Manitex International Inc (MNTX) 2008 Q2 法說會逐字稿

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Manitex International Inc. second-quarter 2008 financial results conference call. (OPERATOR INSTRUCTIONS). This conference is being recorded today, August 7, 2008.

I would now like to turn the conference over to Mr. David Langevin, Chairman and CEO. Please go ahead, sir.

Thank you, David, and thanks to everyone on this call for their interest in Manitex. I would like to first start with our Safe Harbor statement. The following comments contain forward information based on our current expectations. Because forward-looking statements involve risk and uncertainties, actual results could differ materially. For such risks and uncertainties, please see the list of risk and uncertainties on our SEC filings. Manitex expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements included herein or to reflect any changes in our expectations with regard to our tools or changes in events, conditions or circumstances on which any such statement is based.

With the important Safe Harbor statement out of the way, I would like to continue. I will first make a few opening comments followed by operational comments from our President and Chief Operating Officer, Andrew Rooke, and then I will conclude with a brief review on our 2008 goals before we open it up to questions.

As stated in our press release by Andrew, I do not believe our year-to-date results properly reflect the excitement we feel at the Company for the outstanding reception by the marketplace of our crane products. We also believe that we're seeing real momentum for these products, which bodes well for the rest of 2008 and beyond.

I will try to communicate some of the reasoning for our optimism in my prepared remarks.

We finished the first half with revenues over $50 million and net earnings per share of $0.16 on a fully diluted basis. We have a growing backlog and steady net demand for our crane products. We now have a significantly more optimistic business outlook compared to just six or seven months ago. Further, we're particularly pleased with where we are given the current macroeconomic constraints in the capital equipment marketplace, which we all know has been quite tough.

During the second quarter, it became clear that our higher tonnage cranes were meeting extraordinary success in the marketplace. In fact, we have sold over 130 of our 50-ton high-capacity cranes since introducing them in May of 2007. We expect continued strength in our crane business to drive additional performance this year and next.

What I would like to offer as our key messages are that one, our backlog is up based on demand for our large cranes, which deliver an excellent return on investments; two, we expect steadily growing worldwide demand for our products as we continue our international expansion; and three, our profitability is up and will continue to improve based upon the change of mix of our cranes, the concerted effort to enhance our profits at our Material Handling business, and a reduction on our interest expense due to the actions we took last year, along with diligent control of our SG&A costs.

As reported in our release, our crane backlog is up 22% year-to-date. It is being driven by global demand for heavy lifting equipment, particularly our 50-ton and other high-capacity cranes. In 2009 we expect at least 10% of our production to be driven by our international diversification. Our first international agreement announced in April is with a well-established heavy equipment distributor in the Middle East. Our second agreement announced in May is with DSC Ltd., a Russian distributor with retail sales in crane rental fleets headquartered in Moscow. They will distribute our 50 and 30-tons Manitex boom trucks. We believe the Russian market opportunity for this class of machine significantly exceeds that of the United States, and the capital equipment market in Russia is growing at a double-digit rate. We have already received and shipped an initial order for a 50-ton crane and have completed our certification for Russian markets, which allowed the crane to be shipped to DSC.

This crane will be displayed at ConExpo Russia, an international industry trade show being held in Moscow in September, which creates more visibility for the Company and provides us with additional global marketing leverage. We believe that Russia's growing economy will continue to spur demand for infrastructure development, and in addition, it is a region with substantial natural resources that are increasing demand worldwide. Our cranes are well-suited for these infrastructure, mining and oilfield lifting applications. Our distribution agreement enables us to participate in the Russian economic boom and accelerate our top and bottom line financial performance during next year and beyond.

Relatively high worldwide commodity prices should continue to benefit mining, energy development and construction substructures elsewhere and drive additional demand for our high-capacity cranes.

With those brief introductory comments, I will turn the call over to Andrew to review the operating results. Andrew?

Thanks, David, and good afternoon and welcome, everyone. I'm going to cover an overview, highlights and the details of our second quarter and six months ended June 2008 earnings release.

As David has indicated, we're very excited with prospects for the business right now due to a series of factors, including the strong performance of the Manitex crane operations in a very tough North American market, the advancement in our global growth and diversification strategy with the signed distribution agreements for the rapidly growing markets of Russia and the Middle East, the work being undertaken to streamline the Material Handling operation and position it for market recovery, and our stronger financial position due to the actions taken to reduce debt in the second half of 2007, together with the recently renewed credit facilities.

