lease, then such discount rate was used. For those leases with no explicit or implicit interest rate, an incremental borrowing rate was used. The weighted average remaining useful life for operating and finance leases were
Leases |
|
Classification |
|
September 30, 2022 |
|
|
December 31, 2021 |
|
||
Assets |
|
|
|
|
|
|
|
|
||
Operating lease assets |
|
Operating lease assets |
|
$ |
|
|
$ |
|
||
Financing lease assets |
|
Fixed assets, net |
|
|
|
|
|
|
||
Total leased assets |
|
|
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
|
|
||
Liabilities |
|
|
|
|
|
|
|
|
||
Current |
|
|
|
|
|
|
|
|
||
Operating |
|
Current liabilities |
|
$ |
|
|
$ |
|
||
Financing |
|
Current liabilities |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||
Non-current |
|
|
|
|
|
|
|
|
||
Operating |
|
Non-current liabilities |
|
|
|
|
|
|
||
Financing |
|
Non-current liabilities |
|
|
|
|
|
|
||
Total lease liabilities |
|
|
|
$ |
|
|
$ |
|
|
|
|
|
Three months ended September 30, |
|
|
Nine months ended September 30, |
|
||||||||||
Lease Cost |
|
Classification |
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Operating lease costs |
|
Operating lease assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Finance lease cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Amortization of |
|
Amortization |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest on lease liabilities |
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Lease cost |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
Three months ended September 30, |
|
|
Nine months ended September 30, |
|
||||||||||
Other Information |
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Cash paid for amounts included in the |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating cash flows from operating |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Operating cash flows from finance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Financing cash flows from finance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
19
Future principal minimum lease payments for the period ending September 30 for the next five years and subsequent are:
|
|
Operating Leases |
|
|
Capital Leases |
|
||
2023 |
|
$ |
|
|
$ |
|
||
2024 |
|
|
|
|
|
|
||
2025 |
|
|
|
|
|
|
||
2026 |
|
|
|
|
|
|
||
2027 |
|
|
|
|
|
|
||
And subsequent |
|
|
|
|
|
|
||
Total undiscounted lease payments |
|
|
|
|
|
|
||
Less interest |
|
|
( |
) |
|
|
( |
) |
Total liabilities |
|
$ |
|
|
$ |
|
||
Less current maturities |
|
|
( |
) |
|
|
( |
) |
Non-current lease liabilities |
|
$ |
|
|
$ |
|
We had
In connection with our acquisition of Rabern, the Company became the lessee of two buildings from HTS Management LLC (“HTS”), an entity controlled by Steven Berner, who is a key member of Rabern management. HTS operates as a holding company for property and as a single lessee leasing company for business use property for Rabern. HTS’s ongoing activities preceding and succeeding the Rabern acquisition relate to financing, purchasing, leasing and holding property leased to Rabern. Based on these activities, HTS would be subject to interest rate risk and real estate investment pricing risk related to holding the real estate as an investment. These risks represent the potential variability to be considered as passed to interest holders. Although we have a variable interest through our relationship with Mr. Berner, such variability is not passed on to Rabern in connection with the arrangement, and therefore Rabern is not the primary beneficiary of the VIE. Furthermore, all risks and benefits of the significant activities of HTS are passed to Mr. Berner directly and do not represent a direct or indirect obligation for Rabern.
12. Income Taxes
For the three months ended September 30, 2022, the Company recorded an income tax provision of $
The effective tax rate for the three months ended September 30, 2022 was an income tax provision of
For the nine months ended September 30, 2022, the Company recorded an income tax provision of $
The effective tax rate for the nine months ended September 30, 2022 was an income tax provision of
20
valuation allowance in Italy, nondeductible foreign permanent differences, income taxed in foreign jurisdictions at varying tax rates and a reduction in the uncertain position liability for the expiration of the statute of limitations for various state and foreign jurisdictions.
The Company’s total unrecognized tax benefits as of September 30, 2022 and 2021 were approximately $
13. Net Earnings (Loss) per Common Share
Basic net earnings per share is computed by dividing net income by the weighted average number of common shares outstanding for the period. Details of the calculations are as follows:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Net income (loss) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
Net income attributable to noncontrolling interest |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Net income (loss) attributable to shareholders of |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income (loss) per share |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
Net income (loss) attributable to shareholders of |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
Net income (loss) attributable to shareholders of |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Dilutive effect of restricted stock units and stock options |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Basic and Dilutive |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
Unvested restricted stock units |
|
|
|
|
|
|
||
Options to purchase common stock |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
21
14. Equity
Stock Issued to Employees and Directors
The Company issued shares of common stock to employees and Directors as restricted stock units issued under the Company’s 2004 and 2019 Incentive Plan vest. Upon issuance, entries were recorded to increase common stock and decrease paid in capital for the amounts shown below.
