Manitex International Inc (MNTX) 2007 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Veri-Tek International Corporation third quarter 2007 financial report conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation the conference will be opened for questions. (OPERATOR INSTRUCTIONS.) This conference call is being recorded today, Wednesday, November 14th of 2007. I would now like to turn the conference to David Langevin, Chairman and CEO. Please go ahead, sir.

Thank you, Mary. Welcome to the third quarter call for Veri-Tek International. I would first like to take care of a housekeeping issue, that being the safe harbor statement. Please note that the safe harbor statement in our press release, and also please note that the comments on this call, may contain statements that are forward-looking in nature, and that such statements are based on current plans, estimates, and expectations, and involve a number of known and unknown risks and our future results could differ significantly. These factors and risks, as well as additional information, are discussed in detail in our filings with the Securities and Exchange Commission.

I'd also like to welcome Andrew Rooke, our President and COO, who will join me on the call. And as our normal procedure is, I will start with some overall comments, followed by Andrew highlighting the specifics of our quarter and, before taking questions, I will summarize how we see the outlook of our company at this time.

Let me first state that we are proud of the transformation of our company to a focused industrial equipment company from the legacy Veri-Tek business, which we successfully sold during the third quarter. Our company is now clearly led by Manitex, which is a profitable business, nicely placed in a growing segment of the marketplace. The positive changes in our company are documented by the following recent achievements.

As I referred to previously, we completed the sale and closure of the Testing and Equipment Assembly segment. We recognized a small gain on that sale, as well as we eliminated the losses from carrying this business, and realized slightly over $1 million in cash, which we used to reduce debt.

We acquired Noble Forklifts to integrate with Liftking, which should provide us with a more consistent earnings picture for our Liftking division, as we integrate Noble into Liftking.

We introduced our new 50-ton crane and received orders for over 50 units. The acceptance of this product has been unprecedented for our company, and is allowing us to grow into new markets not covered before at Manitex, at higher than our normal historical margins.

We reduced our long-term debt by $12.1 million, or over 32%. And as a result of this action, and in a very difficult credit market, we increased our credit facility to $23 million on a consolidated basis and decreased our borrowing [rates] by 50 basis points.

Finally, and most importantly, we recorded earnings per share of $0.18 per basic and $0.17 on a fully-diluted basis for the nine months ended September 30, 2007 from continuing operations.

With these brief opening comments, I would like to turn it over to Andrew to discuss the specific operating results for our quarter, after which I will comment on outlook and we will be happy to take questions. Andrew?

Thanks, Dave, and good afternoon and welcome, everyone. I'm going to start with the overview and summary highlights of our quarter three earnings release and then review a few areas of particular note in more detail.

Before addressing the highlights, with regard to our financial statements, I'd like to be clear as to how they reflect the acquisitions and disposals that we have completed, as we have transformed the company into a focused industrial equipment company. The legacy Testing and Assembly Equipment business is treated as a discontinued business for 2007, and comparative results have been restated to reflect this.

We acquired Manitex on July 3, 2006, Manitex Liftking on November 30, 2006 and the Noble product line on July 31, 2007. These comprise the Lifting Equipment segment and the continuing operations of the Company. Consequently, the results for the continuing operations for 2007 include nine months of Manitex and Manitex Liftking and two months for Noble. The results for 2006 only include three months of Manitex.

So firstly I'd like to comment on the third quarter highlights of continuing operations. We are very pleased to report a 33% year-over-year net sales growth to $26.6 million, from $20 million, driven by the Manitex Liftking acquisition. There was a 500 basis points improvement in gross margin to 18.8% for the third quarter of 2007, from 13.8% in the same period of 2006. EBITDA increased 100% to $2.4 million from $1.2 million in the same quarter last year, representing an EBITDA margin of 8.9%, compared to 5.8% for the same quarter of last year.

Debt was reduced by $12.1 million to $26.2 million, from $38.3 million at June 30, 2007, which potentially would decrease annual interest expense by approximately $1 million. We reported net income from continuing operation of $0.9 million, compared to breakeven in the same period of 2006.

In addition, the following is some of the third-quarter operating highlights. The Manitex 50-ton boom truck launched in May has received more than 50 orders to date. We acquired Noble Forklift to integrate with Liftking. We completed the sale and closure of the Testing and Assembly Equipment segment, and we initiated currency hedging programs to limit exposure to transaction movements from the U.S. dollar/Canadian dollar currency exchange rate fluctuations.