As we enter the second half of the year, we believe these factors will continue to positively influence results, and I will refer to several of these again as we go through the detailed results.

Net sales for the quarter were $26.5 million compared to $30 million for the three months ended June 30, 2007. The decrease in revenues is primarily due to a reduction in the sales of the Material Handling product lines that were particularly strong in the second quarter of 2007 when a high number of military corporate units were shipped together with three of the larger transporters.

The second quarter of 2008 included more modest military sales but did not include any transporters or specialist carriers, the orders for which tend to be more cyclical. The second quarter of 2008 did benefit from sales of the Noble Rough-Terrain Forklift product line that we acquired at the end of July 2007. That helped offset lower sales of commercial forklifts that have been adversely impacted by the significant market slowdown.

Crane revenues were down less than 5% compared to the second quarter of 2007, but were above the first quarter of 2008 even though the North American market had experienced an across the board contraction in our product category. Our favorable performance as compared to the overall market is the result of an increase in market share in all tonnage sectors. In particular, shipments of our higher margin higher tonnage cranes were ahead of the second quarter of 2007 and the first quarter of 2008 due to strong demand, particularly from the oil, energy and mining sectors.

Also, benefiting second-quarter 2008 revenue was improved pricing due to the impact of the price increase implemented at the start of the third quarter of 2007.

As David has already mentioned, the strength of our crane business is reflected by the 22% increase in its backlog since December 31, 2007, the majority of which is for North American customers. We believe there is a strong demand from oil, mining and energy sectors, particularly for our higher tonnage cranes that offer our customers a favorable return on investment compared to custom cranes.

Additionally we're poised for international growth having recently signed two distribution agreements for Russia and the Middle East, completed the certification of our cranes for the Russian market and expect to complete the certification process for Europe in the third quarter.

The CIS and Middle East are anticipated to have GDP growth rates of approximately 6% to 8% in 2008 and capital equipment growth rates in excess of GDP compared to estimates of 1% GDP growth for North America.

To support our international ambition, we have also recently announced deployment of a senior member to our corporate management team who will be responsible for overseeing our international development. Second-quarter 2008 gross profit was $4.5 million or 16.8% gross margin compared to $5.8 million or 19.4% gross margin in the second quarter of 2007. The decrease in gross margin reflects lower margin for the Material Handling product line and a slight decrease in crane product line margins. The Material Handling product line margins were adversely impacted by reduced volumes, a change in product mix from lower military and specialized forklift carrier sales and the negative impact of the strong stronger Canadian dollar.

Subsequent to the quarter, we commenced changes in our Material Handling business to address these volume and cost challenges and to help position this group for when these markets regain momentum.

Crane product margins showed a slight decrease due to material cost increases not fully recovered by price increases or by the improvements in margin percent from the increase in sales of higher tonnage cranes. Increasing material costs and supply chain shortages adversely impacted the second quarter of 2008 and are challenges we continue to face. Rapid inflation has seen material costs rise in some cases over 15% since the start of the year, and to address these costs, we have recently announced a price increase for our crane products for all new orders received on or after July 1, 2008, the benefit from which will be seen late this year or early 2009.

Additionally we have stepped up our work with our supply chain to ensure improved supply performance identifying mitigating actions to raw material cost increases, as well as continuing to seek new alternative sources of supply.

Total operating expenses for the quarter ended June 30, 2008 were $3.2 million compared to $3.7 million in the same period last year. The decrease is primarily related to lower legal and consulting expenses as legal fees were higher in 2007 in conjunction with the SEC review of the S-3 registration statement and for consulting expenses for assisting the Company in meeting its initial years Sarbanes-Oxley obligations.

Net income from continuing operations for the three months ended June 30, 2008 rose 44% to $0.7 million or $0.07 per diluted share based on $10.3 million diluted weighted average shares outstanding from $0.5 million or $0.06 per diluted share based 8.6 million diluted weighted average shares outstanding for the second quarter 2007.

Included in this improvement is $0.5 million of benefit from reduced interest cost arising from the actions implemented in the second half of 2007 to reduce debt combined with the benefit from lower interest rates. Foreign currency transaction losses were essentially eliminated in the quarter, an improvement of $0.5 million over the second quarter of 2007, the result of the hedging program implemented during the third quarter of 2007.