Date of Issue |
|
Employees or |
|
Shares Issued |
|
|
Value of |
|
||
January 1, 2022 |
|
Employee |
|
|
|
|
$ |
|
||
March 6, 2022 |
|
Directors |
|
|
|
|
|
|
||
March 6, 2022 |
|
Employees |
|
|
|
|
|
|
||
March 8, 2022 |
|
Directors |
|
|
|
|
|
|
||
March 8, 2022 |
|
Employee |
|
|
|
|
|
|
||
March 13, 2022 |
|
Directors |
|
|
|
|
|
|
||
March 13, 2022 |
|
Employees |
|
|
|
|
|
|
||
April 11, 2022 |
|
Employee |
|
|
|
|
|
|
||
June 2, 2022 |
|
Directors |
|
|
|
|
|
|
||
June 3, 2022 |
|
Directors |
|
|
|
|
|
|
||
July 5, 2022 |
|
Employee |
|
|
|
|
|
|
||
August 14, 2022 |
|
Directors |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
$ |
|
Stock Repurchases
The Company purchases shares of Common Stock from certain employees at the closing share price on the date of purchase. The stock is purchased from the employees to satisfy employees’ withholding tax obligations related to stock issuances described above.
Date of Purchase |
|
Shares |
|
|
Closing Price |
|
||
March 6, 2022 |
|
|
|
|
$ |
|
||
March 8, 2022 |
|
|
|
|
$ |
|
||
March 13, 2022 |
|
|
|
|
$ |
|
||
April 11, 2022 |
|
|
|
|
$ |
|
||
July 5, 2022 |
|
|
|
|
$ |
|
||
|
|
|
|
|
|
|
Restricted Stock Awards
The following table contains information regarding restricted stock units during the current year through September 30, 2022:
|
|
September 30, |
|
|
Outstanding on January 1, 2022 |
|
|
|
|
Units granted during the period |
|
|
|
|
Vested and issued |
|
|
( |
) |
Vested-issued and repurchased for income tax withholding |
|
|
( |
) |
Forfeited |
|
|
( |
) |
Outstanding on September 30, 2022 |
|
|
|
The value of the restricted stock is being charged to compensation expense over the vesting period. Compensation expense includes expense related to restricted stock units of $
22
Restricted Stock Award with Market Conditions
On May 3, 2022, in connection with J. Michael Coffey’s appointment as the Company’s Chief Executive Officer as of April 11, 2022, he was granted
Restricted Stock Award with Market and Performance Conditions
On May 3, 2022, in connection with his appointment, Mr. Coffey was also granted
Stock Options
On May 3, 2022, in connection with his appointment, Mr. Coffey was also granted
|
|
Grant date |
|
|
Dividend yields |
|
|
— |
|
Expected volatility |
|
|
% |
|
Risk free interest rate |
|
|
% |
|
Expected life (in years) |
|
|
|
|
Fair value of the option granted |
|
$ |
|
15. Legal Proceedings and Other Contingencies
The Company is involved in various legal proceedings, including product liability, employment related issues, and workers’ compensation matters that have arisen in the normal course of operations. The Company has product liability insurance with self-insurance retentions that range from $
When it is probable that a loss has been incurred and it is possible to make a reasonable estimate of the Company’s liability with respect to such matters, a provision is recorded for the amount of such estimate that is most likely to occur. Certain legal proceedings are at a preliminary stage, and it is not possible to estimate the amount or timing of any cost, if any, to the Company for these cases. However, the Company does not believe that these contingencies, in the aggregate, will have a material adverse effect on the Company.
The Company has been named as a defendant in several multi-defendant asbestos-related product liability lawsuits. In certain instances, the Company is indemnified by a former owner of the product line involved. In the remaining cases the plaintiff has, to date, not been able to establish any exposure by the plaintiff to the Company’s products. The Company is uninsured with respect to these claims but believes that it will not incur any material liability with respect to these claims.
On
It is reasonably possible that the estimated reserve for product liability claims may change within the next
23
16. Transactions between the Company and Related Parties
In the course of conducting its business, the Company has entered into certain related party transactions.
C&M conducts business with RAM P&E LLC for the purposes of obtaining parts business as well as buying, selling and renting equipment. In 2022, less than $
C&M is a distributor of Terex rough terrain and truck cranes. As such, C&M purchases cranes and parts from Terex.
PM is a manufacturer of cranes. PM sold cranes, parts, and accessories to Tadano during 2022 and 2021.
Rabern rents heavy duty and light duty commercial construction equipment, mainly to commercial contractors on a short-term rental basis. Rabern sold a fixed asset to Steven Berner the general manager of Rabern in April 2022, in connection with the Rabern acquisition.
In addition, the Company became the lessee of two buildings from HTS Management LLC (“HTS”), an entity controlled by Mr. Berner, who is a key member of Rabern management. HTS operates as a holding company for property and as a single lessee leasing company for business use property for Rabern. HTS’s ongoing activities preceding and succeeding the Rabern acquisition relate to financing, purchasing, leasing and holding property leased to Rabern. Based on these activities, HTS would be subject to interest rate risk and real estate investment pricing risk related to holding the real estate as an investment. These risks represent the potential variability to be considered as passed to interest holders. Although we have a variable interest through our relationship with Mr. Berner, such variability is not passed on to Rabern in connection with the arrangement, and therefore Rabern is not the primary beneficiary of the VIE. Furthermore, all risks and benefits of the significant activities of HTS are passed to Mr. Berner directly and do not represent a direct or an indirect obligation for Rabern.