In more detail then, net sales for the third quarter of 2007 increased $6.6 million, or 33%, to $26.6 million, from $20 million in the third quarter of 2006. The higher net sales was the result of a $0.9 million increase in Manitex's sales and $5.7 million in sales from Manitex Liftking, driven by consistent demand across the range of the Company's lifting products, and strong shipments of Manitex larger boom trucks.

Gross profit was $5 million, or 18.8% (sic - see press release) gross profit margin for the third quarter of 2007, compared to gross profit of $2.8 million, or 13.8% gross profit margin, for third quarter of 2006. The Company's gross profit was favorably impacted in the third quarter of 2007 by volume and product mix, stronger pricing, and the benefit of sourcing materials from lower-cost countries. The favorable mix is a result of an increase in the sales of cranes with a higher lifting capacity, particularly attributable to sales of our 50-ton crane that was introduced in the second quarter of 2007.

Total operating expenses for the third quarter of 2007 were $3.1 million, compared to total operating expenses of $1.6 million in the same quarter of last year. The increase is primarily the result of acquisitions, as well as increased amortization expense attributable to the Manitex acquisition that occurred in 2006.

We believe that EBITDA and EBITDA as a percentage of sales represent a key operating metric for the business. During the third quarter, the Company's continuing operations generated $2.4 million of EBITDA, or 8.9% of sales, compared to $1.2 million, or 5.8% of sales for the same quarter last year. EBITDA for the nine months ended September 30, 2007, was $6.5 million, or 8.2% of sales, compared to $0.9 million, or 4.7% of sales in the period last year.

Net income from continuing operations for the third quarter was $872,000, or $0.10 per basic and $0.09 per fully diluted share, compared to a net loss from continuing operations of $17,000, or $0.00 earnings basic and fully diluted share for third quarter of 2006. Net income for the third quarter was $918,000, or $0.11 per basic and $0.10 per fully diluted share, based on 8.6 million basic and 9.2 million fully diluted weighted average common shares outstanding. This compared to a net loss of $566,000, or $0.11 per basic and fully diluted share, based on 5.1 million fully diluted and weighted average common shares outstanding in the same period of last year.

Foreign currency transaction losses from the U.S./Canadian exchange rate negatively impacted net results by approximately ($172,000) in the third quarter of 2007.

Moving on to the balance sheet and cash flow, we made significant steps toward improving some of our key ratios in the quarter. We generated net cash from operating activities of $2.8 million, and raised a further $1.1 million from the sale of the Testing and Equipment segment assets and $9.3 million from the issuance of stock and exercise of warrants. This cash was used to reduce debt by $12.1 million, and increased our cash balance at the end of the quarter by $1.1 million. We completed the quarter ended September 30, 2007, with $19.7 in working capital and a current ratio, defined as current assets divided by current liabilities, of 2.2 to 1. Shareholders' equity increased 62% to $29.8 million, from $18.4 million as of December 31, 2006.

Now I'd like to review a few areas in more detail, starting with revenue. As already stated, revenues for the quarter increased over the third quarter of 2006 by nearly 33%. Manitex revenues remained strong and, on a pro forma year-over-year basis for the nine months ended September 30, 2007, compared to the same period for 2006, was showing an increase of approximately 18%, driven by demand in our end markets, continuing product development, and new product launches.

As we've discussed, the reception for the higher tonnage boom trucks was very pleasing to us, and gives our customers improved opportunities to improve their return on investment. These higher tonnage products are allowing us to better serve our oil, gas, mining and infrastructure markets, and are allowing us expand our addressable market into those traditionally addressed by custom-chassis and all-terrain cranes.

Liftking's quarter three revenues were, as anticipated, lower than the second quarter in 2007, which had included two large transporters and strong military volumes. On a pro forma year-over-year basis for the nine months ended September 30, 2007, compared to the same period of 2006, volume is showing good growth against 2006 of approximately 19%. The impact from the Noble acquisition in the quarter was not significant and contributed only a small amount of revenue in the period.

Our gross profit margin of 18.8% in the quarter was an improvement of five percentage points over the third quarter of 2006. This was due to the improved production efficiencies from volume, higher sales of our higher margin -- higher tonnage boom trucks, stronger pricing and benefits from some of our supply chain sourcing activities.

