Manitex International [MNTX] Conference call transcript for 2023 q3
2023-11-04 04:13:01
Fiscal: 2023 q3
Operator: Thank you for standing by. This is the conference operator. Welcome to the Manitex International, Inc., Third Quarter 2023 Results Conference Call. As a reminder all participants are in a listen-only mode. And the conference is being recorded. After the presentation there will be an opportunity to ask question. [Operator Instructions] I would now like to turn the conference over to Paul Bartolai, Investor Relations for Manitex International, Inc. Please go ahead.
Paul Bartolai: Thank you. Welcome to Manitex International's Third Quarter 2023 Results Conference Call. Leading the call today are CEO, Michael Coffey; and CFO, Joseph Doolan. We issued a press release earlier today detailing our third quarter operational and financial results. This release together with the accompanying presentation materials are publicly available in the Investor Relations section of our corporate website at www.manitexinternational.com. I would like to remind you that management's commentary and responses to questions on today's conference call may include forward-looking statements, which, by their nature, are uncertain and outside of the company's control. Although these forward-looking statements are based on management's current expectations and beliefs, actual results could differ materially. For a discussion of some of the factors that could cause actual results to differ, please refer to the Risk Factors section of our latest filings with the SEC. Additionally, please note that you can find reconciliations of historical non-GAAP financial measures in the press release issued earlier today and in the appendix of this presentation. Today's call will begin with prepared remarks from CEO, Michael Coffey, who'll provide a review of our recent business performance, including an update on the progress we have made on our new elevating excellence initiative, followed by a financial update and outlook from CFO, Joseph Doolan. At the conclusion of these prepared remarks, we will open the line for your questions. And with that, I'll turn the call over to Mike.
Michael Coffey: Thank you, Paul, and good morning to everyone joining us on the call today. Please turn your attention to Page 3 of our presentation, where we will begin with a discussion of our third quarter results. Our strong third quarter results demonstrate continued execution against our Elevating Excellence multiyear business transformation strategy. As organic revenue growth, margin realization and adjusted EBITDA increased materially over the prior year. Third quarter revenue increased 10% on an organic basis versus the prior year, driven mainly by strong growth in our Lifting Equipment segment. We remain encouraged by our end market trends as we continue to see favorable underlying demand conditions across our core infrastructure, energy and mining markets. While there is some level of broader macroeconomic uncertainty as we continue to look into 2024, current indications of interest from our customers remain very strong, with many of our largest dealers operating with very limited inventory levels. Additionally, our dealers' rental fleets are operating at elevated utilization rates with some in excess of 90%. The strong utilization and limited inventory levels are creating pull-through demand that we expect will translate into favorable dealer restocking trends in the coming quarters. Last quarter, we indicated an anticipated backlog decline from the historically high levels in 2022. Our third quarter ending backlog declined by 5% from last year but remained strong at $197 million. Our current backlog remains high, exceeding 3x normal levels prior to the pandemic and representing approximately nine months of lifting equipment sales. New order activity has remained healthy with dealers placing orders for 2024 deliveries. Our year-to-date book-to-bill has kept pace with the increased level of production at 0.94 as of September. We are currently in discussions with several customers around meaningful future orders that we expect can support increased backlog into the year-end. Our Rental segment reported strong results during the third quarter with revenues of $7.6 million, including the contribution of our recently opened branch in Lubbock, Texas. With the opening of our Lubbock location, total branch count is now four locations, giving us access to a larger customer base and market. Construction activity in our core North Texas market remains robust, driven by strong project activities in infrastructure, commercial, and industrial segments. During the third quarter, we continued to make important progress on our productivity and efficiency initiatives that are a key driver of our elevating excellence strategy. In fact, we are trending well ahead of our initial first year targets, which is evident in the significant