|
|
|
|
September 30, 2022 |
|
|
December 31, 2021 |
|
||
Accounts Receivable |
|
Terex (1) |
|
$ |
|
|
$ |
— |
|
|
|
|
RAM P&E (3) |
|
|
— |
|
|
|
— |
|
|
|
|
|
$ |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
||
Accounts Payable |
|
Terex (1) |
|
$ |
|
|
$ |
|
||
|
|
Tadano (2) |
|
|
|
|
|
|
||
|
|
|
|
$ |
|
|
$ |
|
||
Net Related Party Accounts |
|
|
|
$ |
|
|
$ |
( |
) |
24
The following is a summary of the amounts attributable to certain related party transactions as described in the footnotes to the table, for the periods indicated:
|
|
|
|
Three Months Ended |
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
Nine Months Ended |
|
||||
Rent paid: |
|
Rabern Facility (4) |
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Sales to: |
|
Terex (1) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
Tadano (2) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
RAM P&E (3) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
|
|
Steven Berner (5) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
Total Sales |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Purchases from: |
|
Terex (1) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
Tadano (2) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Total Purchases |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
Note 17. Restructuring
On January 12, 2022, the Company announced a restructuring plan (the “Restructuring”) that will result in the closure of its Badger facility in Winona, Minnesota. As part of the Restructuring, the Company intends to move the manufacturing of its straight mast boom cranes and aerial platforms now produced in Winona, Minnesota, to its Georgetown, Texas, facility. The Restructuring is expected to be completed during 2023.
Restructuring
During the three and nine months ended September 30, 2022, the Company recorded less than $
The following is a summary of the Company’s restructuring activities as of September 30, 2022:
|
|
For the Nine |
|
|
|
|
2022 |
|
|
Balance at beginning of period |
|
$ |
— |
|
Restructuring expense |
|
|
|
|
Balance at end of period |
|
$ |
|
25
Assets held for sale
Note 18. Business Combination
On April 11, 2022, Manitex entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”), with Rabern and Steven Berner. Pursuant to the Purchase Agreement, the Company acquired a
The acquisition of Rabern was accounted for as a business combination in accordance with Accounting Standards Codification ASC 805, Business Combinations, which requires allocation of the purchase price to the estimated fair values of assets acquired and liabilities assumed in the transaction. The preliminary fair value of the consideration transferred at the acquisition date was $
The financial results of Rabern beginning on April 11, 2022 are included in the Company's condensed consolidated financial statements and are reported in the Rental Equipment segment for the periods ended September 30, 2022. The amount of revenue and income from operations associated with the Rabern acquisition from the acquisition date to September 30, 2022 are included in the Company’s condensed consolidated financial statements for the periods ended September 30, 2022.
The following table summarizes the purchase price allocations for the Rabern acquisition as of September 30, 2022:
|
|
|
|
|
Total purchase consideration: |
|
|
|
|
Consideration |
|
$ |
|
|
Revolving loan payoff |
|
|
|
|
Net purchase consideration |
|
|
|
|
Allocation of consideration to assets acquired and liabilities assumed: |
|
|
|
|
Cash |
|
|
|
|
Net working capital |
|
|
|
|
Other current assets |
|
|
|
|
Fixed assets |
|
|
|
|
Customer relationships |
|
|
|
|
Trade name and trademarks |
|
|
|
|
Goodwill |
|
|
|
|
Deferred tax liability |
|
|
( |
) |
Other current liabilities |
|
|
( |
) |
Total fair value of assets acquired |
|
|
|
|
Less: noncontrolling interests, net of taxes |
|
|
|
|
Net assets acquired |
|
$ |
|
The fair value of identifiable intangible assets is determined primarily using the relief from royalty approach and multi-period excess earnings method for trademarks and customer relationships, respectively. Fixed asset values were estimated using either the cost or market approach. Goodwill represents the amount by which the purchase price exceeds the estimated fair value of the net assets acquired. The Rabern acquisition was structured as a taxable purchase of
26
make an IRC Section 754 Election which will give Manitex Section 743(b) step-up in the tax basis in the partnership assets for its acquired membership interest.
The following table summarizes, on an unaudited pro forma basis, the combined results of operations of Rabern as though the acquisition had occurred as of January 1, 2021. The pro forma amounts presented are not necessarily indicative of either the actual consolidated results had the acquisition occurred as of January 1, 2021 or of future consolidated operating results.
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Net revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Income before income taxes |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Net income (loss) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Net income (loss) attributable to shareholders of |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Basic |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Net income (loss) attributable to shareholders of |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Net income (loss) attributable to shareholders of |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
Pro forma results presented above primarily reflect the following adjustments:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Amortization |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
Depreciation |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Interest expense |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Transaction cost |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income tax expense of above items |
|
|
— |
|
|
|
|
|
|
|
|
|
|
The amortization adjustment for the three and nine months ended September 30, 2022 and 2021 reflects the amortization resulting from the recognition of intangible assets at their fair values. The depreciation adjustment for the three and nine months ended September 30, 2022 and 2021 reflects the incremental depreciation resulting from the measurement of fixed assets at their fair values. The interest expense adjustment for the three and nine months ended September 30, 2022 and 2021 reflects the new revolving credit facility and term debt in connection with the acquisition of Rabern. For the three and nine months ended September 30 2022, the Company recorded less than $
Note 19. Segment Information
The Company reports segment information based on the “management” approach. The management approach designates the internal reporting used by the Chief Executive Officer, who is also the Company’s Chief Operating Decision Maker, for making decisions about the allocation of resources and assessing performance as the source of the Company’s reportable operating segments.