Net income was $0.9 million or $0.09 per diluted share based on 10.3 million diluted weighted average shares outstanding compared to $0.3 million or $0.04 per diluted share based on 8.6 million diluted weighted average shares outstanding for the second quarter of 2007. EBITDA for the three months ended June 30, 2008 was $1.7 million compared to $2.6 million for the same quarter of last year. The reduction in EBITDA is primarily due to a lower gross profit caused by reduced volume and a lower gross profit margin percent from the Material Handling product line.

Moving on to the results for the six months ended June 30, 2008. For the six months ended June 30, 2008, net sales were $50 million compared to $53.1 million in the six months ended June 30, 2007. The decrease in revenue is due to a decrease in the higher margin military forklift and specialist carrier product line revenues, offset by an increase in commercial forklift sales. The increase in commercial forklifts aisles is attributable to the introduction of the Noble Rough-Terrain product line, while the decrease in military and specialized carrier sales is attributable to the timing of orders.

Crane revenues are flat year-over-year, which represents a very strong performance in the light of the very slow activity in our principal markets of North America. As stated earlier, we believe we have gained market share in all tonnage sectors, but the higher tonnage cranes in particular have been in high demand.

Gross profit for the six months ended June 30, 2008 was $8.7 million or 17.4% of net revenues compared to $10 million or 18.9% in the year ago period. The overall decrease in gross margin reflects lower margin for the Material Handling product line and a slight decrease in margins of crane products. The Material Handling product lines have been adversely impacted by lower volume, a change in mix and the negative impact of a stronger Canadian dollar.

The slight decrease in crane margins is due to material cost increases not offset by price increases and improved mix. Total operating expenses for the six months ended June 30, 2008 were $6.9 million compared to total operating expenses of $7 million in the same period last year. The slight decrease is primarily related to a decrease in consulting expenses, which in 2007 primarily related to Sarbanes-Oxley compliance initiatives.

Net income from continuing operations for the six months ended June 30, 2008 was $1.2 million or $0.12 per diluted share based on 10.3 million diluted weighted average shares outstanding compared to $0.6 million or $0.07 per diluted share based on 8.6 million diluted weighted average shares outstanding in the year ago period.

Net income for the six months ended June 30, 2008 was $1.6 million or $0.16 per diluted share and consisted of net income from continuing operations of $1.2 million, income from discontinued operations of $0.2 million and the gain on sale of discontinued operations of $0.2 million.

Again for 2006 -- sorry, for 2008 six months' results, both income from continuing operations and net income benefited from the decline in interest expense and foreign currency transaction losses referred to earlier. For the year ago period, the Company reported a net loss of $0.7 million or $0.08 per diluted share.

EBITDA for the six months ended June 30, 2008 is $2.8 million compared to $4.1 million in the same period last year. The reduction in EBITDA is primarily due to the lower gross profit and reduced volume and gross margin in the Company's Material Handling business.

Moving on to the balance sheet, we believe we are in a much stronger financial position than we were a year ago. Total outstanding debt less cash on hand was in line with December 31, 2007 at $24.4 million, and compared to June 30, 2007, debt less cash has been reduced by $13.6 million, largely from the actions taken during the second half of 2007 and from the conversion of $1.1 million of debt to equity in the second quarter of 2008.

We also recently announced the extension of the maturity dates to April 1, 2010 on our revolving credit agreements and an increase in our credit line by an additional $2 million.

We completed the quarter ended June 30, 2008 with $21.8 million in working capital and the current ratio of 2.2 to 1. Working capital increased primarily due to increased inventory of raw materials for crane production, work-in-process related to a specialist carrier under construction and the small increase in finished goods inventory of crane products. We expect our previously discussed activities with the supply chain, together with internal initiatives, to assist with our working capital management for the second half of the year.

In summary, therefore, against the backdrop of very challenging markets in terms of both demand and rising costs, we believe good progress has been made, and our product portfolio, emerging international exposure and strengthened balance sheet position us well for the remainder 2008 and into 2009.

With that, I would now like to hand back to David.

Thank you, Andrew. I will just add a few of the comments about activities in our Company since our last quarterly call and expectations for 2008, and then we will turn it over to questions.