margin expansion and improved profitability we demonstrated during the third quarter. Critical progress was made in throughput efficiencies and throughout the organization, and we are already seeing efficiency gains from our new ERP systems. Looking at the supply chain issues. We continue to see good progress in Europe and expect conditions to further normalize. While North America supply chain headwinds have been more stubborn, we are seeing signs of easing and are working hard to further improve our manufacturing throughput. We expect additional supply chain improvements to benefit productivity in North America during the coming quarters. As a result of the successful implementation of our efficiency measures, our third quarter gross margin improved 427 basis points to 23.3%. Our third quarter gross margin performance was more than 200 basis points higher than any quarter we have reported in more than five years. In addition to the productivity improvements, we are also benefiting from pricing increases, including the surcharges we put in place last quarter to offset the elevated levels of steel pricing. Adjusted EBITDA margin was 11.9% in the third quarter, up nearly 400 basis points from the prior year. This drove the adjusted EBITDA growth more than 60% in the period. With our strong third quarter performance, we now have generated an EBITDA margin of 10.2% on a trailing 12-month basis, putting us on track to achieve our target of becoming an 11% to 13% EBITDA margin business. It is also worth noting that our trailing 12-month EBITDA was nearly $30 million, up over $16 million from the prior 12-month period. Looking into 2024, we see a path towards further margin improvement as we continue to execute on our Elevating Excellence value creation framework, and we are confident that we are well on track to achieve our longer-term margin goal of between 300 and 500 basis points of EBITDA margin improvement by 2025, which equates to an EBITDA margin of 11% to 13%. As I already mentioned, demand trends continue to be supportive of our lifting equipment products, and customer sentiment remains positive. The trends in North American heavy construction equipment are strengthening due to the stimulus dollars from the Infrastructure Investment and Jobs Act. As we have discussed, the stimulus dollars are benefiting markets outside of the traditional infrastructure and making a big impact on markets such as electrical transmission and distribution. While renewable energy development is garnering most of the headlines, we continue to see strong activity in oil and gas markets as well as electrical infrastructure. Energy sources such as solar and wind are growing in share, and we have lifting products that are benefiting from this build-out. However, there is still a significant need to invest capital for traditional fossil fuel developments, and Manitex is benefiting from this trend. Additionally, the growth of renewable energy and the increased adoption of electric vehicles is only serving to increase the stress on our electrical grid infrastructure. And Manitex is well positioned to benefit from the investments needed to support our country's electrical infrastructure upgrades. The broader energy sector, which continues to be an area of strength for Manitex and should be an important driver for our business. While we are seeing some caution in Western Europe, broadly speaking, our international markets remain strong. Similar to the U.S., infrastructure spending is a key driver in Europe. Many of our customers in Italy, for example, are waiting to see if the government continues with its capital investment tax credits. Demand from South American customers remains robust as the pursuit of global minerals such as copper continues to drive capital goods' spend in mining maintenance activities in the region. Now, turning to Slide 4, I will provide you a more detailed update on our Elevating Excellence strategy, which we unveiled during the first quarter of this year. As a quick reminder, this is a multi-year business transformation initiative designed to drive targeted commercial expansion, sustained operational excellence, and disciplined capital allocation. I'm very proud of the progress that we have already made since we rolled out this strategy, which is clearly evident in our strong third quarter margin performance. I would like to take a moment to thank our manufacturing team specifically. Most of the improvements that we have achieved this year are the result of their ideas, their efforts, and their dedication. Let's begin by discussing our commercial growth strategy. A key component of our targeted commercial expansion is market share growth as we focus on leveraging our leadership in straight mast cranes to grow articulated crane sales, industrial lifting sales, and aerial work platform sales across North America. This strategy is outlined on Slide 5. Necessary changes