The Company is a leading provider of engineered lifting solutions and equipment rentals. The Company operates in
Lifting Equipment Segment
The Lifting Equipment segment is a leading provider of engineered lifting solutions. The Company manufactures a comprehensive line of boom trucks, articulating cranes, truck cranes and sign cranes. The Company is also a manufacturer of specialized rough terrain cranes and material handling products. Through PM and Valla, two of the Company's Italian subsidiaries, the Company manufacturers truck- mounted hydraulic knuckle boom cranes and a full range of precision pick and carry industrial cranes using electric, diesel and hybrid power options.
27
Rental Equipment Segment
Through its recently acquired Rabern subsidiary, the Company’s Rental Equipment segment rents heavy duty and light duty commercial construction equipment, mainly to commercial contractors on a short-term rental basis. The Company also rents equipment to homeowners for do-it-yourself projects.
The following is financial information for our two operating segments: Lifting Equipment and Rental Equipment:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Net revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Lifting Equipment |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Rental Equipment |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Total revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Operating income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Lifting Equipment |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
Rental Equipment |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Total operating income (loss) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Lifting Equipment |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Rental Equipment |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Total depreciation and amortization |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Capital expenditures |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Lifting Equipment |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Rental Equipment |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Total capital expenditures |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
28
|
|
Three Months Ended |
|
|
Three Months Ended |
|
||||||||||||||||||
|
|
Lifting |
|
|
Rental |
|
|
Total |
|
|
Lifting |
|
|
Rental |
|
|
Total |
|
||||||
Net sales by country |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
United States |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|||||
Italy |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||
Canada |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||
Chile |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||
France |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||
Other |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
Nine Months Ended |
|
|
Nine Months Ended |
|
||||||||||||||||||
|
|
Lifting |
|
|
Rental |
|
|
Total |
|
|
Lifting |
|
|
Rental |
|
|
Total |
|
||||||
Net sales by country |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
United States |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|||||
Italy |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||
Canada |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||
Chile |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||
France |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||
Other |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
|
September 30, 2022 |
|
|
December 31, 2021 |
|
||||||||||||||||||
|
|
Lifting |
|
|
Rental |
|
|
Total |
|
|
Lifting |
|
|
Rental |
|
|
Total |
|
||||||
Assets by country |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
United States |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|||||
Foreign Subsidiaries |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
Note 20. Subsequent Events
On
29
Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations
Recent Developments
Impact of COVID-19
The COVID-19 pandemic has significantly impacted our ability to meet demand for the Company’s products. While these impacts began to subside in 2021 and continue to decrease in 2022, the Company experienced, and is still experiencing, supply chain and logistic constraints and increased costs that negatively impact its ability to manufacture and ship products to meet customer requirements.
Business Overview
The following management’s discussion and analysis of financial condition and results of continuing operations should be read in conjunction with the Company’s financial statements and notes and other information included elsewhere in this Quarterly Report on Form 10-Q.
Backlog
The Company’s backlog was approximately $207 million and $189 million at September 30, 2022 and December 31, 2021, respectively.
Acquisition of Rabern Rentals
On April 11, 2022, the Company entered into a Membership Interest Purchase Agreement to acquire a 70% membership interest in Rabern Rentals, LLC (“Rabern”), which acquisition also closed on April 11, 2022. Rabern rents heavy duty and light duty commercial construction equipment, mainly to commercial contractors on a short-term rental basis. Rabern also rents equipment to homeowners for do-it-yourself projects.
Amarillo National Bank Financing
Also on April 11, 2022, the Company entered into a Commercial Credit Agreement (the “Credit Agreement”), by and among the Company, the Company’s domestic subsidiaries and Amarillo National Bank, which provides for a $40 million revolving credit facility that matures on April 11, 2024, a $30 million revolving credit facility that matures on April 11, 2024 and a $15 million term loan that matures on October 11, 2029. This new banking facility provided the funds for the Rabern acquisition and working capital facilities for both the Manitex and Rabern businesses.
CIBC Loan Agreement Payoff
In connection with the Rabern acquisition and the entry by the Company into the Credit Agreement, on April 11, 2022, the Company repaid in full all outstanding indebtedness and other amounts outstanding of approximately $12.8 million, and terminated all commitments and obligations under, its prior Loan and Security Agreement with CIBC Bank USA (the “Prior Loan Agreement”), which satisfied all of the Company’s debt obligations under the Prior Loan Agreement. The Company was not required to pay any pre-payment premiums as a result of the repayment of indebtedness under the Prior Loan Agreement. In connection with the repayment of such outstanding indebtedness by the Company, all security interests, mortgages, liens and encumbrances granted to the lenders under the Prior Loan Agreement were terminated and released.
30
Results of Condensed Consolidated Operations
MANITEX INTERNATIONAL, INC.
