UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2021
Commission File No.: 001-32401
MANITEX INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Michigan
(State of incorporation)
9725 Industrial Drive
Bridgeview, Illinois
(Address of principal executive offices)
42-1628978
(I.R.S. Employer
Identification No.)
60455
(Zip Code)
Registrant’s telephone number, including area code: (708) 430-7500
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, no par value
Preferred Share Purchase Rights
Trading Symbol(s)
MNTX
N/A
Name of each exchange on which registered
The NASDAQ Stock Market LLC
The NASDAQ Stock Market LLC
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes ☐ No ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
(Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging
growth company. See the definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of
the Exchange Act.
Large Accelerated Filer
Non-Accelerated Filer
☐
☐
Accelerated Filer
Smaller reporting company
Emerging growth company
☒
☒
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit
report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The aggregate market value of the shares of common stock, no par value (“Common Stock”), held by non-affiliates of the registrant as of June 30, 2021 was
approximately $105.4 million based upon the closing price for the Common Stock of $7.29 on the NASDAQ Stock Market on such date.
The number of shares of the registrant’s common stock outstanding as of March 1, 2022 was 19,943,787.
DOCUMENTS INCORPORATED BY REFERENCE
Part III of this Annual Report on Form 10-K incorporates by reference information (to the extent specific sections are referred to herein) from the registrant’s Proxy
Statement for its 2022 Annual Meeting (the “2022 Proxy Statement”) to be filed with the SEC within 120 days after the end of the fiscal year ended December 31,
2021.
Auditor Name:
Grant Thornton LLP
Auditor Location:
Chicago, IL, United States of America
TABLE OF CONTENTS
PART I
ITEM 1.
ITEM 1A.
ITEM 1B.
ITEM 2.
ITEM 3.
ITEM 4.
PART II
ITEM 5.
ITEM 6.
ITEM 7.
ITEM 7A.
ITEM 8.
ITEM 9.
ITEM 9A.
ITEM 9B.
ITEM 9C.
PART III
ITEM 10.
ITEM 11.
ITEM 12.
ITEM 13.
ITEM 14.
PART IV
ITEM 15.
ITEM 16
BUSINESS .........................................................................................................................................................
RISK FACTORS ................................................................................................................................................
UNRESOLVED STAFF COMMENTS .............................................................................................................
PROPERTIES.....................................................................................................................................................
LEGAL PROCEEDINGS...................................................................................................................................
MINE SAFETY DISCLOSURES ......................................................................................................................
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES ..........................................................................
[RESERVED] .....................................................................................................................................................
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS ........................................................................................................................................
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ..................................
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA...................................................................
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE ........................................................................................................................
CONTROLS AND PROCEDURES...................................................................................................................
OTHER INFORMATION ..................................................................................................................................
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS .................
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE ...........................................
EXECUTIVE COMPENSATION......................................................................................................................
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS ...................................................................................................
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE..............................................................................................................................................
PRINCIPAL ACCOUNTANT FEES AND SERVICES ...................................................................................
EXHIBITS, AND FINANCIAL STATEMENT SCHEDULES ........................................................................
FORM 10-K SUMMARY ..................................................................................................................................
SIGNATURES..........................................................................................................................................................................
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i
PART I
References to the “Company,” “we,” “our” and “us” refer to Manitex International, Inc., together in each case with our subsidiaries
and any predecessor entities unless the context suggests otherwise.
Forward-Looking Statements
When reading this Annual Report on Form 10-K, it is important that you also read the financial statements and related notes thereto.
This Annual Report on Form 10-K and certain information incorporated herein by reference contain forward-looking statements
within the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. All statements contained in this Annual
Report on Form 10-K, other than statements that are purely historical, are forward-looking statements and are based upon
management’s present expectations, objectives, anticipations, plans, hopes, beliefs, intentions or strategies regarding the future. We
use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,”
“should,” “could,” and similar expressions to identify forward-looking statements. Forward-looking statements in this Annual Report
on Form 10-K include, without limitation: (1) projections of revenue, earnings, capital structure and other financial items,
(2) statements of our plans and objectives, (3) statements regarding the capabilities and capacities of our business operations,
(4) statements of expected future economic conditions and the effect on us and on our customers, (5) expected benefits of our cost
reduction measures, and (6) assumptions underlying statements regarding us or our business. Our actual results may differ from
information contained in these forward-looking statements for many reasons, including those described below and in the section
entitled “Item 1A. Risk Factors”:
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
a future substantial deterioration in economic conditions, especially in the United States and Europe;
The negative impacts COVID-19 has had and will continue to have on our business, financial condition, cash flows, results of
operations and supply chain, as well as customer demand;
the reliance of our customers on government spending, fluctuations in activity levels in the construction industry, and capital
expenditures in the oil and gas industry;
our level of indebtedness and our ability to meet financial covenants required by our debt agreements;
our ability to negotiate extensions of our credit agreements and to obtain additional debt or equity financing when needed;
any failure on our part to maintain an effective system of internal controls;
the cyclical nature of the markets we operate in;
an increase in interest rates;
our increasingly international operations expose us to additional risks and challenges associated with conducting business
internationally, including currency exchange risks;
(10) difficulties in implementing new systems, integrating acquired businesses, managing anticipated growth, and responding to
technological change;
(11)
the availability of the third-party financing that some of our customers rely on to purchase our products;
(12) our operations are in a highly competitive industry and the Company is particularly subject to the risks of such competition;
(13) our dependency upon third-party suppliers makes us vulnerable to supply shortages;
(14) price increases in materials could reduce our profitability;
(15)
the Company faces product liability claims and other liabilities due to the nature of its business;
(16)
the Company’s success depends upon the continued protections of its trademarks and the Company may be forced to incur
substantial costs to maintain, defend, protect and enforce its intellectual property rights;
(17)
the volatility of our stock price;
(18) our ability to access the capital markets to raise funds and provide liquidity;
(19)
the willingness of our shareholders and directors to approve mergers, acquisitions, and other business transactions;
(20) compliance with changing laws and regulations;
(21) a substantial portion of our revenues are attributed to a limited number of customers which may decrease or cease purchasing at
any time;
1
(22) a disruption or breach in our information technology systems;
(23) our reliance on the management and leadership skills of our senior executives;
(24)
impairment in the carrying value of goodwill and/or other intangible assets could negatively affect our operating results;
(25) certain provisions of the Michigan Business Corporation Act and the Company’s Articles of Incorporation, as amended,
Amended and Restated Bylaws, and the Company’s Preferred Stock Purchase Rights may discourage or prevent a change in
control of the Company;
(26)
the cost of compliance with Section 404 of the Sarbanes-Oxley Act of 2002; and
(27) other factors.
The risks described in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties
not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial
condition or operating results. All forward-looking statements are made only as of the date hereof. We do not undertake, and expressly
disclaim, any obligation to update this forward-looking information, except as required under applicable law.
ITEM 1. BUSINESS
Our Business
The Company is a leading provider of engineered lifting solutions. The Company designs, manufactures and distributes a diverse
group of products that serve different functions and are used in a variety of industries. The Company reports in a single business
segment and has four operating segments, under which there are five reporting units. The Company has integrated Manitex and
Badger Equipment Company (“Badger”) reporting units into one operating segment as a substantial portion of the sales from Badger
are intercompany sales to Manitex. While the Company continues to report Badger as a separate reporting unit, its results are
combined with Manitex and reported at the combined Manitex operating segment.
Manitex markets a comprehensive line of boom trucks, truck cranes, aerial platforms, and sign cranes. Manitex’s boom trucks and
crane products are primarily used for industrial projects, energy exploration and infrastructure development, including roads, bridges
and commercial construction. Truck mounted aerial work platforms are widely used in several diverse applications. High reach aerial
work platforms are used in highway signage maintenance and construction, parking lot lighting applications, as well as
telecommunication maintenance and upgrades. Medium reach aerial work platforms cover most retail shopping and commercial
advertising. Larger capacity aerial work platforms are used as support vehicles to service and maintain equipment in mining
applications. Sign cranes are used for sign installation and sign maintenance.
Badger is a manufacturer of specialized rough terrain cranes and material handling products. Badger primarily serves the needs of the
construction, municipality and railroad industries.
PM Oil and Steel S.p.A. (“PM” or “PM Group”) is a leading Italian manufacturer of truck- mounted hydraulic knuckle boom cranes
with a 63-year history of technology and innovation, and a product range spanning more than 50 models. PM is also a manufacturer of
truck-mounted aerial platforms with a diverse product line and an international client base. Through its consolidated subsidiaries, PM
Group has locations in Modena, Italy; Valencia, Spain; Arad, Romania; Chassieu, France; Buenos Aires, Argentina; Santiago, Chile;
Singapore and Querétaro, Mexico.
Manitex Valla S.r.L. (“Valla”) produces a full range of precision pick and carry industrial cranes using electric, diesel, and hybrid
power options. Its cranes offer wheeled or tracked, and fixed or swing boom configurations, with special applications designed
specifically to meet the needs of its customers. These products are sold internationally through dealers and into the rental distribution
channel.
Crane and Machinery, Inc. (“C&M” or “Equipment Distribution”) is a distributor of the Company’s products as well as other cranes.
Crane and Machinery Leasing, Inc. (“C&M Leasing”) rents equipment manufactured by the Company as well as a limited amount of
equipment manufactured by third parties.
Discontinued Operations
Manitex Sabre, Inc. (‘’Sabre”)
On August 21, 2020, the Company entered into an Asset Purchase Agreement to sell Manitex Sabre, Inc. to an affiliate of Super Steel,
LLC for cash proceeds of $1.5 million, subject to certain adjustments based on closing date accounts receivable and inventory.
Accordingly, Manitex Sabre, Inc. was reported as a discontinued operation for 2020.
2
In addition to the cash proceeds from sale of $1.5 million in cash received, the Company may receive maximum royalty and earn-out
payments of up to approximately $2.9 million for years 2021 through 2023 if certain revenue criteria are met. The Company has
received approximately $0.1 million of such payments to date. The Company will account for the contingent consideration as a gain in
accordance with ASC 450. Under this approach, we will recognize the contingent consideration in earnings after the contingency is
resolved. See Note 22 for additional discussion related to the sale of Sabre’s business and assets.
General Corporate Information
Our predecessor company was formed in 1993 and was purchased in 2003 by Veri-Tek International, Corp., which changed its name
to Manitex International, Inc. in 2008. Our principal executive offices are located at 9725 Industrial Drive, Bridgeview, Illinois 60455
and our telephone number is (708) 430-7500. Our website address is www.manitexinternational.com. Information contained on our
website is not incorporated by reference into this report and such information should not be considered to be part of this report.
INFORMATION ABOUT OUR BUSINESS
Boom Trucks
A boom truck is a straight telescopic boom crane outfitted with a hook and winch which is mounted on a standard flatbed commercial
(Class 7 or 8) truck chassis. Relative to other lifting equipment, boom trucks provide increased versatility, with some models capable
of transporting relatively large payloads from site to site at highway speeds. A boom truck is usually sold with outriggers, pads and
devices for reinforcing the chassis in order to improve safety and stability. Although produced in a wide range of models and sizes,
boom trucks can be broadly distinguished by their normal lifting capability as light, medium, and heavy-cranes. Various models of
medium or heavy-lift boom trucks can safely lift loads from 15- to 80-tons and operating radii can exceed 200 feet. Another advantage
of the boom truck is the ability to provide occasional man lift capabilities at a very low cost to height ratio. While it is not uncommon
to see a very old boom truck, most replacement cycles seem to trend to seven years. The market for boom trucks has historically been
cyclical.
Although the Company offers a complete line of boom trucks from light to heavy capacity cranes, much of our efforts have been
devoted to the development of higher capacity boom trucks specifically designed to meet the particular needs of customers including
those in energy production and electrical power distribution. We believe it is an advantage to be skewed towards the heavier lifting
capacity, since the heavier capacity cranes have higher margins.
Markets that drive demand for boom trucks include power distribution, oil and gas recovery, infrastructure and new home, commercial
and industrial construction. Historically, the new home construction market, which uses lower capacity cranes, has probably been the
most cyclical. Over the past few years, demand from the energy sector has become more cyclical in part due to changes in oil prices.
The Company sells its boom trucks through a network of over forty full-service dealers in the United States, Canada, Mexico, South
America, and the Middle East. A number of our dealers maintain a rental fleet of their own. Boom trucks can be rented for either short
or long-term periods.
Knuckle Boom Cranes
PM knuckle boom cranes are hydraulic folding and articulating cranes, mounted on a commercial chassis, with lifting capacities that
range from small (lifting capacity up to three-ton meter) to super heavy (lifting capacity up to two-hundred-and-ten-ton meter), often
supplied with a jib for additional reach. The knuckle boom has a compact design and footprint which can be mounted on a chassis to
maximize the load carrying capability. Combined with the crane’s ability to operate in a compact footprint the ability to carry a
payload provides a competitive advantage over other truck mounted cranes and makes the knuckle boom crane particularly attractive
for a variety of end uses in the construction and product delivery sectors.
The knuckle boom crane market is a global market with a wide variety of end sector applications, but focused particularly on
residential and non-residential construction, road and bridge infrastructure development, waste management and utility applications.
PM knuckle boom cranes are sold into a variety of geographies including West and East Europe, Central Asia, Africa, North and
Central America, South America, the Middle East and the Far East and Pacific region. Historically, PM focused on its domestic and
local Western European markets, but in recent years has expanded its sales and distribution efforts internationally. PM has six
international sales and distribution offices located in several European countries as well as the Far East and Latin America.
The market for knuckle boom cranes has been growing in recent years as the acceptability of the product has grown and its advantages
have been accepted. Growth in North America, where the straight-mast boom truck crane has been the more dominant product, has
been more rapid in recent years in combination with the overall improvement in the North American construction sector. PM’s share
of the North American market has been historically low; however, we believe that this is an area of growth opportunity for the
Company.
3
Aerial Work Platforms
Oil & Steel aerial platforms are self-propelled or truck mounted and places an operator in a basket in the air in order to perform
maintenance, repairs or similar activities. The equipment is used in a variety of applications including utilities, sign work and
industrial maintenance and is often sold to rental operations.
Oil & Steel serves a number of geographies in North America, Western and Eastern Europe but also the Near and Far East and sells
through dealers as well as its own sales and distribution offices. In North America, the product sold under the Manitex brand and sold
through its distribution network. The market generally follows the domestic economic cycle for any particular country. Consequently,
the market has shown a positive trend in the past several years.