to our organization have already been completed, preparing us for growth in North America in 2024 and forward. This includes a structural change to our sales team and evaluation of our dealer network to meet this opportunity. Our multiyear plan called for growth in these product segments starting in 2024. We are on schedule, and we look forward to expanding our presence in the Americas. Complementing this strategy, our electrical industrial crane line was exhibited recently at the GIS Expo in Italy. This occurred early October. It included the unveiling of four new products as well as a host of updated features. Our electric crane is branded Valla and is the most established brand in the industry. Manitex offers both full electric and hybrid electric lifting solutions in three of four of our product segments. Our engineering and sales teams have developed practical innovations that are meeting real-world demands. On Page 6, we highlight our second part of the strategy centering on operational performance. Elevating Excellence calls for improved gross margins from enhanced processes, supply chain efficiencies, improved parts sales content, and smarter focus on product mix. We are performing ahead of plan, and the benefits are improving our bottom line. In addition, as Joe will discuss in a moment, our SG&A has remained essentially unchanged year-over-year. This is driving strong operational leverage. Many of our investors know Manitex's longstanding objective is to achieve 10% EBITDA margins. This has been an objective for the company since well in advance of the pandemic. We achieved this goal for the trailing 12 months ending September 2023, as we reported an adjusted EBITDA margin of 10.2% during this period. And the improvement is the result of the efforts made by our operating teams. In September, we achieved a record in units produced, and the improved margins are evident that this strategy is working. During Q1 and Q2 of this year, we highlighted the upgrade of our ERP systems in both the European businesses and our Rental Solutions business. These investments were a critical part of our strategy to enable our ability to scale the business and help us obtain the margin improvements we are targeting. Manitex is now operating on modern systems, positioning us to scale, improve responsiveness, and better global cooperation. Supply chain pressures have continued to ease across our business. Improvements in Europe have been quicker to realize. Progress in the U.S. has lagged, but we are beginning to see headwinds abate in the U.S. in recent months. Our third and final initiative of our plan is a focus on disciplined capital allocation, which is highlighted on Page 7. Our short-term goal was to lower our net leverage ratio below 3x. We are very pleased that our net leverage declined to 2.9x as of September 30, down from 3.9x at year-end. Through the year, we have maintained higher than normal working capital. This is directly correlated to supply chain headwinds. We are now seeing opportunities to safely lower these inventory stocks and use our systems and improve supply chain relationships to translate this into lower working capital levels. We expect our strong operating results and improved working capital structure in the coming quarters will allow us to drive leverage further below our target. As part of Elevating Excellence, we introduced three year financial targets that reflect our confidence in the underlying strength of our end markets coupled with the commercial and operating benefits we seek to generate through our strategic initiatives. These objectives can be found on Page 8 of our presentation. During 2023, we have been running ahead of our first year targets, putting us well on track to achieve these long-term goals. Additionally, based on the strong progress against our strategic initiatives and better-than-expected third quarter results, we are pleased to be increasing our full-year 2023 financial targets, which Joe will detail. Before I turn the call over to Joe, allow me to provide a few concluding remarks. While economic concerns and higher interest rates are impacting certain customers, overall, we are experiencing continued demand from our core end markets. Residential construction is one area being impacted more broadly. But this is a small focus for Manitex. And in fact, we have a large customer tied to the residential market that continues to see strong momentum, and we are in discussions regarding a large order with this customer at this moment. We remain optimistic due to our strong backlog, customer sentiment, dealer inventory health, and infrastructure spending. The third quarter results are another example that our strategy is working, and we are delivering measurable improvements toward that end. Our business is markedly more efficient, and the management team is committed to delivering sustained performance against our strategy. Joe?