We did suffer, however, from integration costs of the Noble product line and the impact of the weakening U.S. dollar versus the Canadian dollar. At Noble we completed the integration for one product line into the Manitex operation, and we began activity to integrate production into our Liftking facility and incurred start-up costs and inefficiencies associated with this. With the continuing weakness of the dollar, Liftking, which sells approximately 75% into the U.S., has seen a negative margin impact of approximately 7% on a pro forma year-over-year basis for the nine months ended September 30, 2007, compared to the same period for 2006. This movement is obviously significant. And operational actions to [recover] this are being initiated, since there is no apparent short-term reversal anticipated in the exchange rate.

Operating expenses for the quarter were $3.1 million, an increase of $1.5 million over the same period of 2006. This increase reflects an increase in R&D expenditures, the addition of Liftking, increased amortization expense from the Manitex acquisition, and costs for consultants for the Sarbanes-Oxley project.

Following the strength -- the impact of the strength of the Canadian dollar against the United States dollar during two, we reported on the call covering those results that we hoped to complete discussions and implement an action plan to mitigate our exposure to these movements. We did complete these activities and entered into four contracts to hedge foreign currency transaction losses. The effect of these contracts was to reduce losses in the quarter by $218,000, as we priced contracts to fully hedge the outstanding balance of the seller notes with C$2.8 million and the accounts receivable balances denominated in U.S. dollars, subject to currency fluctuation and settlement at our Canadian subsidiary. As discussed earlier, however, our Canadian subsidiary has been, and may continue to, have its margins impacted by fluctuations in the U.S./Canadian dollar exchange rate.

For quarter three, we recorded an income tax benefit of $0.1 million, as the provision for tax on the quarter's earnings was more than offset as a result of the change to the effective tax rate to 9.3% from the previous estimates of 27.4%. This change in effective tax rate arises from the change in mix of annual projected earnings between Canada and the U.S. that causes a decrease in the effective rate, as the Company has a net operating loss carryforward, for which no benefit was taken, available to offset taxable earnings in the U.S.

The change in earnings mix is attributable to higher volume and gross profit increase in U.S. earnings, together with a decrease in Canadian income related to the projected continuing impact of the strengthening Canadian dollar.

As I stated earlier, we reduced our debt by $12.1 million in the quarter, through proceeds from a combination of sources, including operations, stock issuance, warrant exercises, and the sale of assets of the discontinued Testing and Assembly Equipment segment. Cash flow generation and the reduction of debt are important objectives for us, and these actions have improved our overall balance sheet. Additionally, we anticipate that the reduction in debt should convert to a reduction in our annual interest expense of approximately $1 million.

Working capital, excluding the Noble transaction, decreased in the third quarter of 2007 by $0.5 million, compared to the second quarter of 2007. This was driven largely by the collection of accounts receivable, offset by a reduction in accounts payable and accrued expenses. Inventory in the quarter remained constant, and remains an improvement opportunity for us.

I'd just like to make a few comments as well about the Noble Forklifts acquisition. Having completed that acquisition on July 31st, we have engaged in activities to integrate it into our operations. We have commenced a series of communications with the extensive customer base, who have been very loyal to its product, and also commenced activity to integrate production and engineering into our existing facilities.

The assembly facility at Texas for the TrailerMate trailer- mounted product is complete and production commenced in the quarter, with one model of the product being shown to visitors at the recent trade show in Kentucky. Similar actions are in progress for the Toronto facility, and I anticipate initial shipments of the rough terrain product during the fourth quarter of the year. Our sales, research and development, and engineering functions are excited at the prospects for Noble, and I look forward to updating you on progress in future course.

With that, I'd now like to hand back to David.

Thank you, Andrew. As we stated in our release, we now expect our sales to be in excess of the previous guidance of $95 million to $100 million for the year. Assuming our fourth-quarter sales are somewhat in the range of our third quarter, we would expect our annual sales to be approximately $105 million. Our expectations are that our EBITDA margins for the year will finish with the range of our earlier guidance of 8 to 8.5%.

Regarding '08, as we stated in our press release, we have not finished our plans for next year. However, with the elimination of our legacy Veri-Tek business, we will provide guidance on annual sales and earning-per-share basis for '08 when our plans are complete, which we would expect to occur in the fourth quarter of '07.

Having said that, it's certainly a more difficult year to provide guidance, with the economic uncertainty in the overall marketplace. However, because of the niches that we principally participate in, that being oil and gas, mining, infrastructure road and bridges, and commercial construction, as well as the steady improvement we've seen in some of our ancillary businesses, such as our higher-margin replacement parts businesses, we believe at this time that we will continue to see a year-over-year improvement in our key financial measurements.