Besides the milestones we achieved in our business during the second quarter, we achieved several others, which we feel are extremely significant to our shareholders. On May 28 our common stock moved from the American Stock Exchange and began trading on the NASDAQ capital markets, trading under the stock symbol of MNTX.

As we had also affected a name change to Manitex International prior to listing on the NASDAQ, we expect that the name change will result in a clearer corporate identity to our customers, as well as to the specialized lifting equipment industry in which we operate. Manitex is our largest and most well-known brand name.

Our listing on NASDAQ marks a significant milestone in the transformation of our Company. During the past 18 months, we have been consistent in our approach to strategic and corporate development, taking steps to strengthen our balance sheet, streamline our operations and improve our financial performance. We believe that the move to the NASDAQ will result in increased visibility within the investment community and provide additional liquidity in the market, capital markets for our common stock.

Finally, I would like to conclude my prepared remarks by reiterating our expectations for the remainder of 2008, which we announced earlier in a press release and which we had not announced up until this point for the year. The financial performance improvement that we expect reflects the higher selling prices and gross margins associated with an increase in sales for our larger capacity cranes which we believe will continue to drive our growth both here and internationally. We believe that we can maintain the sales momentum with our large capacity cranes and their profitability throughout this year and into 2009.

Based on this greater visibility, we expect our revenues for 2008 to be in the 100 to $110 million range with earnings per share in the range of $0.30 to $0.40, representing bottom-line growth of 30% to 74% from last year's net -- from continuing operations.

With that, Andrew and I would welcome any questions. So, David, do you want to open up the lines?

(OPERATOR INSTRUCTIONS). Ned Borland, Next Generation Equity Research.

I'm just wondering on some of these supplier availability issues, I'm assuming it is steel. Did this delay any shipments, and can you quantify that? And would you expect to see that kind of catchup in the third quarter? Is that what we're seeing here?

I don't know. I will give it a quick shot, Andrew, and then you can see if I covered it appropriately. I don't know if necessarily we can specifically quantify it. I know we had some slowdowns in especially our 50-ton cranes. As you can imagine, we have fairly long leadtimes to get the materials -- you know these things are ordered over a long period of time, and we rely on those suppliers to provide them. And when they run into any hiccups, it obviously has an impact on our production.

I do expect and hope that anything that happened in the first six months because we have so much energy and looking at trying to get those cranes out the door into our customers that we will see improved results in the second. But again, it is somewhat -- there are some factors that we cannot control everything. I know, Andrew, you are closer to it.

I think that is well put. A couple of other points just to clarify perhaps. You're right. The 50-ton was one of the areas where we continue to have some issues because of the shortages. But it is something that we as a business have had to manage consistently for some time. This is not a unique problem to us. It is pretty much the industry that we are operating in at the moment, and we continue to work with our suppliers to try and improve the situation, give them better visibility of what is going on and also to help them manage their operations so that we get affected deliveries.

So it's something we manage consistently. One of the downsides to that is that as we manage those supply issues, that occasionally it does influence our inventory, and I think you have seen some of that in this quarter where we will manage and manufacture perhaps a different mix than we were originally anticipating to when we worked through all of those issues.

Okay. I mean I guess that you've resolved some of these supplier issues at least to your satisfaction, or do you still have aways to go?

It is an ongoing situation. I like to think that some of the communications and review sessions and discussions we have had with our supply base have improved the situation, and we have tried to establish improved communications and methodologies to track events and react to events throughout the supply chain, and I think we're making incremental progress on that. Is it fixed? No. Are we working better and harder at it? Yes.

Okay. And then on the military business from a year ago, I guess you saw a surge in business from the military in the second quarter of '07 and did not see it in the second quarter of '08. But if we were to look at military business for 2008, how is at least quotations from the military shaping up versus last year?

We have talked about this a couple of times, and it is a very frustrating area. But then on the other side, it is also a great opportunity. So what the military -- the current quotation and what our expectations are is that we have been told that a number of the quotations that we're working on are our business. And so we expect some very significant military orders over the next 12 months.

However, having said that, the timing of those orders are very difficult to predict. For the rest of '08, I mean I would expect what we have seen in the second quarter and not what we saw in the second quarter a year ago where we had just a significant block of military business run through the quarter. Again, that bodes well for the future because I do expect that we will have some good military business because, of course, as you know, the Liftking base of business was really heavily influenced by military and special transporter business, and it was not especially strong in the commercial side, which is why we were excited when we merged that business with the Noble business.