Joseph Doolan: Thank you, Mike, and good morning, everyone. I will provide some additional details on the quarter, give an update on our liquidity and balance sheet and conclude with commentary around our outlook for 2023. Turning to Slide 11. Net revenue for the third quarter of 2023 was $71.3 million, up 9.7% compared to the same period last year, driven by growth in our lifting equipment business. Third quarter revenue growth was negatively impacted by a decline of $4 million or approximately 6% from the lower truck chassis sales, which are largely pass-through revenue items. We continue to expect full-year 2023 chassis sales to decline relative to last year, which will be a headwind to reported sales growth. As a reminder, the sales decline will have a limited impact on our gross profit dollars, but will benefit the gross margin percentage for the full-year of 2023. Lifting Equipment segment revenue was $63.7 million during the third quarter, an increase of 11% versus the prior year period. As I just discussed, lower truck chassis sales impacted third quarter results, and Lifting Equipment segment revenue would have increased 21%, excluding the chassis sales. Lifting Equipment revenue growth was driven by continued end market strength coupled with improved throughput in manufacturing facilities and pricing actions. Rental Equipment segment revenue was $7.6 million in the third quarter of 2023, supported by strong end market in key North Texas markets, including contributions from our Lubbock, Texas location, which opened in March 2023. Momentum is continuing to build from the expansion of the Lubbock facility, and volumes have been strong in recent months. The Rental business benefited from the deployment of new rental fleet acquired in 2022, the market share gains in its Texas market and pricing benefits. As of September 2023, total backlog was $196.9 million, down 4.9% from a year-ago, driven by increased manufacturing throughput, which drove higher sales and the timing of orders, which Mike discussed. Our backlog ended the quarter with North America representing approximately 60% of the total backlog, and international, the remaining 40%. As Mike discussed, while our backlog is down from last year, our overall business momentum remains strong, and our current backlog at roughly nine months of sales is a healthy level and higher than our normal historical backlog rate. Gross profit was $16.6 million during the third quarter of 2023, up from $12.3 million during the prior year period or an increase of 34%. The increase in gross profit was a result of organic growth in the lifting equipment business, benefit from our operational improvement initiatives, and pricing increases, including the surcharges we implemented in response to elevated steel prices that we discussed last quarter. As a result of these factors, gross profit margin increased nearly 430 basis points to 23.3% during the third quarter. SG&A expense for the third quarter of 2023 was $10.5 million, basically flat from $10.4 million for the same period last year. R&D expense was $0.9 million during the third quarter, up modestly from $0.7 million in the same period last year. We are pleased to be able to hold our operating expenses relatively flat despite the strong revenue growth and investments that we are making in the business. We expect minimal growth in operating expenses in the coming quarters, which should enable us to continue driving strong operational leverage to the bottom line. Operating income was $5.2 million during the quarter compared to $1.2 million for the same period last year. Operating margin in the third quarter was 7.3%. The year-over-year improvement in operating income was driven by the organic revenue growth in the lifting equipment businesses, our improved gross margin performance and operating leverage. Adjusted EBITDA was $8.5 million for the third quarter or 11.9% of sales compared to $5.2 million or 8% of sales for the same period last year. Net income was $1.7 million or $0.08 per diluted share for the third quarter compared to a net loss of $3.4 million or $0.15 per share for the same period last year. Adjusted net income was $2.9 million or $0.14 per diluted share in the third quarter of 2023, up from adjusted net income of $0.7 million or $0.04 per diluted share for the same period last year. Adjusted net income for the third quarter of 2023 excludes $500,000 of stock compensation expense and $0.8 million of other nonrecurring expenses. Now, turning to our balance sheet on Slide 12. As of September 30, net debt was $86.4 million, which is a $1.4 million decline from the end of the second quarter. As a result of the strong operating results, net leverage improved to 2.9x at the end of the third quarter of 2023 compared to 3.9x at the end of the fourth quarter of 2022. We expect to begin to see our working capital usage normalize in the coming quarters, which should lead to improved free cash flow conversion and even further reduction of leverage levels. As of September 30, 2023, total cash and available liquidity was approximately $29 million. As Mike detailed, we have made tremendous progress on our strategic initiatives, and we are running nicely ahead of our first year targets, which resulted in our third quarter results coming in ahead of our expectations. Based on the strong third quarter results and our expectation for continued execution against our strategic goals, we are raising our full-year 2023 outlook. Our increased targets call for revenue in the range of $285 million to $290 million and adjusted EBITDA in the range of $28 million to $30 million. At the midpoint of our EBITDA range, we are forecasting nearly 40% adjusted EBITDA growth compared to the $21.3 million in adjusted EBITDA that we reported in 2022. Our financial targets are supported by continued end market momentum, market share gains as well as expected margin improvements resulting from our Elevating Excellence initiatives. That completes our prepared remarks. Operator, we are now ready for the question-and-answer portion of our call.