We are also encouraged by the strength of our balance sheet as we enter into '08. Our company is on good solid footing, which will allow us to implement our business plan, continue to expand our product selection, with continued development of higher capacity cranes, as well as allow us to be opportunistic with any potential acquisitions.

With that, Mary, I'd like to open up the line now for questions, please.

Thank you. (OPERATOR INSTRUCTIONS.) One moment, please , for the first question. Your first question comes from Sam Nicholls from Quillen Securities. Please go ahead.

Hi. Good afternoon.

Hi, Sam. How're you doing?

I wanted to ask about the approximately 50 orders for the 50-ton truck.

Yes.

About how much did you receive in the quarter, and how many have you delivered?

Well, we've just started with basic production, so we have not started to deliver many of those yet. At the end of September we had shipped six. At the end of the quarter we had just started to ship some of those, and they'll really mostly be delivered out into '08, as we have stated in some of our releases.

Okay. Could you refresh my memory on the selling price?

Well, we haven't announced the selling price of those because it depends -- as we do the final configuration with the chassis, but roughly a 50-ton crane is $175,000 to $200,000, for just the crane piece, the piece that we deliver on. But, again, that can fluctuate quite a bit, depending on the specifics of the crane, as well as the mounting of the crane on the chassis. But it's not something that we have announced.

Okay. And in the Manitex division, your revenue year over year was pretty much flat. Was there any consequence from the poor weather, especially in the Southwest, to your knowledge?

In the third quarter?

Yes.

No, Sam, I don't think we had any -- I do know what you're referring to, but it was nothing like the ice storms that we in the first quarter. So as far as I know, there was not any production delays or issues as a result of that.

Okay. And your tax rate, which was a benefit, was that entirely due to usage of the NOL?

Yes. If you recall, Sam -- I know we've talked about this in the past -- we have roughly at the end of the year a $10 million net operating loss carryforward, which of course is only used on federal U.S. taxes, so we do not get that benefit in the Canadian income, or the state taxes that we pay in Texas.

Okay. What explains the difference for the tax rate in the third quarter versus a positive tax amount in the second quarter?

Well, the second quarter we had, as Andrew referred to, we had some, not unusual, but some business go through the Canadian operation in the second quarter, which resulted in more Canadian taxes in the second quarter that we did not have going through in the third quarter.

Okay.

You change your estimates as you -- resulting from your income during the quarter.

Right. Okay. Is there any progress on shifting your sourcing to Liftking's Asian suppliers?

I think Andrew has been working very diligently on that, and we've been seeing some results between the operations. I know Andrew has an Asian trip coming up shortly, but I would think progress is coming along steadily. I don't know, Andrew, if you want to mention or comment on that at all?

Well, I think that's a fair comment, David. We are exploring a number of alternative sources, not only Asia, but India as well. And we continue to do that. So progress is being made. As I'm sure you're aware, I believe that one of the key elements -- and I think we probably discussed this previously -- the important thing that we need to make sure is not only that we get lower costs, but that we get good quality product. And that is something that our engineers and everybody is focusing on as well. So it's not as easy as just -- and I'm not suggesting that you're saying that -- but there are a lot of steps that we go through to make sure that we get a good, quality product and good cost product. We're working, I think, relatively satisfactorily against that.

Okay. And last, I guess kind of superfluous, question. When are you going to change your name to Manitex, or are you still?

I believe that that's in process as we go. It should be sometime in the near future.

Okay. Very good. Thank you David. Thank you Andrew.

Thanks a lot.

Thank you.

Thank you. (OPERATOR INSTRUCTIONS.) And our next question comes from [Philip Anderson] with Pinnacle Fund. Please go ahead.

Hi, guys. I wanted to follow up on the question regarding changing sourcing of components to purchase from suppliers in less expensive countries. Andrew, could you quantify, maybe on a percentage basis, to what extent the Company is already benefiting from having shifted? It sounds like it's fairly early on, but are we actually getting much economic benefit so far? Or is this trip to Asia really a trip that would line up suppliers and we would begin to get the benefit maybe in the March quarter?

Well I think we -- hi, Phil, sorry -- we talked on the last call, I think, that on average we've got approximately 6% of our outsourced product coming from what we would consider to be low-cost countries. And quarter on quarter that hasn't changed to any significant degree. The intent is that we increase that percentage as we go forward, both from today and onwards into 2008, et cetera.

The -- I wouldn't read anything particularly special into the fact that I'm going over to Asia. It's something that I need to do more of, and we need to do more of as a business, as we recognize that there are opportunities to improve our sourcing base and get more suppliers qualified to support our product. So it's something that we intend to continue to do. I would very much like to see that 5 to 6% increase. We have a number of active quotations out there with people, which we are following through. And I anticipate sort of continued progress on that. I hope that answers your question, Phil.