So the quotation activity has been very good, and we expect a number of those quotations to convert to actual orders. I'm just not positive as to the timing.

Okay. So there is at least a potential that military business for full-year 2008 could somewhat approximate where it was at in --?

No, I don't think we are going to be as strong in '08 as we were in '07 in pure military business. Now I may be surprised, but a lot of the orders that we're working on are large Material Handling equipment that -- you know, if some of that equipment we have material in house to build it quickly. Some requires long leadtimes, so it will fall over into '09. But that bodes very well for '09. So that is part of the reason why we are very excited about the future is because we have significant crane business right now which will cover us nicely for '08. And when we are also as we mentioned in our release streamlining and going through the painful reductions that you need to do on the less stronger Material Handling business, the product lines there, to improve our margins and improve our profits there. So that bodes well for the future.

Okay. And then sticking with Material Handling, the consolidation efforts up in Canada, how is that coming? Is that close to being ramped up, or where are you in that?

Yes, I think we have gone along quite a bit on that. We did announce during the quarter that we had put some new personnel involved there. We're taking the painful steps which are also difficult to -- we have taken a couple of heads out, which is also difficult but it is necessary when you have less business. And I'm expecting that to be improved as we go forward.

You know, the margins in the Material Handling side a year ago on a very consistent basis were as good or better than the crane side, you know, our crane products. And, as you know, from just following in the industry, anybody that is in a more pure Material Handling business, as you know, those margins have significantly contracted. And so that is, as we say in our release, that is the principal reason for the decrease in our gross margins as related to the Material Handling side.

But we're not just standing still. We're making sure that we improve those margins regardless of the volume of business and to make sure that we are profitable and in a firmer ground as we continue -- is that business returns back to more normalized levels.

It is a very difficult market. I mean I have been in this business for over 25 years, and this is as bad is it was back in the early '90s (inaudible) that is being reported all over the place. So it's not something that I'm just feeling. It is what is actually happening.

[Len Goldberg], Goldberg Capital Management.

Nice job. Good quarter. Could you tell us a little bit about competition in the large crane area and who you are taking market share from?

Yes, thanks for that. That is a good question. Thanks because I wanted to bring it up, so I'm glad you asked it. The cranes that we are really showing strength in is, of course, what we mentioned is what we described as large capacity cranes. And those are different, and as you know, our cranes are mounted on commercial chassis boom trucks, and we're really not competing more with custom chassis cranes, the truck cranes or rough-terrain cranes.

So, therefore, we are really showing a better return for our investment to our customers. And that is really the reason why we are continuing to show increase in market share. And the competitors in our business are Manitowoc and Terex. But not to the extent -- I mean those companies are huge, huge companies and have cranes that far exceed the volume and the size of ours.

But what we're doing is making inroads in the crossover from a boom truck to a truck crane. So that is what is really giving us strength, and it is really our game plan when we started down this road years ago, several years ago was to -- we could see that less cyclical markets, you know the oil and gas, the mining, the infrastructure work, those are all obviously less cyclical, and we could see that the demand for those cranes far exceeded the supply, and we had the technology to get into that, and we are going to continue to expand our higher capacity as we continue to develop technology mounted on commercial chassis.

Sara Magers, Wachovia Securities.

Your earnings guidance suggests that the earnings are back-end loaded in 2008, and the second half of 2008 seems to be squeezing a lot of other manufacturers both on demand growth and on the margin due to cost inflation. You touched on that. Could you give us a little bit more detail on your full-year margin assumptions, which I know you mentioned for both segments went down in the first half of '08 and then a little bit of insight as to what kind of impacts you are seeing from rising raw material inflation and what you're doing to offset those costs?

Yes, our expectations are that we -- again, we obviously manufacture here in North America, in Canada and in Texas. And we're hoping that as a result of the mix of our products being heavily into the higher cranes, which, of course, produce higher margins, that we will have a better mix in the second half and that the rapid increase in material costs that we had in the first half because of the reduction in just the overall business which we are, as you know, we're holding up pretty well in the face of that, we will see material cost not to the same level of velocity that we saw in the first half.

So our expectations are that we will produce -- because we have been ramping up month by month into the higher crane capacity area, that we will produce more cranes with higher margins, and that will -- and we will also have better margins or some contribution of margins on the Material Handling side because of the cost reductions that we have done through the first six months. So the expectations are that we will have less costs internally, better margins and the reduction in the velocity of increases from our material vendors.