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Three Months Ended |
|
|
|
|
|
|
|
|||||||
|
|
2022 |
|
|
2021 |
|
|
$ Change |
|
|
% Change |
|
||||
Net revenues |
|
$ |
65,037 |
|
|
$ |
50,935 |
|
|
$ |
14,102 |
|
|
|
27.7 |
% |
Cost of sales |
|
|
52,693 |
|
|
|
42,899 |
|
|
|
9,794 |
|
|
|
17.7 |
|
Gross profit |
|
|
12,344 |
|
|
|
8,036 |
|
|
|
4,308 |
|
|
|
8.1 |
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development costs |
|
|
659 |
|
|
|
772 |
|
|
|
(113 |
) |
|
|
(10.0 |
) |
Selling, general and administrative expenses |
|
|
10,440 |
|
|
|
7,419 |
|
|
|
3,021 |
|
|
|
41.7 |
|
Transaction costs |
|
|
37 |
|
|
|
— |
|
|
|
37 |
|
|
|
100.0 |
|
Total operating expenses |
|
|
11,136 |
|
|
|
8,191 |
|
|
|
2,945 |
|
|
|
58.3 |
|
Operating income (loss) |
|
|
1,208 |
|
|
|
(155 |
) |
|
|
1,363 |
|
|
|
(165.0 |
) |
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense |
|
|
(1,409 |
) |
|
|
(490 |
) |
|
|
(919 |
) |
|
|
91.4 |
|
Interest income |
|
|
- |
|
|
|
1 |
|
|
|
(1 |
) |
|
|
(50.0 |
) |
Foreign currency transaction gain (loss) |
|
|
175 |
|
|
|
(121 |
) |
|
|
296 |
|
|
|
(267.1 |
) |
Other income (expense) |
|
|
(2,852 |
) |
|
|
(102 |
) |
|
|
(2,750 |
) |
|
|
14,380.0 |
|
Total other income (expense) |
|
|
(4,086 |
) |
|
|
(712 |
) |
|
|
(3,374 |
) |
|
|
(106.5 |
) |
Income (loss) before income taxes |
|
|
(2,878 |
) |
|
|
(867 |
) |
|
|
(2,011 |
) |
|
|
(132.9 |
) |
Income tax expense |
|
|
206 |
|
|
|
234 |
|
|
|
(28 |
) |
|
|
(26.8 |
) |
Net income (loss) |
|
|
(3,084 |
) |
|
|
(1,101 |
) |
|
|
(1,983 |
) |
|
|
(139.2 |
) |
Net income attributable to noncontrolling interest |
|
|
288 |
|
|
|
— |
|
|
|
288 |
|
|
|
100.0 |
% |
Net income (loss) attributable to shareholders of |
|
$ |
(3,372 |
) |
|
$ |
(1,101 |
) |
|
$ |
(2,271 |
) |
|
|
206.3 |
% |
Three Months Ended September 30, 2022 Compared to Three Months Ended September 30, 2021
Net revenues and gross profit
Net revenues increased $14.1 million or 27.7% to $65.0 million for the three months ended September 30, 2022 from $50.9 million for the comparable period in 2021. The increase in revenues is primarily due to the acquisition of Rabern and increases in sales of straight mast cranes by the Company’s U.S. subsidiaries. Increases in sales of PM Cranes were offset by foreign currency changes of $4.6 million.
Our gross profit increased $4.3 million to $12.3 million for the three months ended September 30, 2022 from $8.0 million for the comparable period in 2021. The increase in gross profit is attributable to increases in revenues due to the Rabern acquisition and increases in sales of straight mast cranes partially offset by higher material costs. The increase in gross profit percentage is primarily driven by the Rabern acquisition and price surcharges on Manitex Cranes offset by material cost inflation due to disruptions in the supply chain.
Research and development — Research and development expense was $0.7 million for the three months ended September 30, 2022 compared to $0.8 million for the same period in 2021. The Company’s research and development spending reflects our continued commitment to develop and introduce new products that give the Company a competitive advantage.
Selling, general and administrative expense — SG&A expense for the three months ended September 30, 2022 was $10.4 million compared to $7.4 million for the comparable period in 2021, an increase of $3.0 million. The increases are primarily related to SG&A expense of $1.3 million related to the Rabern acquisition, increased wages and benefits of $0.6 million, stock compensation of $0.5 million, severance charges of $0.3 million, increased professional fees of $0.2 million and building maintenance cost of $0.2 million.
Transaction costs — Transaction costs for the three months ended September 30, 2022 was less than $0.1 million related to deal costs in connection with the Rabern acquisition.
Interest expense —Interest expense was $1.4 million for the three months ended September 30, 2022 compared to $0.5 million for the comparable period in 2021. The increase in interest expense are due to higher debt and interest rates due to the new credit facilities and term debt added in connection with the Rabern acquisition.
31
Foreign currency transaction losses — For the three months ended September 30, 2022, the Company had foreign currency gain of $0.2 million compared to a loss of $0.1 million for the comparable period in 2021. A substantial portion of the gain relate to changes in the Chilean peso.
Other income (expense) — Other expense was $2.9 million for the three months ended September 30, 2022 driven by the proposed settlement with Custom Truck One Source, L.P. in connection with the sale of our Load King business in 2015 compared to other expense of $0.1 million for the comparable period in 2021.
Income taxes — For the three months ended September 30, 2022, the Company recorded an income tax provision of $0.2 million. The calculation of the overall income tax provision for the three months ended September 30, 2022 primarily consists of US federal income taxes for Rabern which is a separate taxpayer for US federal tax purposes, foreign income taxes, a discrete income tax benefit for a reduction in the valuation allowance recorded against state tax credits in connection with the Rabern acquisition, and a discrete income tax benefit related to the expiration of the statutes of limitations for a foreign jurisdiction. For the three months ended September 30, 2021, the Company recorded an income tax provision of $0.2 million, which includes a discrete income tax expense of $0.01 million. The calculation of the overall income tax provision for the three months ended September 30, 2021 primarily consists of foreign income taxes and a discrete tax expense primarily for the accrual of interest related to unrecognized tax benefits.