Yes, well that's helpful. We anticipate continued progress, too, Andrew, so I hope you have a good trip.

Thank you. I wouldn't expect anything else from you, Phil.

Or me from you. So, can you give us a sense as to what the -- maybe on a percentage basis -- what type of cost-of-goods savings can be potentially enjoyed to the extent the Company is successful in transitioning to a lower-cost supplier in another country?

Well, obviously, as we have spoken and talked on these calls in the past, we have a very significant material content within our cost of goods sold. I mean, it's 65% roughly, approximately, 60-65%. And so to the extent that we at this point are -- and as you know, we have also stated that within Liftking we do have more coming from what we describe as lower-cost countries and, clearly, with the Noble integration they will benefit from that. And we are making progress on Manitex but, to its credit, its margins have been very nicely increasing beyond what -- beyond the success and time period that we had laid out. So we have to work along with Manitex to continue to explore the sources and alternatives that they have. And so that percentage -- I wouldn't want to throw a percentage out, but certainly it's going to be -- it does have a potential to be significant.

David, sorry. Phil, I could also sort of add to that. I think one of things that we're very conscious of as well is we're looking at total acquisition cost, i.e., not just the cost that comes on the invoice, but what the impact is to the supply chain in terms of working capital and all of those type of things as well. So those are factors that we certainly take into consideration when we're looking into all of that [type of] sourcing.

Okay. Well, it sounds like you're on it and you're going to Asia, and hopefully that will bear some fruit for everybody. Switching gears for a minute, can you give us an update on the volume of spare parts business that the Company had in the third quarter?

It's been moving along nicely, as I indicated in my prepared remarks. We have -- I know we have filed in a public release the percentage of spare parts business that we have, which has been moving up to now approaching 12%. And I think that's a good improvement over a year ago. And some of that is because we obviously have much better working capital position, as documented in our balance sheet, and that's allowing us to put, and to have available, more parts on our shelves. And of course, as you know, the parts business is having the availability where, when that customer calls and needs that part, we can deliver it on a prompt basis. So I think -- and the margins there, as we've also stated publicly and have put in previous filings, is in excess of 40% and that margin is also moving up. So that's something that gives us some real strength as we go into, as I indicated and as we all know, some uncertainty in the economic markets.

Could you maybe give us some color as to whatever impact having a better balance sheet has had on the ability to keep parts on the shelves and fill orders in the September quarter, maybe versus how it was back in last year or the March quarter this year when the Company much less cash (inaudible)?

Well, I mean, a year ago our monthly sales -- and, again, we have on file a document that show this, and I'm going a little bit from memory -- but as I recall it was $700,000 to $800,000 a month, far less than a 12% number. And now in the third quarter, as I said, we're approaching a million a month, and so you can see quite a dramatic increase in the parts business. And, while I don't expect those kind of increases to continue on that kind of percentage basis, it does give us a good, stable base of business from which to draw upon as we go forward.

I guess really what I was wondering, Dave, is the percentage of the time that they can fill an order if a boom truck owner/operator has a broken boom truck and they call the shop in Texas and ask him for the widget, I would think that you are able to fulfill that order now more frequently than you were six months or twelve months --

Oh, absolutely.

I'm wondering if you can give us a sense as to how often you're able to fill the order now, and maybe contrast that with a period some time ago?

And it depends on -- what you try to do is have your availability of 90% or better on the part that is a fast-moving part. And I would say that that ability has increased significantly year over year. Also, the service, the ability of our guys to -- our parts people -- to be much more proactive in this area, because now we have the capability to stock our shelves to make sure that those parts that are necessary for our customers are available. I think it's a quantitative and a qualitative issue that we are fast approaching. And I don't want to say that we're there, because there's always room for improvements. But I did sit in on a meeting with our service guys and parts guys -- not service guys, but our parts guys -- in the last 30 days and was quite pleased with the enthusiasm and the energy that they're bringing to that area. And that's why I mentioned it in my prepared remarks. I think that will give us a lot of good stability as we go forward.

Yes, well that sounds very encouraging, particularly the fact that you were in a meeting recently and it seems to be going better.

That's right.

I guess next question -- with the big success of the 50-ton boom truck, I'm not sure how much capacity you had initially allocated to make this truck, but is the manufacturing line or lines set up in such a manner that you can allocate increased capacity to service what appears to be a hot product at this point in time?