Operator: Thank you. [Operator Instructions] Our first question is from Matt Koranda with ROTH Capital. Please go ahead.
Michael Zabran: Hey, guys. It’s Mike Zabran on for Matt. Good morning.
Michael Coffey: Good morning.
Joseph Doolan: Good morning.
Michael Zabran: So can we just start with the breakdown? I know it will be in the Q, but could you just give a breakdown of the revenue by product segment really quick?
Michael Coffey: Yes. Joe, can you handle that? It would be great.
Joseph Doolan: Yes. Yes, I'm just – you're looking for total segment revenue for the quarter. We had the lifting equipment segment, it was about $63.7 million, and the rental equipment was $7.6 million.
Michael Zabran: Okay. Do you have it by like knuckle, boom, aerial or should I just wait for the Q on that one?
Joseph Doolan: We do, yes. But the Q will have it in there, but the boom's, knuckle boom's truck cranes is around $41.2 million. We had the aerial platforms – the platforms was about $8.2 million for the quarter. Part sales was $7.1 million. Rentals was about $6.7 million, and then, the rest was sort of as merchandise and other.
Michael Zabran: Yes. Okay. Got it. Thanks for that, Joe. And maybe, Joe, could you help bridge us from the 19% gross margins in 3Q of last year, so about 400 bps year-over-year? It's great to see improvement there, and kind of like we've been talking about that. Just trying to get a more of a stack rank idea of what is benefiting the margins the most.
Joseph Doolan: Yes. So a couple of things driving the margin improvement year-over-year. Pricing increases have driven a portion of that increase. We've also had some mix effect. As we mentioned – I think we mentioned that the truck chassis sales were down about $4 million year-over-year. Those typically carry a much lower margin, so having those out of there at a lower rate drives a higher gross margin percentage for us. So that was a big portion of it. And then the rest is really just a mix with some higher tonnage cranes, which generally carry higher gross margin percentage.
Michael Coffey: We also – the initiative calls for production velocity increases. And so, as you know, we made investments in our systems to help us with better scheduling and better throughput. And we actually hit some unique unit records, especially in Europe during the quarter. Normally, Q3 is a little bit of a sleepy quarter because of the European holidays, et cetera, and most of our customers are hard at work through the summer. But the production levels are really, really high. And that's helping us as well just drive more efficiency, at the bottom line, just being able to produce more in the current square footage that we've got is helping us quite a bit.
Michael Zabran: Okay. Got it. Okay. That's great to hear. And on those price increases, it sounds like they're like – they're more of the biggest factor benefiting margins. How much of the recent price increases still need to filter through the P&L? Is there a possibility that it takes until 1Q 2024 to filter through? Or is that just a bit less and you saw the larger benefit in 3Q and try and gauge how much is left to filter through maybe in 4Q if it's going to trickle over?
Michael Coffey: Well, I think the way to look at that is that when we set the margin improvement strategy, we purposely structured this as a multiyear strategy. So early on, our – we're working through backlog that has a more favorable price, and that has benefited us in this quarter. But there's additional initiatives with regard to addressing our supply chain sharing resources. I mentioned process just a moment ago. And we're also seeing that we have a distinct change in the mix of products that we're selling and marketing and what markets we're focusing on. And those things will translate over multiple quarters. It just – it happens over time. And so in the coming quarters, we're looking for those other activities to continue to drive overall product margin.
Michael Zabran: Got it. It's very clear. Last one for me, guys. Good to see the positive commentary around the rental end markets and the recent launch in Lubbock. Should we expect a lower revenue contribution in 4Q from the $7.6 million that we put up in 3Q, just given the winter seasonality? Or should we thinking about it in a different way?