The effective tax rate for the three months ended September 30, 2022 was an income tax provision of 7.2% on pretax loss of $2.9 million compared to an income tax provision of 27.0% on a pretax loss of $0.9 million in the comparable prior period. The effective tax rate for the three months ended September 30, 2022 differs from the U.S. statutory rate of 21% primarily due to a valuation allowance in the U.S., a reduction in the valuation allowance recorded against state tax credits in connection with the Rabern acquisition, a partial valuation allowance in Italy, nondeductible foreign permanent differences, income taxed in foreign jurisdictions at varying tax rates and a reduction in the uncertain position liability for the expiration of the statutes of limitations for a foreign jurisdiction.
|
|
Nine Months Ended |
|
|
|
|
|
|
|
|||||||
|
|
2022 |
|
|
2021 |
|
|
$ Change |
|
|
% Change |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net revenues |
|
$ |
195,034 |
|
|
$ |
158,148 |
|
|
$ |
36,886 |
|
|
|
23.3 |
% |
Cost of sales |
|
|
160,198 |
|
|
|
129,867 |
|
|
|
30,331 |
|
|
|
23.6 |
|
Gross profit |
|
|
34,836 |
|
|
|
28,281 |
|
|
|
6,555 |
|
|
|
11.1 |
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development costs |
|
|
2,095 |
|
|
|
2,357 |
|
|
|
(262 |
) |
|
|
(9.4 |
) |
Selling, general and administrative expenses |
|
|
30,317 |
|
|
|
23,232 |
|
|
|
7,085 |
|
|
|
25.7 |
|
Transaction costs |
|
|
2,236 |
|
|
|
— |
|
|
|
2,236 |
|
|
|
100.0 |
|
Total operating expenses |
|
|
34,648 |
|
|
|
25,589 |
|
|
|
9,059 |
|
|
|
35.1 |
|
Operating income (loss) |
|
|
188 |
|
|
|
2,692 |
|
|
|
(2,504 |
) |
|
|
(135.8 |
) |
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense |
|
|
(2,982 |
) |
|
|
(1,573 |
) |
|
|
(1,409 |
) |
|
|
45.2 |
|
Interest income |
|
|
3 |
|
|
|
7 |
|
|
|
(4 |
) |
|
|
(50.0 |
) |
Gain on Paycheck Protection Program loan forgiveness |
|
|
- |
|
|
|
3,747 |
|
|
|
(3,747 |
) |
|
|
(100.0 |
) |
Foreign currency transaction gain (loss) |
|
|
268 |
|
|
|
(421 |
) |
|
|
689 |
|
|
|
(131.0 |
) |
Other income (expense) |
|
|
(1,864 |
) |
|
|
(117 |
) |
|
|
(1,747 |
) |
|
|
(6,686.7 |
) |
Total other income (expense) |
|
|
(4,575 |
) |
|
|
1,643 |
|
|
|
(6,218 |
) |
|
|
(120.8 |
) |
Income (loss) before income taxes |
|
|
(4,387 |
) |
|
|
4,335 |
|
|
|
(8,722 |
) |
|
|
(129.0 |
) |
Income tax expense |
|
|
570 |
|
|
|
843 |
|
|
|
(273 |
) |
|
|
(40.2 |
) |
Net income (loss) |
|
|
(4,957 |
) |
|
|
3,492 |
|
|
|
(8,449 |
) |
|
|
(140.8 |
) |
Net income attributable to noncontrolling interest |
|
|
442 |
|
|
|
— |
|
|
|
442 |
|
|
|
100.0 |
% |
Net income (loss) attributable to shareholders of |
|
$ |
(5,399 |
) |
|
$ |
3,492 |
|
|
$ |
(8,891 |
) |
|
|
-254.6 |
% |
Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021
Net revenues and gross profit
Net revenues increased $36.8 million or 23.3% to $195.0 million for the nine months ended September 30, 2022 from $158.1 million for the comparable period in 2021. The increase in revenues is primarily due to increases in sales of straight mast cranes by the Company’s U.S. subsidiaries and the acquisition of Rabern. Increases in sales of PM Cranes were offset by foreign currency changes of $11.1 million.
32
Our gross profit increased $6.6 million to $34.8 million for the nine months ended September 30, 2022 from $28.3 million for the comparable period in 2021. The increase in gross profit is attributable to increases in revenues due to increases in sales of straight mast cranes and the acquisition of Rabern and partially offset by higher material costs. The increase in gross profit percentage is primarily driven by the Rabern acquisition and price surcharges from the Manitex business offset by material cost inflation due to disruptions in the supply chain.
Research and development — Research and development expense was $2.1 million for the nine months ended September 30, 2022 compared to $2.4 million for the same period in 2021. The Company’s research and development spending reflects our continued commitment to develop and introduce new products that give the Company a competitive advantage.
Selling, general and administrative expense — SG&A expense for the nine months ended September 30, 2022 was $30.3 million compared to $23.2 million for the comparable period in 2021, an increase of $7.1 million. The increases are primarily related to additional SG&A expense of $2.3 million related to the Rabern acquisition, severance charges of $1.2 million, stock compensation of $0.9 million, increased wages and benefits of $0.9, increased professional fees of $0.7 million and higher amortization expense of $0.4 million.
Transaction costs — Transaction costs for the nine months ended September 30, 2022 were $2.2 million related to deal costs in connection with the Rabern acquisition.