Yes, we don't really have issues with capacity, but you do have to obviously allocate your utilization of your materials and your suppliers, and lay out your factory over an extended period of time and not just on a 30-day basis, because we do have long lead times on some of our components. But we are, as Andrew stated in his prepared remarks, we are making sure that we have more than enough capacity to handle this product and continue to develop in the high-capacity range and go into new markets, which really will allow us to continue to grow this company during a period where maybe our old, historical customers are not in the strongest position, but in some of the new markets where we're going in, and the markets that we serve, are very strong. So that's really what we're trying to accomplish, and I'm happy to say that it looks like that's, because of some of the planning that we did over the last few years, it is getting accomplished.

But, to answer your question specifically on capacity, we're making sure that we have, as I said to some of our shareholders, I'd love to take nothing other than 50-ton all months, but that's not the way you run a full service business.

Are there other new products that you're going to be introducing over the next two or three, four quarters that could be -- that could be -- perhaps that you would have some insight as to how the market's going to respond? I remember when you introduced the 50-ton you had, I think, 20 orders or so before it was even priced, if memory serves.

Eighteen orders, good memory.

Thanks. Are there other products that may have a similar bullish response that you'll be introducing?

You know, obviously we're a little biased. We like to think so, and we are going to continue to move up the capacity chain, as we have commented. And we think that's where the --there is a technology around the world which will allow cranes to be mounted on top of trucks which, as Andrew stated, adds a much better value proposition for our customers than the alternatives, and we intend to continue to grow into those markets. So, we have a schedule. We don't have anything specific that we want to mention right now, but we do expect that we will have a continuation of what you've seen in the past 12 months.

I think, David, if I can just jump in there as well -- we have mentioned it in a couple of places, but Manitex has a history of innovation and development, and over a number of years has introduced, I think it's 21 products in four years or something. That pipeline of R&D from our perspective is very important. And we have a program of projects that identify, we prioritize, and continue to develop, because we think that's critical to the continued growth and health of the Company. And you'll see, if you look at the financials you do see, some increased expenditure coming through on R&D, and our job is to make sure that's good expenditure going to the right projects.

Okay, well it all sounds great. You two are doing a terrific job. It was a very strong quarter, obviously. And it looks like the best is yet to come. So, thanks for the answers and keep up the good work.

Thanks, Phil.

Thank you, Phil.

Thank you. (OPERATOR INSTRUCTIONS.) And our next question comes from [Jeffrey Lone] with [Tuxedo Road Associates]. Please go ahead.

Hi, Dave.

Hi, Jeff.

Having been there from the beginning, you guys are making damn good progress.

Thank you.

I'd like to -- I really have a two-part question. I believe in the last quarterly conference call you mentioned that you were either putting a man in place to service global markets out of London, or were contemplating doing that? Do you have any follow-up on what the status of that is?

I don't recall stating that, Andrew. Do you remember anything about that? I don't recall --

I'm sorry. That's news to me.

Okay. That was my bad. The question really then returns back to international markets, recognizing that the shipping cost on some of these products are relatively high. There are some markets that are very buoyant, particularly in the mining areas that are off shore, not located specifically in Canada. Do have any thoughts or any plans on how you might address those markets?

Jeff, if I understand it right, as you know we ship to our customer, our dealers in North America. And we haven't up to this point, because we're still a relatively new public entity, tracked where a lot of those products end up after they end up going to our dealer. But we are going to try to do a better job on that, so we can address this issue. Because I know it's a concern of people that we have international exposure. I know we have some, but I don't really know -- I can't really be precise as to where our products go, beyond going to that customer. And, as you know, we have stated in our releases that when we sell a bunch of cranes to a Houston dealer, that it's going into oil and gas fields and that type of stuff, or service areas in the oil and gas area. And we suspect that some of those units are being used internationally around the world in their various applications. But again, we haven't been around long enough to be specific, but we will improve on that as we go forward.

It is a misused phrase, but you guys are doing great. Nice quarter. Keep up the good work.

Thanks, Jeff.

Thank you, Jeff.

Thank you. And gentlemen, I'm showing that there are no further calls, so I'll turn it back to you for closing comments. Please go ahead.

Thank you, Mary. And again, I appreciate everybody's interest and we look forward to the end of the year and our next conference call. Thank you again for your interest in Veri-Tek. Bye.

Thank you, sir. Ladies and gentlemen, that will conclude today's teleconference. We do thank you again for your participation. And at this time you may disconnect.