Have you given any kind of tax rate guidance for the year at all?

Well, we do have -- as you can see from our reported results, we have net operating losses which will continue into the second half. So, Andrew, I don't think we have given guidance, but I don't we expect our taxes to be any higher than what they have been, which is basically an alternative -- kind of a small US tax and then a small Canadian tax.

Alright. Just to move forward a little bit, you said that your expectations for 2009 include 10% of those revenues to come from the new international distribution agreement. For the remaining 90%, could you give us a little bit more color as to the geography, breaking out Canada, U.S. and Mexico and the end markets that that 90% kind of represents, whether it be energy and mining or utility or what?

I'm not quite sure what we have said publicly. I know we have obviously said our main markets -- our biggest main market is oil and gas. And so the regions where that, of course, has Canada is very large for us. We're very big in the oilsands business up in Canada. We have obviously good market in the oil and gas regions in the United States, as well as mining, which has become an increasing area for us. Mexico has done pretty well because of the business and the fact that they have been buying cranes they have not purchased in a long time.

So I mean those are the principal areas that we concentrate our customer base on. Of course, as you know, we sell through dealers. So our biggest dealers are Houston, Phoenix and Canada, Alberta.

So the 90% should kind of -- it should be the same kind of geographic mix that we have seen in past years?

I would expect that, yes. I don't expect -- we're not expecting a return of pre-'08 levels of activity in any place that would be considered normalized economic environment for the rest of United States or Canada.

Rick Hoss, Roth Capital Partners.

On the Noble forklift relatively new as far as hitting the market under you guys, how has the traction been there?

You know, I think in light of the economic environment, we always ask to kind of frame this economic environment, it has done quite well. I think we have -- obviously, we sell almost all of those. I don't think -- I think almost all. I think it is all of those products through Caterpillar distribution. So we know we have a strong partner in that product. But it is in a product area that is facing difficult economic environments. So to answer your question, I think it has done okay, but we expect to see improvement.

Okay. And then as far as the opportunity in Russia, can you give us a little bit more detail as far as product positioning comparing your product to what is available in the Russian market right now as far as both capability and price?

With the market as Andrew mentioned in his remarks, we have someone that is now just concentrating totally on that -- in our international expansion, and that person happens to be someone that I have known for many years from my Terex days and also speaks Russian and was educated in Russia, so he is very attuned to the market, and it is just unbelievably exciting.

And, as we all know, they are rich in natural resources and have huge infrastructure issues in both production of those natural resources and in just the normal ordinary infrastructure that we take for granted. And so they are spending the resources that they are developing at clips and rates that far exceed what we see in the United States.

And so that opportunity in the near future presents a wonderful opportunity for us, and by the way, they accept and have a history with products and cranes that are similar to ours. So they understand it is not something that we're introducing new to the market. It is something that they fully understand. And we're competing -- we have good competition there from the standpoint that it is German for the higher quality cranes, which is where we would obviously place ourselves and in price ranges which are very attractive for us because of obviously the Euro and the labor costs and material costs that are prevalent, and our competition there is very similar to ours.

In fact, it is fairly favorable to us because obviously the Euro and Euro-related factors make it very expensive, so the Russians are very open to receiving our cranes.

Okay. So when you look at geographic distribution of revenues, '09 is really just the start. When you talk about 10% from emerging markets, that is just the start? I mean I would imagine that it accelerates from there.

At this point we're just developing these plans, and while we have had some very good meetings with international potential dealers and it seems to be -- we will have some -- again, what we're trying to convey is that the excitement that we have because of the acceptance of these cranes around the world seems to bode very well for us in 2009 and beyond. So, as these things become clear, we will try to communicate that in more of a financial sense so that people can get a better idea. We're just trying to convey that things look very good.

Philip Anderson, Pinnacle Fund.

He must have had something else that came up.

(OPERATOR INSTRUCTIONS).

Go ahead, David, if we have another call.

[Inda Misrahi], SSM Investment Corporation.

Congratulations on a nice quarter. I was just wondering if we could just talk a little bit about the international market. Are you looking to get into any others, or are you going to wait to see if these take traction or if this for now enough?