Industrial Cranes
Badger sells specialized industrial cranes through a network of dealers. The Badger product line includes specialized 15- and 30-ton
industrial cranes (which can be used as dedicated rail cranes by the railroad industry) as well as a 10-ton carry deck crane which are all
sold under both the Badger and Manitex names. Additionally, Badger sells lattice cranes with 20- to 30-ton lifting capacity marketed
under the Little Giant trade name. The Little Giant line has five lattice boom models, three of which are dedicated rail cranes. In
addition, Badger also sells a 30-ton truck crane and a 25-ton crawler crane under the Little Giant name. Badger also has the capability
to manufacture certain of our lower capacity boom trucks and provides expanded boom truck manufacturing capacity when needed.
The products are used by railroads, refineries, states, municipalities, and for general construction. The Company believes it has an
advantage over its competitors in selling to the railroad industry as it is the only crane manufacturer that has integrated the installation
of rail gear into its production process. Competitors send their cranes to a third-party to have rail gear added which both increases cost
and delays deliveries.
As of January 2022, the Company had discontinued the industrial crane product line. See Note 23 for further information.
Valla Cranes
Valla product line of industrial cranes is a full range of precision pick and carry cranes from 2- to 44-tons, using electric, diesel, and
hybrid power options. Its cranes offer wheeled or tracked, and fixed or swing boom configurations, with special applications designed
specifically to meet the needs of its customers. The product is sold internationally through dealers and into the rental distribution
channel.
Equipment Distribution
C&M is a distributor of the Company’s products. C&M Leasing rents equipment manufactured by the Company as well as a limited
amount of equipment manufactured by third parties.
Part Sales
As part of our operations, we supply repair and replacement parts for our products. The parts business margins are generally higher
than our overall margins. Part sales as a percentage of revenues tend to increase when there is a down-turn in the industry. Part sales as
a percentage of revenues are approximately 12% and 16% for the years ended December 31, 2021 and 2020, respectively.
Company Revenues by Sources
The sources of the Company’s revenues are summarized below:
Boom trucks, knuckle boom & truck cranes
Aerial platforms
Part sales
Other equipment
Services
Rough terrain cranes
Net Revenue
4
2021
2020
61%
13%
12%
11%
3%
0%
100%
57%
12%
15%
10%
2%
4%
100%
In 2021 and 2020, no customer accounted for 10% or more of the Company’s revenue.
Raw Materials
The Company purchases a variety of components used in the production of its products. The Company purchases steel and a variety
of machined parts, components and subassemblies including weldments, winches, cylinders, frames, rims, axles, wheels, tires,
suspensions, cables, booms and cabs, as well as engines, transmissions and cabs. Additionally, Manitex and PM mount their cranes on
commercial truck chassis, which are either purchased by the Company or supplied by the customer. Lead times for these materials
(including chassis) historically varied from several weeks to many months. The Company is vulnerable to a supply interruption in
instances when only one supplier has been qualified. Identifying and qualifying alternative suppliers can be very time consuming, and
in some cases, could take longer than a year. The Company has been working on qualifying secondary sources of some products to
assure supply consistency and to reduce costs. The degree to which our supply base can respond to changes in market demand directly
affects our ability to increase production and the Company attempts to maintain some additional inventory in order to react to
unexpected increases in demand.
Supply chain issues have impacted the Company and we expect this to continue to cause disruption in 2022. The disruptions continue
to put a strain on our team and resources, specifically on our electronic components and truck chassis. Future supply chain issues that
might impact the Company will in part depend on how fast the rate of growth is for a product. Strong general economic growth could
put us in competition for parts with other industries. Additionally, events or circumstances at a particular supplier could impact the
availability of a necessary component.
Patents and Trademarks
The Company protects its trade names and trademarks through registration. Its technology consists of bill of materials, drawings,
plans, vendor sources and specifications and although the Company’s technology has considerable value, it does not generally have
patent protection. The Company has (on rare occasions) filed for patent protection on a specific feature. In the future, the Company
will consider seeking patent protection on any new design features believed to present a significant future benefit.
The Company owns and uses several trademarks relating to its brands that have significant value and are instrumental to the
Company’s ability to market its products. The Company’s most significant trademark is “Manitex” (presently registered with the
United States Patent and Trademark Office until 2027). Badger Equipment Company previously marketed its products under the
“Little Giant” and Badger trade names which were discontinued during January 2022. Valla markets its products under the “Valla”
tradename. PM sells its products using the trademark “PM” and PM subsidiary, PM Oil & Steel S.p.A. sells its products using the
“OIL & STEEL” trademark. The Manitex, Badger, Valla, Little Giant, PM and OIL & STEEL trademarks and trade names are
important to the marketing and operation of the Company’s business as a significant number of our products are sold under those
names. PM has three patents. One is registered with the Italian Patents and Trademarks Office until 2028. PM has two additional
patents registered with OHIM that are in force until 2031 and 2034, respectively.
Seasonality
Traditionally, the Company’s peak selling periods for cranes are the second and fourth quarters of a calendar year. A significant
portion of cranes sold over the last several years have been deployed in specialized industries or applications, such as residential and
commercial construction. Sales in these markets are subject to significant fluctuations which correlate more with general economic
conditions and the prices of commodities and generally are not of a seasonal nature.
Sales of cranes from the Equipment Distribution division mirror the seasonality of the sales of the overall Company. However, the sale
of parts is much less seasonal given the geographic breadth of the customer base. Crane repairs are performed by the Equipment
Distribution division throughout the year but are somewhat affected by the slowdown in construction activity during the typically
harsh winters in the Midwestern United States.
Competition
Lifting Equipment
The market for the Company’s boom trucks, knuckle boom cranes, and industrial cranes is highly competitive. The Company
competes based on product design, quality of products and services, product performance, maintenance costs and price. Several
competitors have greater financial, marketing, manufacturing and distribution resources than we do. The Company believes that it
effectively competes with its competitors.
5
The Company’s boom cranes compete with cranes manufactured by National Crane, Custom Truck One Source, Elliott and Altec and
Weldco Beales. The Company’s knuckle boom cranes compete with Palfinger, Fassi, Effer and HIAB. The Company competes
primarily with Broderson in selling rough terrain and industrial cranes.
Equipment Distribution
The Equipment Distribution division’s primary business is facilitation of sale of products manufactured by the Company. As such, it
faces the same competition described above for products manufactured by the Company. Additionally, the Equipment Distribution
division has a dealership arrangement with Terex Corporation and must compete against dealers of other crane
manufacturers. Locally, the Equipment Distribution division competes against Runnion Equipment (dealer for National Crane),
Power Equipment Leasing (dealer for Elliott) and Guiffre Cranes (dealer for Manitex).
While no geographic limitations exist regarding the Equipment Distribution business’s ability to sell cranes internationally, the lack of
any barriers to entry and the heavy use of the Internet make this a highly active and competitive market in which to distribute cranes.
Competition for our Equipment Distribution repair business is even more intense since it is limited geographically due to the necessity
of having physical access to the cranes. Most of the above referenced companies also compete in this aspect of the business, as do
other types of crane and equipment dealers from nearby areas such as Indiana or Wisconsin.
Equipment Distribution parts sales are global in scope and benefit greatly from the Internet and the tenure and expertise of our
employees. While competition in this area is extensive, we believe that the breadth of the products offered and our long history in this
part of the business is a competitive advantage.
Our Equipment Distribution business competes based on the design, quality and performance of the products it distributes, price and
the supporting repair and part services that it provides. Several competitors have greater financial, marketing and distribution
resources than we do. The Company, however, believes that it effectively competes with its competitors.
Backlog
The backlog at December 31, 2021 was approximately $189 million, compared to a backlog of approximately $68 million at
December 31, 2020. The December 31, 2021 backlog has increased by $76 million since September 30, 2021 when it was
approximately $113 million. The Company expects to ship a majority of its products to fulfill its existing backlog within the next
twelve months.
Revenue Recognition
The information regarding revenue, and the basis for attributing revenue from external customers to individual countries, is found in
Note 4 “Revenue Recognition” to our consolidated financial statements, which is hereby incorporated by reference into this Part I,
Item 1.
Employees
As of December 31, 2021, the Company had 514 full-time employees and 12 part-time employees. The Company has not experienced
any work stoppages and anticipates continued good employee relations. Eighteen (18) of our employees are covered by collective
bargaining agreements. Fourteen (14) of our employees at our Badger subsidiary are represented by International Union, United
Automobile, Aerospace, and Agricultural Implement Workers of America, (“UAW”) and its local No. 316. The current union contract
expires on January 21, 2023. Four (4) employees are currently represented by Automobile Mechanics’ Local 701. The union contract
expires on September 30, 2023. The employees represented by the Automobile Mechanics’ Local 701 are mechanics that work in our
Equipment Distribution business. Several of our Equipment Distribution customers in the Chicago metropolitan area mandate usage
of union mechanics for any service/repair jobs.
Governmental Regulation
The Company is subject to various governmental regulations, such as environmental regulations, employment and health regulations,
and safety regulations. We have various internal controls and procedures designed to maintain compliance with these regulations. The
cost of compliance programs is not material but is subject to additions to or changes in federal, state or local legislation or changes in
regulatory implementation or interpretation of government regulations.
Available Information
The Company makes available free of charge our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on
Form 8-K and amendments to those reports filed or furnished as required by Section 13(a) or 15(d) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”), through our Internet Website (www.manitexinternational.com) as soon as is reasonably
practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (the “SEC”). The
SEC also maintains a website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding
issuers that file electronically with the SEC. Information contained in or incorporated into our Internet Website or the SEC’s website
is not incorporated by reference herein.
6
ITEM 1A. RISK FACTORS
The reader should carefully consider the following risks, together with the cautionary statement under the caption “Forward-Looking
Statements” and the other information included in this report. The risks described below represent all of the material risks currently
known to us; however, they are not the only ones the Company faces. Additional risks that are currently unknown to the Company or
that the Company currently considers to be immaterial may also impair its business or adversely affect the Company’s financial
condition or results of operations. If any of the following risks actually occur, the Company’s business, financial condition or results
of operation could be adversely affected.
Risks Relating to the Company’s Business and Operations
A future substantial deterioration in economic conditions, especially in the United States and Europe, would adversely impact the
Company’s results of operations and cash flows.
Economic conditions affect the Company’s sales volumes, pricing levels and overall profitability. Demand for many of the
Company’s products depends on end-use markets. Challenging economic conditions may reduce demand for our products and may
also impair the ability of customers to pay for products they have purchased. As a result, the Company’s reserves for doubtful
accounts and write-offs for accounts receivable may increase. Significant deterioration in economic conditions, especially in the
United States and Europe, has had and may again have negative effects on the Company’s results of operations and cash flows.
A significant deterioration in economic conditions has caused and may again cause deterioration in the credit quality of our customers
and the estimated residual value of our equipment. This could further negatively impact the ability of our customers to obtain the
resources they need to make purchases of our equipment. Reduced credit availability will diminish our customers’ ability to invest in
their businesses, refinance maturing debt obligations, and meet ongoing working capital needs. If customers do not have sufficient
access to credit, demand for the Company’s products will likely decline. Reduced access to credit and the capital markets will also
negatively affect the Company’s ability to invest in strategic growth initiatives such as acquisitions.
The COVID-19 pandemic has had, and is expected to continue to have, a negative impact on our business, financial condition,
cash flows, results of operations and supply chain.
The COVID-19 pandemic resulted in national, state and local government authorities implementing numerous measures to try to
contain the virus, such as travel bans and restrictions, border closings, restrictions on public gatherings, quarantining of people who
may have been exposed to the virus, shelter-in-place restrictions, and limitations or shutdowns of business operations. These
measures, some of which are continuing or being re-implemented in light of new variants of the virus, have impacted and may further
impact our workforce and operations, the operations of our customers, and those of our dealers and suppliers. We have significant
operations worldwide, including in the United States, Italy and Romania and each of these countries have been affected by the
pandemic and have taken measures to try to contain it, resulting in disruptions at some of our manufacturing facilities and support
operations. There is still uncertainty regarding the full impact and duration of such measures and potential future measures, and
restrictions on our access to our facilities or on our support operations or workforce, or similar limitations for our customers, dealers
and suppliers.
The COVID-19 pandemic has disrupted our supply chain and resulted in higher material costs as well as delays in scheduled
shipments of our products. The COVID-19 pandemic has had, and is expected to continue to have, a negative impact on our business,
financial condition, cash flows and results of operations, although the full extent is still uncertain. As the pandemic continues to
evolve and new variants continue to emerge, the extent of the impact on our business, financial condition, cash flows and results of
operations will depend on future developments, including, but not limited to, the continued duration of the pandemic, government
actions to contain the virus and/or treat its impact, restrictions on travel, the duration, timing and severity of the impact on customer
demand, and how quickly and to what extent normal economic and operating conditions can resume, all of which are still uncertain
and cannot be predicted.
Our revenues and profitability are impacted by government spending and fluctuations in the construction industry.
Many of the Company’s customers depend substantially on government spending, including highway construction and maintenance
and other infrastructure projects by U.S. federal and state governments as well as foreign governments. Any decrease or delay in
government funding of highway construction and maintenance and other infrastructure projects could cause the Company’s revenues
and profits to decrease.
7
The Company’s level of indebtedness reduces our financial flexibility and meeting financial covenants required by our debt
agreements could impede our ability to successfully operate.
As of December 31, 2021, the Company’s total debt was $45.4 million, which includes notes payable and finance lease obligations.
Our level of debt affects our operations in several important ways, including the following:
•
•
•
•
•
a significant portion of our cash flow from operations is likely to be dedicated to the payment of the principal and interest
on our indebtedness;
our ability to obtain additional financing in the future for working capital, capital expenditures or acquisitions may be
limited;
we may be unable to refinance our indebtedness on terms acceptable to us or at all;
our cash flow may be insufficient to meet our required principal and interest payments; and
we may be unable to obtain additional loans as a result of covenants and agreements with existing debt holders.
The Company’s existing debt agreements contain a number of significant covenants which may limit our ability to, among other
things, borrow additional money, make capital expenditures, pay dividends, dispose of assets and acquire new businesses. These
covenants also require the Company to meet certain financial and non-financial tests. A default or other event of non-compliance, if
not waived or otherwise permitted by the Company’s lenders, could result in acceleration of the Company’s debt and possibly
bankruptcy.