Interest expense — Interest expense was $3.0 million for the nine months ended September 30, 2022 compared to $1.6 million for the comparable period in 2021. The increase in interest expense are due to higher debt and interest rates due to the new credit facilities and term debt added in connection with the Rabern acquisition.
Gain on Paycheck Protection Program loan forgiveness — Gain on loan forgiveness was $3.7 million for the nine months ended September 30, 2021, due to the paycheck protection program loan forgiveness by the Small Business Administration.
Foreign currency transaction losses — For the nine months ended September 30, 2022, the Company had foreign currency gains of $0.3 million compared to currency losses of $0.4 million for the comparable period in 2021. A substantial portion of the losses relate to changes in the Chilean peso.
Other income (expense) —Other expense was $1.9 million for the nine months ended September 30, 2022 compared to $0.1 million for the comparable period in 2021. The increase in other expense was driven by the proposed settlement of $2.9 million with Custom Truck One Source, L.P. in connection with the sale of our Load King business in 2015 partially offset by other income due to a gain on sale of a building associated with the Badger restructuring and the reversal of a previously recorded contingent liability consideration.
Income taxes — For the nine months ended September 30, 2022, the Company recorded an income tax provision of $0.6 million, which includes a discrete income tax benefit of $0.2 million. The calculation of the overall income tax provision for the nine months ended September 30, 2022 primarily consists of US federal income taxes for Rabern which is a separate taxpayer for US federal tax purposes, foreign income taxes, a discrete income tax benefit for a reduction in the valuation allowance recorded against state tax credits in connection with the Rabern acquisition, and a discrete income tax benefit related to the expiration of the statutes of limitations for various state and foreign jurisdictions. For the nine months ended September 30, 2021, the Company recorded an income tax provision of $0.8 million, which includes a discrete income tax benefit of $0.5 million. The calculation of the overall income tax provision for the nine months ended September 30, 2021 primarily consists of foreign income taxes and a discrete income tax benefit related to the expiration of the statutes of limitations for various state and foreign jurisdictions.
The effective tax rate for the nine months ended September 30, 2022 was an income tax provision of 13.0% on pretax loss of $4.4 million compared to an income tax provision of 19.4% on a pretax income of $4.3 million in the comparable prior period. The effective tax rate for the nine months ended September 30, 2022 differs from the U.S. statutory rate of 21% primarily due to a valuation allowance in the U.S., a reduction in the valuation allowance recorded against state tax credits in connection with the Rabern acquisition, a partial valuation allowance in Italy, nondeductible foreign permanent differences, income taxed in foreign jurisdictions at varying tax rates, and a reduction in the uncertain position liability for the expiration of the statute of limitations for various state and foreign jurisdictions.
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 potential negative financial impact to our results of operations and liquidity position cannot be reasonably estimated at this time, but could be material. In the context of these uncertain conditions, we are actively managing the business to maintain cash flow and ensure that we have sufficient liquidity for a variety of scenarios. We believe that such strategy will allow us to meet our anticipated funding requirements.
On April 11, 2022, the Company entered into an $85 million credit facility with Amarillo National Bank consisting of a working capital facility of $40 million, working capital facility of $30 million, and $15 million term loan facility. This new banking facility provided
33
the funds for the Rabern acquisition and working capital facilities for both the Manitex and Rabern businesses. At September 30, 2022, the PM Group had established working capital facilities with five Italian, one Spanish, twelve South American banks and one Romanian bank, which was added in August 2022. Under these facilities, the PM Group can borrow $19.2 million against orders, invoices and letters of credit.
Cash, cash equivalents and restricted cash were $11.9 million and $21.6 million at September 30, 2022 and December 31, 2021. At September 30, 2022, the Company had global liquidity of approximately $32 million based on the cash balance and availability under its working capital facilities. Future advances are dependent on having available collateral.
If our revenues were to increase significantly in the future, the provision limiting borrowing against accounts receivable and inventory would limit future borrowings. If this were to occur, we would attempt to negotiate higher inventory caps with our banks. There is, however, no assurance that the banks would agree to increase the caps.
The Company expects cash flows from operations and existing availability under the current revolving credit and working capital facilities will be adequate to fund future operations. If, in the future, we were to determine that additional funding is necessary, we believe that it would be available. There is, however, no assurance that such financing will be available or, if available, on acceptable terms.
At September 30, 2022 and December 31, 2021, no customer accounted for 10% or more of the Company’s accounts receivable.
Cash flows for the nine-month period ended September 30, 2022 compared to the nine-month period ended September 30, 2021
Operating Activities - For the nine months ended September 30, 2022, cash flow used in operating activities was $11.3 million compared to cash provided by operating activities of $4.3 million for the same period in the prior year. Cash used by working capital was $13.0 million for the nine months ended September 30, 2022 compared to cash provided by working capital of $0.4 million for the same period in the prior year. The increase is primarily related to inventory to meet increasing demand and backlog.
Investing Activities - Cash used in investing activities was $50.2 million in the first nine months of 2022, compared to $0.7 million used in investing activities in the same period a year ago. Cash used in the nine month period ended September 30, 2022 was primarily related to cash payments for the Rabern acquisition of $38.4 million, property and equipment purchases of $13.7 million, offset by $1.9 million in proceeds from the sale of the Badger facility and other equipment. Cash used in the nine month period ended September 30, 2021 was related to cash payments for property and equipment and investment in intangible assets.