Well, you know, we are a small company, and as Andrew stated, we have appointed an international person to establish and grow our international business. But we are going to try to do it in a controlled way where we think we can get the most, the quickest, and then continue to grow from there. So we will do it on a rollout basis because obviously there are a lot of places that fortunately our products are in good demand in a number of places around the world. And we just want to do it in a controlled environment so that we can make sure we do it in a cost-effective way.

Let me just say as well then, David, because the Russian market is very, very hot at the moment, and that is why we started in that arena. It is a large market, and it is where we want to get some traction very quickly.

Right.

I understand that. So right now there is nothing on the horizon for a new market?

Well, we did also obviously appoint a Middle East dealer, and we do expect to appoint other dealers in the near future, which would be beyond just the Russian market. So I don't want to give you the impression that we're not going anyplace else. We will be, and we will be appointing more dealers.

I also don't want to give you the impression that in the next six months we will have 50 countries covered. That will not be the case.

Okay. And just to clarify the backlog. Nothing from the backlog is from the Russian market yet?

That is correct.

Sara Magers, Wachovia Securities.

We have heard from other equipment manufacturers about the slowing growth in North America and more recently in Europe. Could you give us a little bit of color on what you're experiencing on that line and if it has impacted any expectations for orders from the recently announced distribution agreement or if you think it might impact the potential signing of other agreements?

Well, I don't think -- most of the countries and dealers that we're dealing with from an international standpoint have needs -- because again, a dealer is looking for if we can add value to his profits, then that is a reason for him. So we are not looking -- obviously we all want to think long-term, but we also have short-term needs as well as dealers do. So we are really trying to find that mix that makes a good combination.

And in North America, as I stated earlier, this business is at levels that go back to the early '90s. So this is a very poor market, which is one of the reasons why we're so excited is because we're doing very well in a very poor market. So I don't want to convey that the markets are turning around or improving. We don't see any improvement at all.

Do you think that with the slowing business in Europe that might lead to increased competition from other manufacturers?

Well, again fortunately we have a product category that not a lot of people have. And, as I said, we're crossing over into other categories, and we present a very cost-effective product. So we have a good product to offer to the marketplace, and as a result of our backlog and our current activities, we think we are, and we can see some good opportunities going forward.

Is it possible to get a little bit more detail on I guess what makes up the backlog, if it is the majority in cranes or a majority of Material Handling or --?

It is I think -- I have got to be careful here. What we have stated is that we have a 22% increase in our backlog relating to cranes and a 16% increase overall. And the number -- the benchmark number that we're using is the 45 million that we stated in our 10-K at the end of the year.

So what that would imply is that we have a proportionally larger increase for cranes than we do for Material Handling, which is what you would expect.

Philip Anderson.

Considering it is a difficult environment industrywide, what does the acquisition landscape look like at this point in time? Are there companies which are -- which have suffered on their balance sheets to the point where they would become increasingly interesting to you?

Thank you for asking. I am glad you did. The market I think is -- we are going to see more opportunities as we go forward. You know it has been a tough, tough market for us. As you know, my history and background is pretty much all on corporate development and acquisitions, so I'm not afraid to continue to grow the business that way.

But I also want to just be careful because we have -- I think we have such a nice base business in the crane business that I want to make sure that we concentrate and fully grow that. Because obviously the best way to grow a business is with internal business.

Having said that, though, I think what you're saying is exactly correct. I think there will be more opportunities because of the fact that some people got overextended and purchased companies at high prices, and now, of course, you're starting to see some real stress. And we also expect that to continue.

So with stress for the next 18 months or so, I think that is going to present some opportunity for us.

Does the guidance assume any acquisitions?

No, not at all. It is all internal.

Okay. Well, it looks like you did an admirable job under very difficult circumstances. No one who is on the phone has probably been at it longer than you have, and of course, you have seen it.

I still have a lot to go, though. We're not done yet. Thanks.

Through the years (multiple speakers) basically you did a great job, and we know you are working hard for us. Appreciate it.

(OPERATOR INSTRUCTIONS).

If there's no further questions, David, do you want give them the information on the call-in, and I can thank everyone for their interest in Manitex.

Certainly. Ladies and gentlemen, this concludes the Manitex International Inc. second-quarter 2008 financial results conference call. If you would like to listen to a replay of today's conference, please dial 1-800-406-7325 and enter access code 390-6851.

AT&T would like to thank you for your participation. You may now disconnect.

Thanks, David.