The Company may be unable to negotiate extensions of our credit agreements and to obtain additional debt or equity financing
when needed.
Our future capital requirements will depend on the amount of cash generated or required by our current operations, as well as
additional funds which may be needed to finance future acquisitions. Future cash needs are subject to substantial uncertainty.
Adequate funds may not be available when needed, and if we do not receive sufficient capital, we may be required to alter or reduce
the scope of our operations or to forego making future acquisitions. If we raise additional funds by issuing equity securities, existing
stockholders may be diluted.
If we fail to maintain an effective system of internal controls, we may not be able to accurately and timely report our financial
results, which could negatively impact our business, investor confidence, and the price of our common stock.
As previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020, we previously did not maintain an
effective control environment over information technology and general controls, based on the criteria established in the COSO
framework, to enable identification and mitigation of risks of material accounting errors. We completed remediation measures related to
the material weaknesses and concluded that our internal control over financial reporting was effective as of December 31, 2021.
However, completion of remediation does not provide assurance that our remediation or other controls will continue to operate properly
or remain adequate. Accordingly, if we are unable to maintain effective internal control over financial reporting or disclosure controls and
procedures in the future, our ability to record, process, and report financial information accurately and to prepare financial statements
within required time periods could be adversely affected, which could subject us to litigation, investigations, or penalties; negatively
affect our liquidity, our access to capital markets, our ability to maintain compliance with covenants, any of which may require substantial
management resources or cause our stock price to decline.
The Company’s business is affected by the cyclical nature of its markets.
A substantial portion of our revenues are attributed to a limited number of customers which may decrease or cease purchasing any
time, since the Company’s products depend upon the general economic conditions of the markets in which the Company competes.
The Company’s sales depend in part upon its customers’ replacement or repair cycles. Adverse economic conditions, including a
decrease in commodity prices, may cause customers to forego or postpone new purchases in favor of repairing existing machinery.
Downward economic cycles may result in reductions in sales of the Company’s products, which may reduce the Company’s profits.
8
The Company’s business is sensitive to increases in interest rates.
The Company is exposed to interest rate volatility with regard to future issuances of fixed rate debt and existing issuances of variable
rate debt. If interest rates rise, it becomes costlier for the Company’s customers to borrow money to pay for the equipment they buy
from the Company. Should the United States Federal Reserve Board decide to increase rates, as it has indicated it intends to do in
March 2022, prospects for business investment and manufacturing could deteriorate sufficiently and impact sales opportunities.
Our increasingly international operations expose us to additional risks and challenges associated with conducting business
internationally.
The international expansion of our business may expose us to risks inherent in conducting foreign operations. These risks include:
•
•
•
•
•
•
•
•
•
challenges associated with managing geographically diverse operations, which require an effective organizational
structure and appropriate business processes, procedures and controls;
the increased cost of doing business in foreign jurisdictions, including compliance with international and U.S. laws and
regulations that apply to our international operations;
currency exchange and interest rate fluctuations and the resulting effect on our revenue and expenses, and the cost and risk
of entering into hedging transactions, if we continue to do so in the future;
cash requirements to finance business growth;
potentially adverse tax consequences;
complexities and difficulties in obtaining protection and enforcing our intellectual property;
compliance with additional regulations and government authorities in a highly regulated business;
general economic and political conditions internationally; and
public health concerns, including the ongoing COVID-19 pandemic.
Additionally, changes to the United States’ participation in, withdrawal from, renegotiation of certain international trade agreements
or other major trade related issues including the non-renewal of expiring favorable tariffs granted to developing countries, tariff
quotas, and retaliatory tariffs, trade sanctions, new or onerous trade restrictions, embargoes and other stringent government controls
could have a material adverse effect on our business, results of operations and financial condition.
The reporting currency for our consolidated financial statements is the U.S. Dollar. Certain of our assets, liabilities, expenses,
revenues and earnings are denominated in other countries’ currencies, including the Euro, Chilean Peso, and Argentinean Peso. Those
assets, liabilities, expenses, revenues and earnings are translated into U.S. Dollars at the applicable exchange rates to prepare our
consolidated financial statements. Therefore, increases or decreases in exchange rates between the U.S. Dollar and those other
currencies affect the value of those items as reflected in our consolidated financial statements, even if their value remains unchanged
in their original currency. Such fluctuations in foreign currency rates relative to the U.S. Dollar caused a loss of approximately $0.5
million on our actual results.
The risks that the Company faces in its international operations may continue to intensify if the Company further develops and
expands its international operations.
The Company may face limitations on its ability to integrate acquired businesses and manage anticipated growth and may be
unable to effectively respond to technological change and implementing new systems.
The successful integration of new business depends on the Company’s ability to manage these new businesses and cut excess costs.
The Company cannot ensure that these acquired companies will operate profitably or that the intended beneficial effect from these
acquisitions will be realized.
If the Company fails to manage growth, the Company’s financial results and business prospects may be harmed. To manage the
Company’s growth and to execute its business plan efficiently, the Company will need to institute, maintain and continue to improve
operational, financial and management controls, as well as reporting systems and procedures. The Company also must effectively
expand, train and manage its employee base. The Company may not be successful in any of these endeavors.
9
The markets served by the Company are not historically characterized by rapidly changing technology. Nevertheless, the Company’s
future success will depend in part upon the Company’s ability to enhance its current products and to develop and introduce new
products. If the Company fails to anticipate or respond adequately to competitors’ product improvements and new production
introductions, future results of operations and financial condition will be negatively affected.
Some of our customers rely on financing with third parties to purchase our products.
We rely on sales of our products to generate cash from operations. Significant portions of our sales are financed by third-party finance
companies on behalf of our customers. The availability and terms of financing by third parties are affected by general economic
conditions, credit worthiness of our customers and estimated residual value of our equipment. Deterioration in credit quality of our
customers or estimated residual value of our equipment, increases in interest rates or changes in the terms of third-party financing
agreements could negatively impact the ability or willingness of our customers to obtain resources they need to purchase our
equipment. There can be no assurance third-party finance companies will continue to extend credit to our customers.
The Company operates in a highly competitive industry and the Company is particularly subject to the risks of such competition.
The Company competes in a highly competitive industry and the competition which the Company encounters has an effect on its
product prices, market share, revenues and profitability. Because certain competitors have substantially greater financial, production,
research and development resources and substantially greater name recognition than the Company, the Company is particularly
subject to the risks inherent in competing with them and may be put at a competitive disadvantage. To compete successfully, the
Company’s products must excel in terms of quality, price, product line, ease of use, safety and comfort, and the Company must also
provide excellent customer service. The greater financial resources of the Company’s competitors may put it at a competitive
disadvantage. If competition in the Company’s industry intensifies or if the Company’s current competitors enhance their products or
lower their prices for competing products, the Company may lose sales or be required to lower its prices. This may reduce revenue
from the Company’s products and services, lower its gross margins or cause the Company to lose market share. The Company may
not be able to differentiate its products from those of competitors, successfully develop or introduce less costly products, offer better
performance than competitors or offer purchasers of our products payment and other commercial terms as favorable as those offered
by competitors.
The Company is dependent upon third-party suppliers, making us vulnerable to supply shortages.
The Company obtains materials and manufactured components from third-party suppliers. Any delay in the ability of the Company’s
suppliers to provide the Company with necessary materials and components may affect the Company’s capabilities at a number of its
manufacturing locations, or may require the Company to seek alternative supply sources. Delays in obtaining supplies may result from
a number of factors affecting the Company’s suppliers including capacity constraints, labor disputes, the impaired financial condition
of a particular supplier, suppliers’ allocations to other purchasers, difficulties in obtaining raw materials, shipping delays or
disruptions, public health emergencies, weather emergencies or acts of war or terrorism. Any delay in receiving supplies could impair
the Company’s ability to deliver products to its customers and, accordingly, could have a material adverse effect on business, results
of operations and financial condition.
In addition, the Company purchases materials and services from suppliers on extended terms based on the Company’s overall credit
rating. Negative changes in the Company’s credit rating may impact suppliers’ willingness to extend terms and increase the cash
requirements of the business.
Price increases in materials could reduce our profitability.
We use large amounts of steel and other items in the manufacture of our products. In the past, market prices of some of our key raw
materials increased significantly. If we experience future significant increases in material costs, including steel, we may not be able to
reduce product cost in other areas or pass raw material price increases on to our customers and our margins could be adversely
affected.
The Company faces product liability claims and other liabilities due to the nature of its business.
In the Company’s lines of business numerous suits have been filed alleging damages for accidents that have occurred during the use or
operation of the Company’s products. The Company is self-insured, up to certain limits, for these product liability exposures, as well
as for certain exposures related to general, workers’ compensation and automobile liability. Insurance coverage is obtained for
catastrophic losses as well as those risks required to be insured by law or contract. Any material liabilities not covered by insurance
could have an adverse effect on the Company’s financial condition.
10
The Company’s success depends upon the continued protection of its trademarks and the Company may be forced to incur
substantial costs to maintain, defend, protect and enforce its intellectual property rights.
The Company’s registered and common law trademarks, as well as certain of the Company’s licensed trademarks, have significant
value and are instrumental to the Company’s ability to market its products. The Company’s trademarks “Manitex”, “Badger”, “Valla”,
“PM” and “O&S” are important to the Company’s business as the majority of the Company’s products are sold under those names.
The Company has not registered all of its trademarks in the United States nor in the foreign countries where it does business. Third
parties could assert claims against such intellectual property that the Company could be unable to successfully resolve. If the
Company has to change the names of any of its products, it may experience a loss of goodwill associated with its brand names,
customer confusion and a loss of sales.
In addition, international protection of the Company’s intellectual property may not be available in some foreign countries to the same
extent permitted by the laws of the United States. The Company could also incur substantial costs to defend legal actions relating to
use of its intellectual property, which could have a material adverse effect on the Company’s business, results of operations or
financial condition.
The Company may be unable to access the capital markets to raise funds and provide liquidity when needed.
Our access to capital markets to raise funds through the sale of equity or debt securities is subject to various factors, including general
economic and/or financial market conditions which are outside our control, as well as our historical and expected future financial
performance and perceived credit worthiness. Significant changes in market liquidity conditions or our actual or perceived financial
condition could impact access to funding and associated funding costs, which could reduce our earnings and cash flows.
Compliance with changing laws and regulations may increase our costs or reduce our business flexibility.
Our operations are subject to a number of potential risks. Such risks principally include:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
trade protection measures and currency exchange controls;
labor unrest;
global and regional economic conditions;
political instability;
terrorist activities and the U.S. and international response thereto;
restrictions on the transfer of funds into or out of a country;
export duties and quotas;
domestic and foreign customs and tariffs;
current and changing regulatory environments;
difficulties protecting our intellectual property;
transportation delays and interruptions;
difficulty in obtaining distribution support;
natural disasters; and
current and changing tax laws.
The Company must comply with all applicable laws, including the Foreign Corrupt Practices Act (“FCPA”) and other laws that
prohibit engaging in corruption for the purpose of obtaining or retaining business. These anti-corruption laws prohibit companies and
their intermediaries from making improper payments or providing anything of value to improperly influence government officials or
private individuals for the purpose of obtaining or retaining a business advantage regardless of whether those practices are legal or
culturally expected in a particular jurisdiction. Our global activities and distribution model are subject to risk of corruption by our
employees and in addition, our sales agents, distributors, dealers and other third parties that transact Manitex business particularly
because these parties are generally not subject to our control.
The Company’s revenues are attributed to limited number of customers which may decrease or cease purchasing any time.
The Company’s revenues are attributed to a limited number of customers. We generally do not have long-term supply agreements with
our customers. Even if a multi-year contract exists, the customer is not required to commit to minimum purchases and can cease
11
purchasing at any time. If we were to lose either a significant customer or several smaller customers our operating results and cash
flows would be adversely impacted.
The Company depends on its information technology systems. If its information technology systems do not perform in a
satisfactory manner or if the security of them is breached, it could be disruptive and or adversely affect the operations and results
of operations of the Company.
The Company depends on its information technology systems, some of which are managed by third parties, to process, transmit and
store electronic information (including sensitive data such as confidential business information and personally identifiable data
relating to employees, customers and other business partners), and to manage or support a variety of critical business processes and
activities. If our information technology systems do not perform in a satisfactory manner, it could be disruptive and or adversely affect
the operations and results of operations of the Company, including the ability of the Company to report accurate and timely financial
results.
Furthermore, our information technology systems may be damaged, disrupted or shut down due to attacks by computer hackers,
computer viruses, employee error or malfeasance, power outages, hardware failures, telecommunication or utility failures,
catastrophes or other unforeseen events, and in any such circumstances our system redundancy and other disaster recovery planning
may be ineffective or inadequate. A failure of or breach in information technology security could expose us and our customers,
distributors and suppliers to risks of misuse of information or systems, the compromise of confidential information, manipulation and
destruction of data, defective products, production downtimes and operations disruptions. In addition, such breaches in security could
result in litigation, regulatory action and potential liability, as well as the costs and operational consequences of implementing further
data protection measures, each of which could have a material adverse effect on our business or results of operations.
The Company relies on key management.
The Company relies on the management and leadership skills of Steve Filipov, its Chief Executive Officer. Mr. Filipov entered into an
employment agreement commencing on September 1, 2019. Under the employment agreement, Mr. Filipov’s employment term
automatically extends for successive periods of three years unless either the Company or Mr. Filipov gives written notice to the other
party of non-renewal at least 90 days prior to the end of the then current employment term. The loss of his services could have a
significant and negative impact on the Company’s business. In addition, the Company relies on the management and leadership skills
of other senior executives. The Company could be harmed by the loss of key personnel in the future.
The Company may be required to record goodwill, other intangibles and fixed assets impairment charges on all or a significant
amount of the goodwill, other intangibles and fixed assets on its Consolidated Balance Sheets.
As of December 31, 2021, the Company recognized approximately $2.1 million of impairment charges in goodwill, other intangibles
and fixed assets. The Company tests goodwill and other intangibles for impairment at least annually. If the carrying value of goodwill
or other intangibles exceeds the implied fair value of the goodwill or intangibles, an impairment charge is recorded for the excess, as
occurred in 2021. An impairment of a significant portion of goodwill could materially negatively affect the Company’s results of
operations.
Risks Relating to Our Common Stock
The Company’s principal shareholders, executive officers and directors hold a significant percentage of the Company’s common
stock, and these shareholders may take actions that may be adverse to your interests.