Michael Coffey: No. Generally – the seasonality generally is a Q1 phenomenon on rentals. Q4, the backlog, with most of our customers are strong. If there's inclement weather, that can always impact project production and rental activities. But Q4 is typically a strong quarter on the rental segment. And when things really freeze in Q1, they slow down a little bit, but that's – we're not expecting any adverse Q4 reactions from rentals.
Michael Zabran: Got it. And preliminarily, just how you are thinking about rental revenue growth in 2024 just given where we're at with the launch in Lubbock and then prior commentary you've given around opportunity in underserved markets?
Michael Coffey: Well, we feel – in general, we feel really strong about our position in Northern Texas, and the economy is strong, backlog of infrastructure and commercial projects is strong. We have a really good market position in North Texas, Lubbock. The response from the customers in Lubbock has been exceptional, but we're the new kid on the block. And so we're going to grow as quickly as we can, but just have eyes wide open. But thus far, we're really happy with how that market's performed, and we expect that, that will continue through 2024.
Michael Zabran: Got it. That's all for me, guys. Thank you.
Michael Coffey: Thanks so much.
Joseph Doolan: Thanks. Thank you.
Operator: The next question is from Ted Jackson with Northland Securities. Please go ahead.
Ted Jackson: Hey, good morning. Congrats on a really nice quarter.
Michael Coffey: Thanks, Ted. Good morning. Good to hear from you.
Ted Jackson: Okay. So I've got just a smattering of random questions. I'm going to – since we just were on rental, I'm going to stick with that to start with. So the latest store that's opened, I know it takes a while for each of these locations to kind of hit their stride and ramp up. I mean, would you view all of your locations now at stride? Or is that latest store still in the process of kind of filling out in terms of the revenue potential within it? And then a follow-up in that on rental is you've got four locations in Northern Texas. At what point do you see yourself adding a fifth location? And would you continue to be building out in North Texas? And then I got a few more behind that.
Michael Coffey: Yes. So I appreciate that a lot. So the way I think about Lubbock is Lubbock is a larger market than Amarillo. And so not all the stores are equal. For example, our Hereford store is an industrial store. It serves industrial ag markets. And our Washington store is in the center of Amarillo and is our largest to date. When we built Lubbock, we built Lubbock to be as big and then surpass Washington because the Lubbock market is bigger in population and general economy than Amarillo. So we're looking at that as a long-term project, and we're seeing – and Lubbock is designed to surpass Washington and help us to grow the overall business. So we've got a lot of room for growth there. Really happy with how we've been received, and we're ahead of schedule on the growth curve since we opened the store in April-May of this year. So I hope that answers your question. On the second one, as far as opening new markets, we're not prepared to talk about that publicly at this stage. But we really like the strategy that we have for the rental business. It's a high-growth strategy, and we're being selective in the markets that we're choosing where we can make a competitive difference, and they are very similar in size and scope to what we're doing in Lubbock and Amarillo.
Ted Jackson: Okay. Then I want to just jump just quickly over to the gross margin, which was touched on before, meaning just a fabulous improvement in gross margin. I understand that it's with a combination of chassis and mix. And just bluntly speaking, is that like kind of a new baseline or margin that we should view as sustainable and that you should be making adjustments to our kind of forward outlook? Or is this kind of like the weather was great, the temperature was great, you just – it really helps you put up a PR time?
Michael Coffey: Yes. I think what we have here is not a blip in the radar. I mean, when margins – when you improve a business like ours, it takes time for those improvements to get ahead of steam and get momentum. But we're not looking at this as a blip in the radar. As a matter of fact, we're looking at this as a down payment for how the business is going to perform going forward. So we introduced this three-year strategy to drive 300 to 500 basis points of improvement that would fall to the bottom line. Most of those improvements are going to come from gross margin. And what we're seeing is that it's working. The strategy is working. But the first part of that was pricing improvements, production velocity, a little bit of supply chain. The next wave that comes in will be more of the effects of product mix, market focus, more intense supply chain focus, and then a growth in our parts sales. So it's a multi-tiered strategy, and these things are going to fold upon each other. But we're committed to what we've set out with this Elevating Excellence strategy. And I think the message of Q3 is that it's working and really, really Joe and I are exceptionally proud of how the operating teams have come together. The management team at Manitex is very excited about the process. And it's good for them to see that their efforts are actually winning because they are.