Financing Activities - Cash provided by financing activities was an inflow of $55.5 million for the nine months ended September 30, 2022 which included an increase in borrowings on the revolving credit facility in connection with the Rabern acquisition of $46.7 million, borrowings on the term loan in connection with the Rabern acquisition of $15.0 million, additional borrowings on the revolving credit facility of $6.7 million, working capital borrowing of $0.9 million and borrowings for insurance agreements and finance leases of $0.9 million, offset by repayment of previous revolving credit facility of $12.8 million and notes of $1.1 million. Cash used in financing activities was an outflow of $1.9 million for the nine months ended September 30, 2021 which included a decrease in working capital borrowing of $1.3 million, repayments of notes of $1.1 million and payments on capital lease obligations of $0.3 million, offset by borrowings for insurance agreements of $0.7 million.
Critical Accounting Policies
The Company’s critical accounting policies have not materially changed since the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 was filed. See Item 7, Management’s Discussion and Analysis of Results of Operations and Financial Condition, in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 for a discussion of the Company’s critical accounting policies.
34
Item 3—Quantitative and Qualitative Disclosures about Market Risk
Not required for Smaller Reporting Companies.
Item 4—Controls and Procedures
Disclosure Controls and Procedures
With the participation of our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer) and under the supervision of the Audit Committee of the Board of Directors, our management conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, as of September 30, 2022. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures, as of September 30, 2022, were effective and provided reasonable assurance that the information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). During the period covered by this report, the Company made no changes that have materially affected, or that are reasonably likely to materially affect, its internal control over financial reporting.
35
PART II—OTHER INFORMATION
Item 1—Legal Proceedings
The information set forth in Note 15 (Legal Proceedings and Other Contingencies) to the accompanying Condensed Consolidated Financial Statements included in Part I. Item 1 “Financial Statements” of this Quarterly Report on Form 10-Q is incorporated herein by reference.
Item 1A—Risk Factors
Except as set forth below, as of the date of this filing, there have been no material changes from the risk factors disclosed in the Company’s Annual Report on Form 10-K filed for the fiscal year ended December 31, 2021.
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:
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.
In connection with the ongoing war between Russia and Ukraine, the U.S. government has imposed enhanced export controls on certain products and sanctions on certain industry sectors and parties in Russia. The Company is not accepting orders from Russia at this time. This region does not represent a material portion of our international operations, and we do not rely on any material goods from suppliers in the region. However, the fluidity and continuation of the conflict may result in additional economic sanctions and other impacts which could have a negative impact on the Company’s financial condition, results of operations and cash flows. These include decreased sales; supply chain and logistics disruptions; volatility in foreign exchange rates and interest rates; inflationary pressures on raw materials and energy and heightened cybersecurity threats.
The risks that the Company faces in its international operations may continue to intensify if the Company further develops and expands its international operations.
36
Item 2—Unregistered Sales of Equity Securities and Use of Proceeds.
The Company’s Credit Agreement with Amarillo National Bank directly restricts the Company’s ability to declare or pay dividends without Amarillo’s consent. In addition, pursuant to the Company’s Credit Agreement with Amarillo National Bank, the Company’s U.S. subsidiaries must maintain a debt service coverage ratio of at least 1.25:1.00 and a net worth for U.S. entities of at least $80 million, each as measured on the last date of each calendar quarter, beginning June 30, 2022.
ISSUER PURCHASES OF EQUITY SECURITIES
Period |
|
(a) Total |
|
|
(b) Average |
|
|
(c) Total |
|
|
(d) Maximum |
|
||||
July 1—July 31, 2022 |
|
|
4,725 |
|
|
$ |
6.27 |
|
|
|
— |
|
|
|
— |
|
August 1—August 31, 2022 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
September 1—September 30, 2022 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
|
— |
|
Item 3—Defaults Upon Senior Securities
None.
Item 4—Mine Safety Disclosures
Not applicable.
Item 5—Other Information
None.
Item 6—Exhibits
See the Exhibit Index set forth below for a list of exhibits included with this Quarterly Report on Form 10-Q.
37
EXHIBIT INDEX
Exhibit Number |
|
Exhibit Description |
|
|
|
10.1 |
|
|
|
|
|
31.1* |
|
|
|
|
|
31.2* |
|
|
|
|
|
32.1** |
|
|
|
|
|
101.INS* |
|
Inline XBRL Instance Document- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
|
|
|
101.SCH* |
|
Inline XBRL Taxonomy Extension Schema Document. |
|
|
|
101.CAL* |
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
|
|
|
101.LAB* |
|
Inline XBRL Taxonomy Extension Label Linkbase Document. |
|
|
|
101.PRE* |
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
|
|
|
101.DEF* |
|
Inline XBRL Taxonomy Extension Definition Linkbase Document. |
|
|
|
104 |
|
Cover Page Interactive Data File-The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
* Filed herewith
** Furnished herewith
38
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
November 3, 2022
|
|
By: |
|
/s/ MICHAEL COFFEY |
|
|
|
|
Michael Coffey |
|
|
|
|
Chief Executive Officer |
|
|
|
|
(Principal Executive Officer) |
November 3, 2022
|
|
By: |
|
/s/ JOSEPH DOOLAN |
|
|
|
|
Joseph Doolan |
|
|
|
|
Chief Financial Officer (Principal Financial and Accounting Officer) |
39