The Company’s principal shareholders, executive officers and directors beneficially own, in the aggregate, approximately 39% of the
Company’s common stock as of January 25, 2022. As a result, these shareholders, acting together, will be able to significantly
influence all matters requiring shareholder approval, including the election and removal of directors and approval of significant
corporate transactions such as mergers, consolidations, sales and purchases of assets. They also could dictate the management of the
Company’s business and affairs. This concentration of ownership could have the effect of delaying, deferring or preventing a change
in control or impeding a merger or consolidation, takeover or other business combination, even if smaller shareholders support such a
transaction, which could cause the market price of our common stock to fall or prevent smaller shareholders from receiving a premium
in such a transaction.
12
Provisions of the Michigan Business Corporation Act and the Company’s Articles of Incorporation, Amended and Restated
Bylaws, and Rights Agreement may discourage or prevent a takeover of the Company.
Provisions of the Company’s Articles of Incorporation and Amended and Restated Bylaws, Michigan law, and the Rights Agreement,
as amended, between the Company and Broadridge Corporate Issuer Solution, Inc., as rights agent, could make it more difficult for a
third-party to acquire the Company, even if doing so would be perceived to be beneficial to you. These provisions could discourage
potential takeover attempts and could adversely affect the market price of the Company’s shares. Because of these provisions, you
might not be able to receive a premium on your investment. These provisions:
•
•
•
•
authorize the Company’s Board of Directors, with approval by a majority of its independent directors but without
requiring shareholder consent, to issue shares of “blank check” preferred stock that could be issued by the Company’s
Board of Directors to significantly dilute the ownership percentage of existing shareholders and prevent a takeover
attempt;
limit our shareholders’ ability to call a special meeting of the Company’s shareholders;
limit the Company’s shareholders’ ability to amend, alter or repeal the Company bylaws; and
restrict business combinations with certain shareholders.
The provisions described above could prevent, delay or defer a change in control of the Company or its management.
General Risk Factors
The trading price of our common stock is highly volatile.
The trading price of the Company’s common stock is highly volatile and could be subject to wide fluctuations in price in response to
various factors, many of which are beyond the Company’s control, including:
•
•
•
•
•
•
•
•
•
the degree to which the Company successfully implements its business strategy;
actual or anticipated variations in quarterly or annual operating results;
changes in recommendations by the investment community or in their estimates of the Company’s revenues or operating
results;
failure to meet expectations of industry analysts;
speculation in the press or investment community;
strategic actions by the Company’s competitors;
announcements of technological innovations or new products by the Company or its competitors;
changes in business conditions affecting the Company and its customers; and
potential to be delisted.
In the past, following periods of volatility in the market price of a company’s securities, class action litigation has often been brought
against companies. If a securities class action suit is filed against us, whether or not meritorious, we would incur substantial legal fees
and our management’s attention and resources would be diverted from operating our business in order to respond to the litigation.
The cost of compliance with Section 404 of the Sarbanes-Oxley Act of 2002 may negatively impact the Company’s income.
The Company is subject to the rules and regulations of the SEC, including those rules and regulations mandated by the Sarbanes-
Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act requires all reporting companies to include in their annual report a
statement of management’s responsibilities for establishing and maintaining adequate internal control over financial reporting,
together with an assessment of the effectiveness of those internal controls. Section 404 further requires that the reporting company’s
independent auditors attest to, and report on, this management assessment. The Company expects its expenses related to its internal
and external auditors to be significant.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None
13
ITEM 2.
PROPERTIES
The Company’s executive offices are located at 9725 Industrial Drive, Bridgeview, Illinois 60455. The Company has six principal
operating plants. The Company builds boom trucks and sign cranes in its 188,000 sq. ft. leased facility located in Georgetown, Texas.
The Company manufactures its knuckle boom cranes in two owned facilities, the 542,000 sq. ft. plant located in S. Cesario sul Panaro,
Italy and the 213,000 sq. ft. facility located in Arad, Romania. The Romania facility also produces sub-assemblies that are
incorporated into PM products manufactured in Italy. The Company manufactures its precision pick and carry cranes in a 58,000 sq.
ft. facility located in Piacenza, Italy. The Company had previously built specialized rough terrain cranes and material handling product
in its 170,000 sq. ft. owned facility located in Winona, Minnesota through January 2022.
The Company operates its crane distribution business from a 39,000 sq. ft. leased facility located in Bridgeview, Illinois. The
Bridgeview facility also houses our corporate offices.
The Company believes that its facilities are suitable for its business and will be adequate to meet our current needs.
ITEM 3. LEGAL PROCEEDINGS
The information set forth in Note 21 (Legal Proceedings and Other Contingencies) to the accompanying Condensed Consolidated
Financial Statements included in Part II. Item 8 “Financial Statements” on Form 10-K is incorporated herein by reference.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
14
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
Market for the Company’s Common Stock
The Company’s common stock is listed on The NASDAQ Capital Market trading under the symbol MNTX.
Number of Common Stockholders
As of February 3, 2022, there were 162 record holders of the Company’s common stock.
Dividends
During the fiscal years ended December 31, 2021 and 2020, the Company did not declare or pay any cash dividends on its common
stock and the Company does not intend to pay any cash dividends in the foreseeable future. Furthermore, the terms of our credit
facility do not allow us to declare or pay dividends without the prior written consent of the lender.
Issuer Purchases of Equity Securities
The following table provides information about the Company’s purchases of equity securities during the year ended December 31,
2021:
Period
January 1— January 31, 2021
February 1—February 28, 2021
March 1—March 31, 2021
April 1—April 30, 2021
May 1—May 31, 2021
June 1—June 30, 2021
July 1—July 31, 2021
August 1—August 31, 2021
September 1—September 30, 2021
October 1 through October 31, 2021
November 1 through November 30, 2021
December 1 through December 31, 2021
Total
Total
number
of shares
purchased (1)
— $
—
6,183
—
—
—
—
—
—
—
—
1,124
7,307 $
Average
price
paid per
share
Total number
of shares
purchased as
part of publicly
announced
plans or programs
—
—
—
—
—
—
—
—
—
—
—
—
—
Maximum number
or approximate
dollar value of
shares that may
yet be purchased
under the
plans or programs
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
7.84
—
—
—
—
—
—
—
—
6.99
7.71
(1)
The Company purchased and cancelled 7,307 shares of its common stock. The shares were purchased from employees
throughout the year at an average market closing price of $7.71. The employees used the proceeds from the sale of shares to
satisfy their withholding tax obligations that arose when restricted shares vested on that date.
ITEM 6.
[RESERVED]
15
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Recent Developments
Impact of COVID-19
During 2020, the COVID-19 pandemic significantly impacted demand for the Company’s products. While these impacts subsided in
2021, the Company experienced, and is still experiencing, supply chain and logistic constraints that negatively impacted its ability to
manufacture and ship products.
Business Overview
The following management’s discussion and analysis of financial condition and results of continuing operations should be read in
conjunction with the Company’s financial statements and notes, and other information included elsewhere in this Report.
When reading this section of this Annual Report on Form 10-K, it is important that you also read the financial statements and related
notes thereto. This Annual Report on Form 10-K and certain information incorporated herein by reference contain forward-looking
statements within the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. See “Forward-Looking
Statements”.
The following table sets forth certain financial data for the years ended December 31, 2021, and 2020:
Results of Consolidated Operations
MANITEX INTERNATIONAL, INC.
(In thousands)
Net revenues
Cost of sales
Cost of sales - inventory write-down
Gross profit
Operating expenses
Research and development costs
Selling, general and administrative expenses
Impairment of intangibles and fixed assets
Total operating expenses
Operating income (loss)
Other income (expense)
Interest expense
Interest income
Gain on extinguishment of debt
Gain on Paycheck Protection Program loan
forgiveness
Foreign currency transaction loss
Other income (expense)
Total other income (expense)
Income (loss) before income taxes from
continuing operations
Income tax expense from continuing operations
Net income (loss) from continuing
operations
Discontinued operations:
For the Years Ended
December 31,
2021
2020
$ Change % Change
$ 211,539 $ 167,498 $
175,377 136,632
—
30,866
3,226
32,936
44,041
38,745
3,226
2,070
26.29%
28.36
(100.00)
6.71
3,332
31,948
2,078
37,358
(4,422)
(2,084)
43
—
3,747
(543)
(97)
1,066
3,227
28,743
6,722
38,692
(7,826)
(3,595)
97
595
—
(813)
(503)
(4,219)
105
3,205
(4,644)
(1,336)
3,406
3.26
11.15
(69.09)
(3.45)
(43.52)
1,511
(54)
(595)
(42.03)
(55.85)
(100.00)
3,747
270
406
5,285
100.00
(33.19)
(80.73)
(125.27)
(3,356)
1,217
(12,045)
674
8,689
543
(72.14)
80.46
(4,573)
(12,719)
8,146
(64.05)
Loss from discontinued operations, net of income
tax expense
Net income (loss)
—
(891)
(4,573) $ (13,610) $
891
9,037
(100.00)
(66.4)%
$
16
Year Ended December 31, 2021 Continuing Operations Compared to Year Ended December 31, 2020
Net income (loss) from continuing operations
For the year ended December 31, 2021, net loss was $4.6 million, compared to net loss of $12.7 million for 2020.
Net revenue and gross profit —For the year ended December 31, 2021, net revenue and gross profit were $211.5 million and $32.9
million, respectively. Gross profit as a percent of net revenues was 15.6% for the year ended December 31, 2021. For the year ended
December 31, 2020, net revenue and gross profit were $167.5 million and $30.9 million, respectively. Gross profit as a percent of net
revenues was 18.4% for the year ended December 31, 2020.
For 2021, revenues increased $44.0 million or 26.3% from $167.5 million for 2020. The increase in revenues is primarily due to
increases in sales of straight mast cranes from the Company’s United States subsidiaries and knuckle boom cranes and aerial platforms
from the Company’s foreign subsidiaries, which was largely driven by the partial recovery in the global market from the COVID-19
pandemic and market demand.
Gross profit as a percent of net revenues was 15.6% for the year ended December 31, 2021, which decreased from 18.4% for the year
ended December 31, 2020. The increase in gross profit is attributable to increases in revenues partially offset by the inventory write-
down of $3.2 million at Badger, which was driven by the closure of the Badger facility and higher material costs due to steel
surcharges. The decrease in gross profit percentage is primarily driven by the inventory write-down at Badger driven by the closure of
the Badger facility, product mix as lower margin products were sold and material cost inflation due to disruptions in the supply chain.
Research and development —Research and development for the year ended December 31, 2021 was $3.3 million compared to $3.2
million for the comparable period in 2020. The Company’s research and development spending continues to reflect our commitment
to develop and introduce new products that give the Company a competitive advantage.
Selling, general and administrative expense — Selling, general and administrative expense for the year ended December 31, 2021
was $31.9 million compared to $28.7 million for the comparable period in 2020, an increase of $3.2 million. The increases are
primarily related to higher salaries and wages, professional fees, advertising expenses, and negative impacts in foreign exchange rates
offset by lower trade show expenses.
Impairment of intangibles and fixed assets – Impairment expense for the year ended December 31, 2021, was $2.1 million. Valla
recorded a full impairment of goodwill and intangible assets of $1.7 million driven by net losses in the business. In addition, the
restructuring plan that resulted in the closure of the Badger facility drove an impairment to its intangible and fixed assets of $0.4
million. Impairment expense for the year ended December 31, 2020, was $6.7 million. The impairment was driven by the COVID-19
pandemic which caused a decrease in the Company’s market capitalization causing a triggering event which resulted in a $6.6 million
goodwill impairment charge and a $0.1 million tradename impairment charge during 2020.
Interest expense —Interest expense was $2.1 million and $3.6 million for the years ended December 31, 2021 and 2020, respectively.
The decrease in interest expense is due to lower debt driven by the pay-off of the convertible notes in December 2020 and principal
payments made on the term debt in 2020.
Gain on extinguishment of debt— For 2020, the Company paid off a portion of the PM term loan and unsecured debt at a 15%
discount to its face value which resulted in a gain of $0.6 million.
Gain on Paycheck Protection Program loan forgiveness —Gain on loan forgiveness was $3.7 million for the year ended December
31, 2021 due to the forgiveness of the Paycheck Protection Program loan by the SBA. The gain on loan forgiveness is not subject to
U.S. taxation. This deductible permanent difference is offset by a change in the U.S. valuation allowance and therefore has no impact
on the effective tax rate.
Foreign currency transaction loss —The Company had a foreign currency loss of $0.5 million and $0.8 million for the years ended
December 31, 2021 and 2020, respectively. A substantial portion of the losses relate to changes in the Chilean Peso.
Other income (expense)— For the year ended December 31, 2021, the Company had other expenses of $0.1 million compared to
other expenses of $0.5 million for the comparable period in 2020, a decrease of $0.4 million. The decreases are primarily related to a
legal settlement and a facility closure recorded in 2020.
17
Discontinued operations— For the year ended December 31, 2020, the Company had a net loss from discontinued operations of $0.9
million related to the Sabre operations.
Income tax — On March 27, 2020, the “Coronavirus Aid, Relief and Economic Security (CARES) Act” was enacted. The CARES
Act, among other things, includes provisions relating to net operating loss carrybacks, alternative minimum tax credit refunds, a
modification to the net interest deduction limitations and a technical correction to tax depreciation methods for qualified improvement
property. The CARES Act did not have a material impact on the Company’s consolidated financial statements.
The calculation of the overall income tax provision for the 12 months ended December 31, 2021 primarily consists of a domestic
income tax provision resulting from state and local taxes, foreign income taxes, the change in unrecognized tax benefits and valuation
allowance.
The Company’s effective tax rate from continuing operations was an income tax provision of 36.3% on a pretax loss of $3.4 million
compared to an income tax provision of 5.6% on a pretax loss of $12.0 million from the prior year. The effective tax rate for the year
ended December 31, 2021 differs from the U.S. statutory rate of 21% primarily due to the tax effects related to the mix of domestic
and foreign earnings, nondeductible permanent differences, domestic and foreign losses for which the Company is not recognizing an
income tax benefit, the change in unrecognized tax benefits and valuation allowance.