Ted Jackson: Okay. Two more questions. Going back over to chassis. I mean, I know that you've gotten them out of your P&L, but it's still an important part of the business in terms of you got to have them to deliver most of your – big chunks of your product. We had just gone through some labor disruption with the UAW on the Big 3. It has spilled over into some of the commercial vehicle market. And so I guess my question on this front is have you had any issues with regards to at least your customers getting availability to chassis? And do you have any concerns with that as you think about fourth quarter? Because I know there's still some turbulence, if you would, within the commercial vehicle market as a result of the strikes.
Michael Coffey: Yes, absolutely. I really appreciate your question, Ted, and we've been asking ourselves and our suppliers what to expect. Most of the chassis that we – first of all, the chassis in Europe have been unaffected. And so that impacts our work platform business. And so we're moving along unencumbered there. The chassis in North America are largely Class 8, and there hasn't been a big impact of the UAW strike. And we've been monitoring chassis delivery for both our trucks and our customers' trucks very intently. And we're not seeing a significant change. But to tell you that our eyes are not on that as a potential issue would be a misnomer. I mean, we've been talking to our suppliers every week. Thus far, we're not seeing a change in schedule. And I'm hoping that as the UAW resolves, that threat will go away completely. Our biggest supplier is PACCAR, and they don't have direct UAW influence, but their suppliers are. So that's how we're looking at it. And the short answer is we're not seeing any impact at this stage.
Ted Jackson: Okay. And then my last question, just more of a strategy one is, over the longer term, one of the efforts, I guess, would be, say, to kind of drive margins and efficiencies, bringing some of – the manufacturing of some of the products that you currently make in Italy and Europe and actually bring some of that manufacturing here to the U.S., you don't have to ship it. And I just wanted to kind of hear like where are you in terms of that journey there? I mean could you talk a little bit maybe about kind of timeline and where you are within that timeline? Just kind of an update, if you would, and that's my final question.
Michael Coffey: Well, yes, so we don't – we're not prepared to talk about a distinct or detailed timeline along that. But we are at the early stages of sharing supply chain. So we have a supply chain directive in Europe and a supply chain directive in North America. And many of the products that we're acquiring in both areas are complementary, and many of the suppliers actually have the same ownership or we're sharing suppliers. So we see as an opportunity for us to broaden that, bring more value to supply chain to help eliminate costs of the supply chain. And then there are some products in Europe that are distinctly well suited for North America. And some of the products in Europe are 100% North American, so we're looking at that. But I would characterize it as the early innings in the early stages. And when we're prepared for – when we are prepared to release the timeline, we'll let you know. But at this stage, it's a very early consideration of a long-term process.
Ted Jackson: Okay. That's it for me. Again, congratulations on the quarter. Talk to you soon.
Michael Coffey: Thanks, Ted. I appreciate the questions.
Operator: The next question is from Mike Shlisky with D.A. Davidson. Please go ahead.
Michael Coffey: Good morning, Mike.
Operator: Mr. Shlisky, your line is open. You seem to be on hold, and we are just hearing music from his line. That's the last of the questions. I'll hand the conference back over to Michael Coffey for closing remarks.
Michael Coffey: Thanks very much, operator. And I just want to thank everyone for your interest in Manitex and our investors for their support and long-term investments in the company. It means a lot to us, and we're grateful for it. Thank you for joining the call. If we don't get a chance to connect during the quarter, we wish you the best and look forward to seeing you soon. And with that, that will conclude our call today.
Operator: This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.