Liquidity and Capital Resources
The ultimate duration and severity of the COVID-19 pandemic remains highly uncertain at this time. Accordingly, its impact on the
global economy generally and our customers and suppliers specifically, as well as the ultimate potential negative financial impact to
our results of operations and liquidity position cannot be reasonably estimated at this time, but have been and could continue to be
material. In the context of these uncertain conditions, we are actively managing the business to maintain cash flow and ensure that we
have sufficient liquidity for a variety of scenarios. We believe that such strategy will allow us to meet our anticipated funding
requirements.
Cash, cash equivalents and restricted cash were $21.6 million and $17.4 million at December 31, 2021 and December 31, 2020,
respectively. In addition, the Company has a U.S. revolving credit facility with a maturity date of July 20, 2023. At December 31,
2021 the Company had $11.2 million available to borrow under its U.S. revolving credit facility.
At December 31, 2021, the PM Group had established working capital facilities with five Italian, one Spanish and twelve South
American banks. Under these facilities, the PM Group can borrow $21.4 million against orders, invoices and letters of credit. At
December 31, 2021, the PM Group had availability under these facilities of $4.8 million. Future advances are dependent on having
available collateral.
Cash Flows for 2021 and 2020
Operating Activities
For 2021, operating activities provided $7.5 million in cash compared to $12.0 million cash provided during 2020. Cash provided by
working capital was $1.1 million for 2021 compared to $10.9 million for 2020. Working capital decreases were primarily from less
cash generated from accounts receivable and higher inventory purchases. During April 2020, the Company was granted $3.7 million
from a bank under the Paycheck Protection Program. During June 2021, the entire $3.7 million balance of the Company’s loan was
forgiven.
Investing Activities
Cash used by investing activities was $1.1 million in 2021 which included $0.2 million investment in intangible assets. Cash provided
from investing activities was $0.8 million in 2020 which included $1.6 million in proceeds from the sale of the Sabre business unit.
Cash payments for plant, property and equipment were $0.9 million in 2021 compared to payments of $0.7 million in 2020.
Financing Activities
Cash flows from financing activities was an inflow of less than $0.1 million for the year ended December 31, 2021 which included an
increase in working capital borrowings of $3.1 million and insurance premium financings of $1.1 million offset by the principal loan
payments of $3.7 million and payments under finance leases of $0.3 million. Cash flows from financing activities was an outflow of
18
$20.8 million for the year ended December 31, 2020 which included the payoff of the convertible notes for $22.5 million, principal
loan payments of $8.3 million, a reduction in working capital borrowings of $2.3 million and payments under finance leases of $0.5
million. These were partially offset by net borrowings under the revolving credit facility of $12.8 million.
Contingencies
The Company is involved in various legal proceedings, including product liability and workers’ compensation matters which have
arisen in the normal course of operations. Certain cases are at a preliminary stage, and it is not possible to estimate the amount or
timing of any cost to the Company.
The Company does not believe that these contingencies in aggregate will have a material adverse effect on the Company.
Additionally, the Company has been named as a defendant in several multi-defendant asbestos related product liability lawsuits. In
certain instances, the Company is indemnified by a former owner of the product line in question. In the remaining cases the plaintiff
has, to date, not been able to establish any exposure by the plaintiff to the Company’s products. The Company is uninsured with
respect to these claims but believes that it will not incur any material liability with respect to these to claims.
When it is probable that a loss has been incurred and possible to make a reasonable estimate of the Company’s liability with respect to
such matters, a provision is recorded for the amount of such estimate or the minimum amount of a range of estimates when it is not
possible to estimate the amount within the range that is most likely to occur.
Off Balance Sheet Arrangements
CIBC Bank USA (“CIBC”) issued 2 standby letters of credit during 2021. The first standby letter of credit was for $0.2 million in
favor of an insurance carrier to secure obligations which may have arisen in connection with future deductible payments that may have
incurred under the Company’s worker’s compensation insurance policies. The second standby letter of credit was for less than $0.1
million in favor of a governmental agency to secure obligations which may have arisen in connection with worker’s compensation
claims. As of December 31, 2021, the standby letters of credit were released.
See Note 21 – “Legal Proceedings and Other Contingencies.”
Critical Accounting Policies and Estimates
The preparation of our financial statements and related disclosures in conformity with generally accepted accounting principles in the
United States of America (“GAAP”) requires management to make estimates and judgments that affect our reported amounts of assets
and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an on-going basis, we evaluate
our estimates and assumptions based upon historical experience and various other factors and circumstances. Management believes
that our estimates and assumptions are reasonable under the circumstances; however, actual results may vary from these estimates and
assumptions under different future circumstances. We have identified the following critical accounting policies that affect the more
significant judgments and estimates used in the preparation of our consolidated financial statements.
Revenue Recognition. Revenue is recognized when obligations under the terms of the contract with our customer are satisfied;
generally, this occurs with the transfer of control of our equipment, parts or installation services (typically completed within one day),
which occurs at a point in time. Equipment can be redirected during the manufacturing phase such that over time revenue recognition
is not appropriate. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or
providing services. Our contracts are non-cancellable, and returns are only allowed in limited instances. Value added tax and other
taxes we collect concurrent with revenue-producing activities are excluded from revenue. The expected costs associated with our base
warranties continue to be recognized as expense when the products are sold and do not constitute a separate performance obligation.
For instances where equipment and installation services are sold together, the Company accounts for the equipment and installation
services separately. The consideration (including any discounts) is allocated between the equipment and installation services based on
their stand-alone selling prices. The stand-alone selling prices are determined based on the prices at which the Company separately
sells the equipment.
In some instances, the Company fulfills its obligations and bills the customer for the work performed but does not ship the goods until
a later date. These arrangements are considered bill-and-hold transactions. In order to recognize revenue on the bill-and-hold
transactions, the Company ensures the customer has requested the arrangement, the product is identified separately as belonging to the
customer, the product is ready for shipment to the customer in its current form, and the Company does not have the ability to direct the
19
product to a different customer. A portion of the transaction price is not allocated to the custodial services due to the immaterial value
assigned to that performance obligation.
Payment terms offered to customers are defined in contracts and purchase orders and do not include a significant financing
component. At times, the Company may offer discounts which are considered variable consideration however, the Company applies
the constraint guidance when determining the transaction price to be allocated to the performance obligations.
Assets and Liabilities Classified as Held for Sale. The Company classifies assets (or disposal groups comprised of assets and
liabilities) as held for sale when they are expected to be recovered primarily through sale rather than through continuing use. They are
stated at the lower of carrying amount or fair value less costs to sell. Upon reclassification, we cease to depreciate or amortize non-
current assets classified as held for sale. A discontinued operation is a component of our business that represents a separate major line
of business or geographical area of operation that has been disposed of or is held for sale and a strategic shift that will have a major
effect on our operations and financial results. Classification as a discontinued operation occurs upon disposal or when the operation
meets the criteria to be classified as held for sale, if earlier. When an operation is classified as a discontinued operation, the
comparative statement of comprehensive income (loss) is revised as if the operation had been discontinued from the start of the
comparative period. We have elected to not revise consolidated statements of cash flows to split operating, investing and financing
activities between continuing and discontinued operations, but instead provide certain required cash flow information. The Company
will account for the contingent consideration as a gain in accordance with ASC 450. Under this approach, we will recognize the
contingent consideration in earnings after the contingency is resolved. As part of the discontinued operations classification, we review
the allocation of corporate expenses, interest expense and entity-wide goodwill and intangible assets. In addition, income taxes are
calculated on a stand-alone basis for both continuing and discontinued operations.
Inventories and Related Reserve for Obsolete and Excess Inventory. Inventories are valued at the lower of cost or net realizable value
and are reduced by a reserve for excess and obsolete inventories. The estimated reserve is based upon historical experiences and/or
specific identification of excess or obsolete inventories.
Goodwill. Goodwill, representing the difference between the total purchase price and the fair value of assets (tangible and intangible) and
liabilities at the date of acquisition, is reviewed for impairment annually, and more frequently as circumstances warrant, and written down
only in the period in which the recorded value of such assets exceed their fair value. The Company does not amortize goodwill in
accordance with Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC”) 350, “Intangibles—
Goodwill and Other” (“ASC 350”).
Under ASC 350, entities are provided with the option of first performing a qualitative assessment on none, some, or all of its reporting
units to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If after
completing a qualitative analysis, it is determined that it is more likely than not that the fair value of a reporting unit is less than its
carrying value a quantitative analysis is required.
Goodwill is tested for impairment at the reporting unit level, which is defined as an operating segment or a component of an operating
segment that constitutes a business for which discrete financial information with similar economic characteristics is available and
operating results are regularly reviewed by our chief operating decision maker.
The Company evaluates its consolidated goodwill using the quantitative two step approach. The first step used to identify potential
impairment involves comparing the reporting unit’s estimated fair value to its carrying value, including goodwill. During the first step
testing, the Company evaluates goodwill for impairment using a business valuation method, which is calculated as of a measurement
date by determining the present value of debt-free, after-tax projected future cash flows, discounted at the weighted average cost of
capital of a hypothetical third-party buyer. The market approach was also considered in evaluating the potential for impairment by
calculating fair value based on multiples of earnings before interest, taxes, depreciation and amortization (“EBITDA”) of comparable,
publicly traded companies. The Company also observed implied EBITDA multiples from relatively recent merger and acquisition
activity in the industry, which was used to test the reasonableness of the results.
The second step of the process involves the calculation of an implied fair value of goodwill for each reporting unit for which step one
indicated impairment. The implied fair value of goodwill is determined by measuring the excess of the estimated fair value of the
reporting unit over the estimated fair values of the individual assets, liabilities and identifiable intangibles as if the reporting unit was
being acquired in a business combination. If the implied fair value of goodwill exceeds the carrying value of goodwill assigned to the
reporting unit, there is no impairment. If the carrying value of goodwill assigned to a reporting unit exceeds the implied fair value of
the goodwill, an impairment charge is recorded for the excess. An impairment loss cannot exceed the carrying value of goodwill
assigned to a reporting unit and the subsequent reversal of goodwill impairment losses is not permitted.
20
The determination of fair value requires the Company to make significant estimates and assumptions. These estimates and
assumptions primarily include, but are not limited to, revenue growth and operating earnings projections, discount rates, terminal
growth rates, and required capital expenditure projections. In the event the Company determines that goodwill is impaired in the future
the Company would need to recognize a non-cash impairment charge.
Impairment of Long-Lived Assets. The Company’s policy is to assess the realizability of its long-lived assets, including intangible
assets, and to evaluate such assets for impairment whenever events or changes in circumstances indicate that the carrying amount of
such assets (or group of assets) may not be recoverable. Impairment is determined to exist if the estimated future undiscounted cash
flows are less than the carrying value. Future cash flow projections include assumptions for future sales levels, the impact of cost
reduction programs, and the level of working capital needed to support each business. The amount of any impairment then recognized
would be calculated as the difference between the estimated fair value and the carrying value of the asset.
Litigation Claims. In determining whether liabilities should be recorded for pending litigation claims, the Company must assess the
allegations and the likelihood that it will successfully defend itself. When the Company believes it is probable that it will not prevail in
a particular matter, it will then make an estimate of the amount of liability based, in part, on the advice of legal counsel.
Income Taxes.
The Company accounts for income taxes under the provisions of ASC 740 “Income Taxes,” which requires recognition of income
taxes based on amounts payable with respect to the current year and the effects of deferred taxes for the expected future tax
consequences of events that have been included in the Company’s financial statements or tax returns. Under this method, deferred tax
assets and liabilities are determined based on the differences between the financial accounting and tax basis of assets and liabilities, as
well as for operating losses and tax credit carryforwards using enacted tax rates in effect for the year in which the differences are
expected to reverse. Valuation allowances are recorded to reduce deferred tax assets when it is more-likely-than-not a tax benefit will
not be realized. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some
portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the
generation of future taxable income prior to the expiration of any net operating loss carryforwards.
The Jobs Act also establishes global intangible low-taxed income (“GILTI”) provisions that impose a tax on foreign income in excess
of a deemed return on tangible assets of foreign corporations. The Company has elected to recognize GILTI as a period cost as
incurred, therefore there are no deferred taxes recognized for basis differences that are expected to impact the amount of the GILTI
inclusion upon reversal.
ASC 740 also prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement
of a tax position taken or expected to be taken in a tax return, as well as guidance on derecognition, classification, interest and
penalties, accounting in interim periods, disclosure and transition. The Company records interest and penalties related to income tax
matters in the provision for income taxes.
Recently Issued Pronouncements – Not Yet Adopted
In March 2020, the FASB issued guidance under ASC 848, Reference Rate Reform. This guidance provides optional expedients and
exceptions to account for debt, leases, contracts, hedging relationships and other transactions that reference LIBOR or another
reference rate if certain criteria are met. The guidance is effective immediately and may be applied prospectively to contract
modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. The Company determined
there was no material effect on the Company’s financial statements related to Reference Rate Reform guidance.
In January 2021, the FASB issued ASU 2021-01, which refines the scope of ASC 848 and clarifies some of its guidance as part of the
FASB’s monitoring of global reference rate reform activities. The ASU permits entities to elect certain optional expedients and
exceptions when accounting for derivative contracts and certain hedging relationships affected by changes in the interest rates used for
discounting cash flows, for computing variation margin settlements, and for calculating price alignment interest (PAI) in connection
with reference rate reform activities under way in global financial markets (the “discounting transition”). We are currently evaluating
the potential effects of the adoption of this guidance on our Consolidated Financial Statements.
There have been no other accounting pronouncements issued, but not yet adopted by us, which are expected to have a material impact
on our Condensed Consolidated Financial Statements.
21
Recently Adopted Accounting Guidance
In December 2019, the FASB issued ASU 2019-12, “Income Taxes Topic 740-Simplifying the Accounting for Income Taxes” (“ASU
2019-12”), which intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain
exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application of
Topic 740. The effective date for ASU 2019-12 was the first quarter of fiscal year 2021 and the Company adopted this guidance as of
January 1, 2021. The adoption of this guidance did not have a significant impact on our operating results.
Except as noted above, the guidance issued by the FASB is not expected to have a material effect on the Company’s consolidated
financial statements.
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not required for Smaller Reporting Companies.
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The report of the Company’s independent registered public accounting firm and the Company’s Consolidated Financial Statements are
filed pursuant to this Item 8 and are included in this report. See the Index to Financial Statements.
22
The financial statements of the registrant required to be included in Item 8 are listed below:
Index to Financial Statements
Report of Independent Registered Public Accounting Firm (PCAOB ID Number 248) ..............................................................
Consolidated Financial Statements:
Consolidated Balance Sheets as of December 31, 2021 and 2020................................................................................................
Consolidated Statements of Operations for the Years Ended December 31, 2021 and 2020 .......................................................
Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2021 and 2020 ......................................
Consolidated Statements of Shareholders’ Equity for Years Ended December 31, 2021 and 2020 ...........................................
Consolidated Statements of Cash Flows for the Years Ended December 31, 2021 and 2020 ....................................................
Page
Reference
24
28
29
30
31
32
Notes to Consolidated Financial Statements .................................................................................................................................
33-59
23
Report of Independent Registered Public Accounting Firm
Board of Directors and Shareholders
Manitex International, Inc.
Opinion on the financial statements
We have audited the accompanying consolidated balance sheets of Manitex International, Inc. and subsidiaries (the “Company”) as of
December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income, shareholders’ equity, and
cash flows for each of the two years in the period ended December 31, 2021, and the related notes and financial statement schedule(s)
included under Item 15(a) (collectively referred to as the “financial statements”). In our opinion, the financial statements present
fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its
operations and its cash flows for each of the two years in the period ended December 31, 2021, in conformity with accounting
principles generally accepted in the United States of America.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in the
2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(“COSO”), and our report dated March 9, 2022 expressed an unqualified opinion.
Basis for opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to
be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe
that our audits provide a reasonable basis for our opinion.
Critical audit matters
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was
communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material
to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the
critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by
communicating the critical audit matters below, providing separate opinions on the critical audit matter or on the accounts or
disclosures to which it relates.
Goodwill impairment analysis
As described further in Note 3 to the financial statements, the Company evaluates goodwill for impairment at the reporting unit level
annually or more frequently if indicators of impairment exist. During the course of the year, the Company performed a quantitative
goodwill impairment assessment for the Company’s three reporting units of Manitex, PM, and Valla. The quantitative impairment
assessment involves the comparison of the fair value of a reporting unit to its carrying amount. The Company used a weighting of the
income and market approaches to determine the fair value of the reporting unit.
We identified the goodwill impairment analysis as a critical audit matter for the Manitex reporting unit because evaluating
management's quantitative goodwill impairment test involved a high degree of auditor judgment due to the significant estimation
required to determine the fair value of each reporting unit.
The principal considerations for our determination that the goodwill impairment analysis is a critical audit matter are that the fair value
estimate was sensitive to significant assumptions, such as forecasted revenues, operating income margins, discount rate, and estimated
valuation multiples.
24
Our audit procedures related to the goodwill impairment analysis included the following, among others:
• We tested the design and operating effectiveness of key controls over the Company's goodwill impairment assessment process
including review of the valuation model and significant assumptions used.
• We tested the significant assumptions discussed above by assessing the reasonableness of management’s forecasts compared to
current results and forecasted industry trends.
• With the assistance of our valuation specialists, we evaluated the selection of the discount rate, including testing the underlying
source information and the mathematical accuracy of the calculations by developing a range of independent estimates and
comparing those to the rates selected by management.
• We also involved our valuation specialists to evaluate the market approach, including evaluating the reasonableness of estimated
valuation multiples.
• We also involved our valuation specialist to evaluate the market capitalization reconciliation and implied control premium
performed by the Company.
/s/ GRANT THORNTON LLP
We have served as the Company’s auditor since 2018.
Chicago, Illinois
March 9, 2022
25
Report of Independent Registered Public Accounting Firm
Board of Directors and Shareholders
Manitex International, Inc.
Opinion on internal control over financial reporting
We have audited the internal control over financial reporting of Manitex International, Inc and subsidiaries (the “Company”) as of
December 31, 2021, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as of December 31, 2021, based on criteria established in the 2013 Internal
Control—Integrated Framework issued by COSO.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2021, and our report
dated March 9, 2022 expressed an unqualified opinion on those financial statements.
Basis for opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control
over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based
on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness
exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such
other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our
opinion.
26
Definition and limitations of internal control over financial reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect
on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ GRANT THORNTON LLP
Chicago, Illinois
March 9, 2022
27
MANITEX INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
As of December 31,
2021
2020
ASSETS
Current assets
Cash
Cash - restricted
Trade receivables (net)
Other receivables
Inventory (net)
Prepaid expense and other current assets
Total current assets
Total fixed assets, net of accumulated depreciation of $18,662 and $17,444, at December 31, 2021 and
2020, respectively
Operating lease assets
Intangible assets (net)
Goodwill
Other long-term assets
Deferred tax assets
Total assets
LIABILITIES AND EQUITY
Current liabilities
Accounts payable
Accrued expenses
Related party payables (net)
Notes payable
Current portion of finance lease obligations
Current portion of operating lease obligations
Customer deposits
Deferred income liability
Total current liabilities
Long-term liabilities
Revolving term credit facilities (net)
Notes payable (net)
Finance lease obligations (net of current portion)
Non-current operating lease obligations (net of current portion)
Deferred gain on sale of property
Deferred tax liability
Other long-term liabilities
Total long-term liabilities
Total liabilities
Commitments and contingencies
Equity
Preferred Stock—Authorized 150,000 shares, no shares issued or outstanding at
December 31, 2021 and 2020
Common Stock—no par value 25,000,000 shares authorized, 19,940,487 and 19,821,090 shares
issued and outstanding at December 31, 2021 and 2020, respectively
Paid-in capital
Retained deficit
Accumulated other comprehensive loss
Total equity
Total liabilities and equity
The accompanying notes are an integral part of these financial statements
$
$
$
$
21,359 $
222
30,515
2,039
64,965
2,436
121,536
16,460
3,563
11,946
24,949
1,143
178
179,775 $
44,136 $
10,539
203
18,401
399
1,064
7,121
—
81,863
12,717
10,089
3,822
2,499
507
1,074
4,389
35,097
116,960
—
132,206
3,264
(68,436)
(4,219)
62,815
179,775 $
17,161
240
30,418
179
56,055
2,218
106,271
18,723
4,068
15,671
27,472
1,143
247
173,595
32,429
7,909
52
16,510
344
1,167
2,363
3,747
64,521
12,606
13,625
4,221
2,901
587
1,333
4,892
40,165
104,686
—
131,455
3,025
(63,863)
(1,708)
68,909
173,595
28
MANITEX INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
For the years ended December 31,
2021
2020
Net revenues
Cost of sales
Cost of sales - inventory write-down
Gross profit
Operating expenses
Research and development costs
Selling, general and administrative expenses
Impairment of intangibles and fixed assets
Total operating expenses
Operating income (loss)
Other income (expense)
Interest expense
Interest income
Gain on extinguishment of debt
Gain on Paycheck Protection Program loan forgiveness
Foreign currency transaction loss
Other income (expense)
Total other income (expense)
Income (loss) before income taxes from
continuing operations
Income tax expense from continuing operations
Net income (loss) from continuing operations
Discontinued operations:
Loss from operations of discontinued operations
Income tax expense
Loss on discontinued operations
Net income (loss)
Earnings (loss) Per Share
Basic
Income (loss) from continuing operations
Loss from discontinued operations
Net income (loss)
Diluted
Income (loss) from continuing operations
Loss from discontinued operations
Net income (loss)
Weighted average common shares outstanding
Basic
Diluted
The accompanying notes are an integral part of these financial statements
$
211,539 $
175,377
3,226
32,936
3,332
31,948
2,078
37,358
(4,422)
(2,084)
43
—
3,747
(543)
(97)
1,066
(3,356)
1,217
(4,573)
—
—
—
(4,573) $
(0.23) $
— $
(0.23) $
(0.23) $
— $
(0.23) $
$
$
$
$
$
$
$
167,498
136,632
—
30,866
3,227
28,743
6,722
38,692
(7,826)
(3,595)
97
595
—
(813)
(503)
(4,219)
(12,045)
674
(12,719)
(888)
3
(891)
(13,610)
(0.64)
(0.05)
(0.69)
(0.64)
(0.05)
(0.69)
19,900,117
19,900,117
19,773,081
19,773,081
29
MANITEX INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
Net income (loss)
Other comprehensive income (loss)
Foreign currency translation gain (loss)
Total other comprehensive income (loss)
Total comprehensive loss
The accompanying notes are an integral part of these financial statements
For the years ended December 31,
2020
2021
$
(4,573) $
(13,610)
(2,511)
(2,511)
(7,084) $
1,992
1,992
(11,618)
$
30
MANITEX INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
(In thousands, except per share data)
Outstanding
shares
Common
Stock
APIC
Retained
Deficit
AOCI
(Loss)
Total
Balance at December 31, 2019
Net loss
Gain on foreign currency translation
Employee 2004 and 2019 incentive plan grant
Repurchase to satisfy withholding and cancelled
Share-based compensation
Balance at December 31, 2020
Net loss
Loss on foreign currency translation
Employee 2004 and 2019 incentive plan grant
Repurchase to satisfy withholding and cancelled
Share-based compensation
Balance at December 31, 2021
—
—
806
(61)
—
—
—
121,027
(13,122)
—
19,713,185 $130,710 $ 2,793 $ (50,253) $ (3,700) $ 79,550
— (13,610)
— (13,610)
1,992
—
—
—
—
(806)
(61)
—
—
1,038
—
1,038
19,821,090 $131,455 $ 3,025 $ (63,863) $ (1,708) $ 68,909
(4,573)
—
(2,522)
(11)
—
(807)
(56)
—
1,057
1,057
19,940,487 $132,206 $ 3,264 $ (68,436) $ (4,219) $ 62,815
—
—
126,704
(7,307)
—
(4,573)
—
—
—
—
—
(2,511)
—
—
—
1,992
—
—
—
—
—
807
(56)
—
The accompanying notes are an integral part of these financial statements
31
MANITEX INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
Cash flows from operating activities:
Net loss
Adjustments to reconcile net loss to cash provided by operating activities:
For the years ended December 31,
2020
2021
$
(4,573 ) $
(13,610 )
4,343
—
—
(278 )
42
(3,747 )
3,226
(1,621 )
(106 )
111
1,130
872
76
152
1,056
(80 )
—
(322 )
(1,947 )
(12,777 )
(273 )
(89 )
14,221
—
3,293
4,973
(226 )
7,456
—
(890 )
(247 )
(1,137 )
—
—
3,055
—
1,095
(3,704 )
—
(56 )
(344 )
46
6,365
(2,185 )
17,401
21,581 $
4,354
(319 )
(595 )
—
(478 )
—
—
(1,021 )
458
376
6,585
137
—
508
1,038
(80 )
(131 )
5,954
870
4,746
2,772
(1,065 )
165
3,747
(1,913 )
738
(1,200 )
12,036
1,553
(709 )
—
844
(3,500 )
16,300
(2,276 )
(22,500 )
246
(8,287 )
(194 )
(61 )
(496 )
(20,768 )
(7,888 )
1,712
23,577
17,401
Depreciation and amortization
Gain on sale of discontinued operations
Gain from extinguishment of debt
Gain on forward currency contract
Changes in allowances for doubtful accounts
Gain on Payroll Protection Program loan forgiveness
Inventory write-down
Changes in inventory reserves
Changes in deferred income taxes
Amortization of deferred financing cost
Write-down of goodwill
Write-down of intangibles
Write-down of fixed assets
Amortization of debt discount
Share-based compensation
Deferred gain on sale and lease back
Reserves for uncertain tax provisions
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable
(Increase) decrease in other receivable
(Increase) decrease in inventory
(Increase) decrease in prepaid expenses
Increase in other assets
Increase in accounts payable
Increase in deferred income
Increase (decrease) in accrued expenses
Increase in other current liabilities
Decrease in other long-term liabilities
Net cash provided by operating activities
Cash flows from investing activities:
Proceeds from the sale of assets from discontinued operations
Purchase of property and equipment
Investment in intangibles other than goodwill
Net cash (used) provided by investing activities
Cash flows from financing activities:
Payments on revolving term credit facilities
Borrowings on revolving term credit facility
Net borrowings (repayments) on working capital facilities
Repayments on convertible notes
New borrowings- other
Note payments
Bank fees and cost related to new financing
Shares repurchased for income tax withholding on share-based compensation
Payments on finance lease obligations
Net cash provided by (used) for financing activities
Net increase (decrease) in cash and cash equivalents
Effect of exchange rate changes on cash
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at end of period
(See Note 16 for other supplemental cash flow information)
*Includes related party activities, see Note 20.
The accompanying notes are an integral part of these financial statements
$
32
MANITEX INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
Note 1. Nature of Operations
The Company is a leading provider of engineered lifting solutions. The Company reports in a single business segment and has four
operating segments, under which there are five reporting units. The Company has integrated Manitex and Badger reporting units into
one operating segment as a substantial portion of the sales from Badger are intercompany sales to Manitex. While the Company
continues to report Badger as a separate reporting unit, its results are combined with Manitex and reported at the combined Manitex
operating segment. The Company designs, manufactures and distributes a diverse group of products that serve different functions and
are used in a variety of industries.
Manitex markets a comprehensive line of boom trucks, truck cranes and sign cranes. Manitex’s boom trucks and crane products are
primarily used for industrial projects, energy exploration and infrastructure development, including roads, bridges and commercial
construction.
Badger is a manufacturer of specialized rough terrain cranes and material handling products.
PM Oil and Steel S.p.A. (“PM” or “PM Group”) is a leading Italian manufacturer of truck- mounted hydraulic knuckle boom cranes
with a 50-year history of technology and innovation, and a product range spanning more than 50 models. PM is also a manufacturer of
truck-mounted aerial platforms with a diverse product line and an international client base. Through its consolidated subsidiaries, PM
Group has locations in Modena, Italy; Valencia, Spain; Arad, Romania; Chassieu, France; Buenos Aires, Argentina; Santiago, Chile;
Singapore and Querétaro, Mexico.
Manitex Valla S.r.L. (“Valla”) produces a full range of precision pick and carry industrial cranes using electric, diesel, and hybrid
power options. Its cranes offer wheeled or tracked, and fixed or swing boom configurations, with special applications designed
specifically to meet the needs of its customers. These products are sold internationally through dealers and into the rental distribution
channel.
Crane and Machinery, Inc. (“C&M”) is a distributor of the Company’s products. Crane and Machinery Leasing, Inc. (“C&M
Leasing”) rents equipment manufactured by the Company as well as a limited amount of equipment manufactured by third parties.
COVID-19 Pandemic
We are continuing to closely monitor the impact of the COVID-19 pandemic on all aspects of our business, including how it is
impacting our customers, employees, supply chain, and distribution network, as well as the demand for our products in the industries
and markets that we serve. Our first priority is the health and safety of our employees, customers, and business partners and we
believe that we have taken the necessary steps to keep our facilities clean and safe during the COVID-19 pandemic. While COVID-19
has had a material impact on our past financial results, we are unable to predict the ultimate impact that it may have on our business,
future results of operations, financial position or cash flows. The extent to which our operations may be impacted by the COVID-19
pandemic will depend largely on future developments, which are highly uncertain and cannot be accurately predicted, including new
information which may emerge concerning the ultimate severity and duration of the outbreak (including the spread and impact of new
COVID-19 variants) and actions by government authorities to contain the outbreak or treat its impact. Furthermore, the impacts of a
potential worsening of global economic conditions and the continued disruptions to and volatility in the financial markets remain
unknown.
The Company is currently experiencing supply chain disruptions and related logistical bottlenecks that have impacted our ability to
meet strong industrial demand and have also, increased costs related to shipping, warehousing, and working capital management.
While the Company is doing everything it can to mitigate these expenses and the associated timing issues, certain segments – such as
truck chassis – have been more impacted than others. Where appropriate and feasible, we have implemented pricing adjustments to
protect margins and, in tandem, are building inventory to meet our customer requirements. In addition, the Company is actively
managing costs and working to further streamline operations where needed. Furthermore, the Company has modified its business
practices to manage expenses (including practices regarding employee travel, employee work locations, and cancellation of physical
participation in meetings, events and conferences). We continue to take steps intended to minimize the negative impact of the COVID-
19 pandemic on our business and to protect the safety of our employees and customers.
33
Discontinued Operations
Manitex Sabre, Inc. (“Sabre”)
On August 21, 2020, the Company entered into an Asset Purchase Agreement to sell Manitex Sabre, Inc. to an affiliate of Super Steel,
LLC for cash proceeds of $1.5 million, subject to certain adjustments based on closing date accounts receivable and inventory. The
criterion of asset held for sale had been met and Sabre was reported as a discontinued operation for 2020.
In addition to the cash proceeds from sale of $1.5 million in cash received, the Company may receive maximum royalty and earn-out
payments of up to approximately $2.9 million for years 2021 through 2023 if certain revenue criteria are met. The Company has
received approximately $0.1 million of such payments to date. The Company will account for the contingent consideration as a gain in
accordance with ASC 450. Under this approach, we will recognize the contingent consideration in earnings after the contingency is
resolved. See Note 22 for additional discussion related to the sale of Sabre’s business and assets.
Note 2. Basis of Presentation
The consolidated financial statements, included herein, have been prepared by the Company pursuant to the rules and regulations of
the United States Securities and Exchange Commission. Pursuant to these rules and regulations, the financial statements are prepared
in accordance with GAAP.
Financial statements are presented in thousands of dollars except for share and per share amounts unless otherwise stated.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect
certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
Note 3. Summary of Significant Accounting Policies
The summary of significant accounting policies of Manitex International, Inc. is presented to assist in understanding the Company’s
financial statements. The financial statements and notes are representations of the Company’s management who is responsible for
their integrity and objectivity. These accounting policies conform to GAAP and have been consistently applied in the preparation of
the financial statements.
Cash and Cash Equivalents —For purposes of the statement of cash flows, the Company considers all short-term securities purchased
with maturity dates of three months or less to be cash equivalents. The cash in the Company's U.S. banks (primarily CIBC) is not fully
insured by the FDIC due to the statutory limit of $250.
Restricted Cash—Certain of the Company’s lending arrangements require the Company to post collateral or maintain minimum cash
balances in escrow. These cash amounts are reported as current assets on the balance sheets based on when the cash will be
contractually released. Total restricted cash was $222 and $240 at December 31, 2021 and 2020, respectively.
Revenue Recognition —Revenue is recognized when obligations under the terms of the contract with our customer are satisfied;
generally, this occurs with the transfer of control of our equipment, parts or installation services (typically completed within one day),
which occurs at a point in time. Equipment can be redirected during the manufacturing phase such that over time revenue recognition
is not appropriate. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or
providing services. Our contracts are non-cancellable and returns are only allowed in limited instances. Sales, value add, and other
taxes we collect concurrent with revenue-producing activities are excluded from revenue. The expected costs associated with our base
warranties continue to be recognized as expense when the products are sold and do not constitute a separate performance obligation.
For instances where equipment and installation services are sold together, the Company accounts for the equipment and installation
services separately. The consideration (including any discounts) is allocated between the equipment and installation services based on
their stand-alone selling prices. The stand-alone selling prices are determined based on the prices at which the Company separately
sells the equipment.
In some instances, the Company fulfills its obligations and bills the customer for the work performed but does not ship the goods until
a later date. These arrangements are considered bill-and-hold transactions. In order to recognize revenue on the bill-and-hold
transactions, the Company ensures the customer has requested the arrangement, the product is identified separately as belonging to the
customer, the product is ready for shipment to the customer in its current form, and the Company does not have the ability to direct the
product to a different customer. A portion of the transaction price is not allocated to the custodial services due to the immaterial value
assigned to that performance obligation.
Payment terms offered to customers are defined in contracts and purchase orders and do not include a significant financing
component. At times, the Company may offer discounts which are considered variable consideration however, the Company applies
the constraint guidance when determining the transaction price to be allocated to the performance obligations.
34
Allowance for Doubtful Accounts —Accounts receivable are stated at the amounts the Company’s customers are invoiced and do not
bear interest. The Company has adopted a policy consistent with GAAP for the periodic review of its accounts receivable to determine
whether the establishment of an allowance for doubtful accounts is warranted based on the Company’s assessment of the collectability
of the accounts. The Company established an allowance for bad debt of $2.4 million and $2.6 million at December 31, 2021 and 2020,
respectively. The Company also has in some instances a security interest in its accounts receivable until payment is received.
Property, Equipment and Depreciation —Property and equipment are stated at cost or the fair market value at date of acquisition for
property and equipment acquired in connection with the acquisition of a company. Depreciation of property and equipment is
provided over the following useful lives:
Asset Category
Buildings
Machinery and equipment
Furniture and fixtures
Leasehold improvements
Motor Vehicles
Computer software
Depreciable Life
12 –33 years
3 – 20 years
3 – 7 years
1 – 12 years
3 – 5 years
3 – 5 years
Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. Expenditures
for maintenance and repairs are charged to expense as incurred. Depreciation of property, and equipment is calculated using the
straight-line method over the estimated useful lives of the assets. Depreciation expense for the years ended December 31, 2021 and
2020 was $2,061 and $2,011, respectively.
Other Intangible Assets —The Company capitalizes certain costs related to patent technology. Additionally, a substantial portion of
the purchase price related to the Company’s acquisitions has been assigned to patents or unpatented technology, trade name, customer
backlog, and customer relationships. Under the guidance, Other Intangible Assets with definite lives are amortized over their
estimated useful lives. Intangible assets with indefinite lives are tested annually for impairment.
Goodwill — Goodwill, representing the difference between the total purchase price and the fair value of assets (tangible and intangible)
and liabilities at the date of acquisition, is reviewed for impairment annually, and more frequently as circumstances warrant, and written
down only in the period in which the recorded value of such assets exceed their fair value. The Company does not amortize goodwill.
Under “ASC 350”, entities are provided with the option of first performing a qualitative assessment on none, some, or all of its
reporting units to determine whether it is more likely-than-not that the fair value of a reporting unit is less than its carrying value. If
after completing a qualitative analysis, it is determined that it is more likely-than-not that the fair value of a reporting unit is less than
its carrying value a quantitative analysis is required.
The Company evaluates its consolidated goodwill by identifying potential impairment by comparing the reporting unit’s estimated fair
value to its carrying value, including goodwill. The Company evaluates goodwill for impairment using a business valuation method,
which is calculated as of a measurement date by determining the present value of debt-free, after-tax projected future cash flows,
discounted at the weighted average cost of capital of a hypothetical third-party buyer. The market approach was also considered in
evaluating the potential for impairment by calculating fair value based on multiples of earnings before interest, taxes, depreciation and
amortization (EBITDA) of comparable, publicly traded companies. The Company also observed implied EBITDA multiples from
relatively recent merger and acquisition activity in the industry, which was used to test the reasonableness of the results. An
impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, if any, would be recognized.
The loss recognized would not exceed total amount of goodwill allocated to that reporting unit.
The Company performed its annual impairment assessment as of October 1, 2021 and determined its goodwill was impaired. The
Company recognized $1.1 million and $6.6 million impairment related to goodwill for the year ended December 31, 2021 and 2020,
respectively.
35
Impairment of Long-Lived Assets — The Company’s policy is to assess the realizability of its long-lived assets, including intangible
assets, and to evaluate such assets for impairment whenever events or changes in circumstances indicate that the carrying amount of
such assets (or group of assets) may not be recoverable. Impairment is determined to exist if the estimated future undiscounted cash
flows are less than the carrying value. Future cash flow projections include assumptions for future sales levels, the impact of cost
reduction programs, and the level of working capital needed to support each business. The amount of any impairment then recognized
would be calculated as the difference between the estimated fair value and the carrying value of the asset. The Company recognized a
$1.0 million impairment related to patents, tradenames, customer relationships, and fixed assets for the year ended December 31,
2021. The Company recognized $0.1 million in impairment related to tradenames and customer relationships for the year ended
December 31, 2020.
Inventory, net —Inventory consists of stock materials and equipment stated at the lower of cost (first in, first out) or net realizable
value. All equipment classified as inventory is available for sale. The Company records excess and obsolete inventory reserves. The
estimated reserve is based upon specific identification and/or historical experience of excess or obsolete inventories. Selling, general
and administrative expenses are expensed as incurred and are not capitalized as a component of inventory. In valuing inventory, the
Company is required to make assumptions regarding the level of reserves required to value potentially obsolete or over-valued items
at lower of cost or NRV. These assumptions require the Company to analyze the aging of and forecasted demand for its inventory,
forecast future product sales prices, pricing trends and margins, and to make judgments and estimates regarding obsolete or excess
inventory. Future product sales prices, pricing trends and margins are based on the best available information at that time including
actual orders received, negotiations with the Company’s customers for future orders, including their plans for expenditures, and
market trends for similar products. The Company’s judgments and estimates for excess or obsolete inventory are based on analysis of
actual and forecasted usage.
Accounting for Paycheck Protection Program — During April 2020, the Company entered a loan transaction pursuant to which the
Company received proceeds of $3.7 million under the Paycheck Protection Program (“PPP”). The PPP, established as part of the
Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), provides for loans to qualifying companies and is administered
by the U.S. Small Business Administration (“SBA”).
The PPP loan was evidenced by a promissory note between the Company and CIBC. The promissory note had a two-year term,
accrued interest at the rate of 1.0% per annum, and was prepayable at any time without payment of any premium. No payments of
principal or interest were due during the six-month period beginning on the date of the promissory note.
Under the terms of the CARES Act, PPP loan recipients can apply for and be granted forgiveness for all or a portion of loans granted
under the PPP, with such forgiveness to be determined, subject to limitations, based on the use of the loan proceeds for payment of
payroll costs and any payments of mortgage interest, rent, and utilities. However, at least 75 percent of the PPP loan proceeds must be
used for eligible payroll costs. The terms of any forgiveness may also be subject to further requirements in any regulation and
guidelines the SBA may adopt.
The Company applied for forgiveness of the PPP loan during November 2020 and in June 2021, the Company received confirmation
that the application for forgiveness of the PPP loan had been approved by the SBA. The loan forgiveness of $3.7 million was applied
to the Company’s entire outstanding PPP loan balance from CIBC. The Company recorded the forgiveness as Gain on Paycheck
Protection Program loan forgiveness in Other Income (Expense) on the Consolidated Statement of Operations. The gain on loan
forgiveness is not subject to U.S. taxation. This deductible permanent difference is offset by a change in the U.S. valuation allowance
and therefore has no impact on the effective tax rate.
Foreign Currency Translation and Transactions —The financial statements of the Company’s non-U.S. subsidiaries are translated
using the current exchange rate for assets and liabilities and the weighted-average exchange rate for the year for income and expense
items. Resulting translation adjustments are recorded to accumulated other comprehensive income (OCI) as a component of
shareholders’ equity.
The Company converts receivables and payables denominated in other than the Company’s functional currency at the exchange rate as
of the balance sheet date. The resulting transaction exchange gains or losses, except for certain transaction gains or loss related to
intercompany receivable and payables, are included in other income and expense. Transaction gains and losses related to
intercompany receivables and payables not anticipated to be settled in the foreseeable future are excluded from the determination of
net income and are recorded as a translation adjustment (with consideration to the tax effect) to accumulated other comprehensive
income (OCI) as a component of shareholders’ equity.
36
Derivatives—Forward Currency Exchange Contracts —When the Company enters into forward currency exchange contracts it does
so such that the exchange gains and losses on the assets and liabilities that are being hedged, which are denominated in a currency
other than the reporting units’ functional currency, would be offset by the changes in the market value of the forward currency
exchange contracts it holds. The forward currency exchange contracts that the Company has to offset existing assets and liabilities
denominated in other than the reporting units’ functional currency have been determined not to be considered a hedge. The Company
records the forward currency exchange contracts at its market value with any associated gain or loss being recorded in current
earnings. Both realized and unrealized gains and losses related to forward currency contracts are included in current earnings and are
reflected in the Consolidated Statements of Operations in the other income expense section on the line titled foreign currency
transaction loss.
Research and Development Expenses— The Company expenses research and development costs, as incurred. For the periods ended
December 31, 2021 and 2020 expenses were $3,332 and $3,227, respectively.
Advertising —Advertising costs are expensed as incurred and were $737 and $489 for the years ended December 31, 2021 and 2020,
respectively.
Retirement Benefit Costs and Termination Benefits —Payments to defined contribution retirement benefit plans are recognized as an
expense when employees have rendered service entitling them to the contributions. Employees in Italy are entitled to Trattamento di
Fine Rapporto (“TFR”), commonly referred to as an employee leaving indemnity, which represents deferred compensation for
employees in the private sector. Under Italian law, an entity is obligated to accrue for TFR on an individual employee basis payable to
each individual upon termination of employment (including both voluntary and involuntary dismissal). The expense is recognized in
the personnel costs, either in Selling, General, and Administrative expense or Cost of Goods Sold, in the Consolidated Statements of
Operations and the accrual is recorded in other long-term liability in the Consolidated Balance Sheets.
Litigation Claims —In determining whether liabilities should be recorded for pending litigation claims, the Company must assess the
allegations and the likelihood that it will successfully defend itself. When the Company believes it is probable that it will not prevail in
a particular matter, it will then record an estimate of the amount of liability based, in part, on advice of legal counsel.
Shipping and Handling —The Company records the amount of shipping and handling costs billed to customers as revenue. The cost
incurred for shipping and handling is included in the cost of sales.
Adoption of Highly Inflationary Accounting in Argentina— GAAP guidance requires the use of highly inflationary accounting for
countries whose cumulative three-year inflation exceeds 100 percent. Under highly inflationary accounting, PM Argentina’s
functional currency became the Euro (its parent company’s reporting currency), and its income statement and balance sheet have been
measured in Euros using both current and historical rates of exchange. The effect of changes in exchange rates on peso-denominated
monetary assets and liabilities has been reflected in earnings in other (income) and expense, net and was not material. As of
December 31, 2021, PM Argentina had an insignificant net peso monetary position. Net sales of PM Argentina were less than 5
percent of our consolidated net sales for the years ended December 31, 2021 and 2020, respectively.
Income Taxes — The Company accounts for income taxes under the provisions of ASC 740 “Income Taxes,” which requires
recognition of income taxes based on amounts payable with respect to the current year and the effects of deferred taxes for the
expected future tax consequences of events that have been included in the Company’s financial statements or tax returns. Under this
method, deferred tax assets and liabilities are determined based on the differences between the financial accounting and tax basis of
assets and liabilities, as well as for operating losses and tax credit carryforwards using enacted tax rates in effect for the year in which
the differences are expected to reverse. Valuation allowances are recorded to reduce deferred tax assets when it is more-likely-than-
not a tax benefit will not be realized. In assessing the realizability of deferred tax assets, management considers whether it is more
likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income prior to the expiration of any net operating loss carryforwards. See Note 15,
Income Taxes, for further details.
The Jobs Act also establishes Global Intangible Low-Taxed Income (“GILTI”) provisions that impose a tax on foreign income in
excess of a deemed return on tangible assets of foreign corporations. The Company has elected to recognize GILTI as a period cost as
incurred, therefore there are no deferred taxes recognized for basis differences that are expected to impact the amount of the GILTI
inclusion upon reversal.
ASC 740 also prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement
of a tax position taken or expected to be taken in a tax return, as well as guidance on derecognition, classification, interest and
penalties, accounting in interim periods, disclosure and transition. The Company records interest and penalties related to income tax
matters in the provision for income taxes.
37
Accrued Warranties —Warranty costs are accrued at the time revenue is recognized and the expense is recorded in Statement of
Operations in Cost of Sales. The Company’s products are typically sold with a warranty covering defects that arise during a fixed
period of time. The specific warranty offered is a function of customer expectations and competitive forces.
A liability for estimated warranty claims is accrued for at the time of sale. The liability is established using historical warranty claim
experience. The current provision may be adjusted to take into account unusual or non-recurring events in the past or anticipated
changes in future warranty claims. Adjustments to the initial warranty accrual are recorded if actual claim experience indicates that
adjustments are necessary.
As of December 31, 2021 and 2020, accrued warranties were $1,578 and $1,292, respectively.
Debt Issuance Costs —Debt issuance costs incurred in securing the Company’s financing arrangements are capitalized and amortized
over the term of the associated debt. Deferred financing costs associated with long-term debt are presented in the balance sheet as a
direct deduction from the carrying amount of that debt liability, consistent with debt discount.
Sale and Leaseback —In accordance with ASC 842-10 Sales-Leaseback Transactions, the Company has recorded a deferred gain in
relationship to the sale and leaseback of one of the Company’s operating facilities. As such, the gains have been deferred and are
being amortized on a straight- line basis over the life of the leases.
Computation of EPS —Basic Earnings per Share (“EPS”) was computed by dividing net income (loss) by the weighted average
number of common shares outstanding during the period.
The number of shares related to options, warrants, restricted stock, convertible debt and similar instruments included in diluted EPS is
based on the “Treasury Stock Method” prescribed in ASC 260-10, Earnings per Share. This method assumes the theoretical
repurchase of shares using proceeds of the respective stock option or warrant exercised, and for restricted stock, the amount of
compensation cost attributed to future services which has not yet been recognized, and the amount of current and deferred tax benefit,
if any, that would be credited to additional paid in capital upon the vesting of the restricted stock, at a price equal to the issuer’s
average stock price during the related earnings period. Accordingly, the number of shares includable in the calculation of EPS in
respect of the stock options, restricted stock, and similar instruments is dependent on this average stock price and will increase as the
average stock price increases.
Stock Based Compensation —In accordance with ASC 718 Compensation-Stock Compensation, share-based payments to employees,
including grants of restricted stock units, are measured at fair value as of the date of grant and are expensed in the Consolidated
Statements of Operation over the service period (generally the vesting period).
Comprehensive Income —Comprehensive income includes, in addition to net earnings, other items that are reported as direct
adjustments to shareholder’s equity. Currently, the comprehensive income adjustment required for the Company is a foreign currency
translation adjustment, the result of consolidating its foreign subsidiary.
Business Combinations —The Company accounts for acquisitions in accordance with guidance found in ASC 805, Business
Combinations. The guidance requires consideration given, including contingent consideration, assets acquired, and liabilities assumed
to be valued at their fair market values at the acquisition date. The guidance further provides that: (1) in-process research and
development will be recorded at fair value as an indefinite-lived intangible asset; (2) acquisition costs will generally be expensed as
incurred, (3) restructuring costs associated with a business combination will generally be expensed subsequent to the acquisition date;
and (4) changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally will affect
income tax expense.
The Company records any excess of purchase price over fair value of assets acquired, including identifiable intangibles and liabilities
assumed be recognized as goodwill.
38
Note 4. Revenue Recognition
The following table disaggregates our sources of revenues for the years indicated (ended December 31):
Boom trucks, knuckle boom & truck cranes
Aerial platforms
Part sales
Other equipment
Services
Rough terrain cranes
Net Revenue
Equipment sales
Part sales
Services
Net Revenue
2021
128,768 $
27,179
25,769
23,560
5,424
839
211,539 $
2021
180,346 $
25,769
5,424
211,539 $
2020
96,007
20,385
25,657
17,033
4,168
4,248
167,498
2020
137,673
25,657
4,168
167,498
$
$
$
$
The Company attributes revenue to different geographic areas based on where items are shipped to or services are performed. The
following table provides details of revenues by geographic area for the years ended December 31, 2021 and 2020, respectively.
United States
Italy
Canada
Chile
France
Other
Customer Deposits
2021
2020
77,881 $
36,876
20,827
12,232
10,359
53,364
211,539 $
71,406
25,582
8,656
8,397
8,522
44,935
167,498
$
$
At times, the Company may require an upfront deposit related to its contracts. In instances where an upfront deposit has been received
by the Company and the revenue recognition criteria have not yet been met, the Company records a contract liability in the form of a
customer deposit, which is classified as a short-term liability on the Consolidated Balance Sheets. That customer deposit is revenue
that is deferred until the revenue recognition criteria have been met, at which time, the customer deposit is recognized into revenue.
The following table summarizes changes in customer deposits for the year ended December 31, 2021 and 2020:
2021
2020
$
2,363 $
1,493
11,447
(6,446)
(243)
7,121 $
7,019
(6,188)
39
2,363
Customer deposits at January 1,
Additional customer deposits received where revenue has not
yet been recognized
Revenue recognized from customer deposits
Effect of change in exchange rates
Customer deposits at December 31,
$
39
Note 5. Earnings per Common Share
Basic net earnings per share is computed by dividing net income by the weighted average number of common shares outstanding for
the period. Details of the calculations are as follows:
Net (loss) income from continuing operations
Loss from discontinued
operations, net of income taxes
Net Loss
Loss (earnings) per share
Basic
Loss from continuing operations
Loss from discontinued operations, net of income taxes
Net loss
Diluted
(Loss) income from continuing operations
Loss from discontinued operations, net of income taxes
Net loss
Weighted average common shares outstanding
Basic and Dilutive
For the Years Ended December 31,
2021
2020
$
(4,573) $
(12,719)
$
$
$
$
$
$
$
—
(4,573) $
(891)
(13,610)
(0.23) $
— $
(0.23) $
(0.23) $
— $
(0.23) $
(0.64)
(0.05)
(0.69)
(0.64)
(0.05)
(0.69)
19,900,117
19,773,081
The following securities were not included in the computation of diluted earnings per share as their effect would have been
antidilutive:
Unvested restricted stock units
Options to purchase common stock
For the Years Ended December 31,
2021
2020
286,227
97,437
383,664
242,586
97,437
340,023
Note 6. Fair Value Measurements
The following tables set forth the Company’s financial assets and liabilities that were accounted for at fair value by level with the fair
value hierarchy. As required by ASC 820-10, financial assets and liabilities are classified in their entirety based on the lowest level of
input that is significant to the fair value measurement. Except as noted the below assets and liabilities are valued at fair market on a
recurring basis.
40
The following is a summary of items that the Company measured at fair value during the periods:
Asset:
Forward currency exchange contracts
Total current assets at fair value
Liabilities:
Valla contingent consideration
Total liabilities at fair value
Liabilities:
Valla contingent consideration
Forward currency exchange contracts
Total liabilities at fair value
Liabilities:
Balance at December 31, 2020
Effect of change in exchange rates
Balance at December 31, 2021
Fair Value at December 31, 2021
Level 1
Level 2
Level 3
Total
$
$
$
$
$
$
— $
— $
— $
— $
75 $
75 $
— $
— $
— $
— $
207 $
207 $
Fair Value at December 31, 2020
— $
—
— $
— $
267
267 $
224 $
—
224 $
75
75
207
207
224
267
491
Fair Value
Measurements Using
Significant
Unobservable Inputs
(level 3)
Valla Contingent
Consideration
$
$
224
(17)
207
The Company has qualitatively evaluated the Valla contingent liability from the date of acquisition.
The carrying value of the amounts reported in the Consolidated Balance Sheets for cash, accounts receivable, accounts payable and
short-term variable debt, including any amounts outstanding under the Company’s revolving credit facilities and working capital
borrowing, approximate fair value due to the short periods during which these amounts are outstanding.
The book and fair value of the Company’s term debt was $12,814 for the year ended December 31, 2021, and $16,532 for the year
ending December 31, 2020. The book and fair value of the Company’s finance leases were $4,221 and $5,044 for the year ended
December 31, 2021, respectively and $4,565 and $5,592 for the year ending December 31, 2020, respectively. There is no difference
between the book value and the fair value for amount recorded in connection with the liability recorded for a long-term legal
settlement, which was $687 and $765 for the years ending December 31, 2021 and 2020, respectively.
Fair Value Measurements
ASC 820-10 classifies the inputs used to measure fair value into the following hierarchy:
Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets
or liabilities;
Level 2 - Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially
the full term of the asset or liability; and
Level 3 -
Prices or valuation techniques that require inputs that are both significant to the fair value measurement and
unobservable (i.e., supported by little or no market activity)
Fair value of the forward currency contracts is determined on the last day of each reporting period using observable inputs, which are
supplied to the Company by the foreign currency trading operation of its bank and are Level 2 items.
41
Note 7. Derivative Financial Instruments
The Company’s risk management objective is to use the most efficient and effective methods available to us to minimize, eliminate,
reduce or transfer the risks which are associated with fluctuation of exchange rates between the Euro, Chilean Peso and the U.S.
Dollar.
Forward Currency Contracts
The Company enters into forward currency exchange contracts such that the exchange gains and losses on the assets and liabilities
denominated in other than the reporting units’ functional currency would be offset by the changes in the market value of the forward
currency exchange contracts it holds. The forward currency exchange contracts that the Company has to offset existing assets and
liabilities denominated in other than the reporting units’ functional currency have been determined not to be considered a hedge under
ASC 815-10. The Company records the forward currency exchange contracts at its market value with any associated gain or loss being
recorded in current earnings. Both realized and unrealized gains and losses related to forward currency contracts are included in
current earnings and are reflected in the Consolidated Statements of Operations in the other income (expense) section on the line titled
foreign currency transaction loss. Items denominated in other than a reporting unit functional currency include certain intercompany
receivables due from the Company’s Italian subsidiaries and accounts receivable and accounts payable of our Italian subsidiaries and
their subsidiaries.
PM Group has an intercompany receivable denominated in Euros from its Chilean subsidiary. At December 31, 2021, the Company
had entered into a forward currency exchange contracts that matured on January 31, 2022. Under the contract the Company was
obligated to sell 2,500,000 Chilean Pesos for 2,634 Euros. The purpose of the forward contract is to mitigate the income effect related
to this intercompany receivable that results with a change in exchange rate between the Euro and the Chilean Peso.
The following table provides the location and fair value amounts of derivative instruments that are reported in the Consolidated
Balance Sheet as of December 31, 2021 and 2020:
Total derivatives not designated as a hedge instrument
Asset Derivatives
Foreign currency exchange contracts
Total derivative assets
Balance Sheet Location
Prepaid expense and other
Liabilities Derivatives
Foreign currency exchange contracts
Total derivative liabilities
Accrued expense
Fair Value
As of December 31,
2020
2021
75 $
75 $
—
—
— $
— $
267
267
$
$
$
$
The following tables provide the effect of derivative instruments on the Consolidated Statement of Operations for 2021 and 2020:
Derivatives not designated as Hedge Instrument
in Statement of Operations Years ended December 31,
Location of gain or
(loss) recognized
Forward currency contracts
Total derivatives gain (loss)
Foreign currency
transaction gains
(losses)
2021
2020
$
$
278 $
278 $
(167)
(167)
During 2021 and 2020, there were no forward currency contracts designated as cash flow hedges. As such, all gains and loss related
to forward currency contracts during 2021 and 2020 were recorded in current earnings and did not impact other comprehensive
income.
42
Note 8. Inventory, net
The components of inventory at December 31, are summarized as follows:
Raw materials and purchased parts
Work in process
Finished goods and replacement parts
Inventories, net
2021
2020
$
$
42,983 $
3,938
18,044
64,965 $
33,172
3,845
19,038
56,055
The Company has established reserves for obsolete and excess inventory of $9,884 and $8,451 as of December 31, 2021 and 2020,
respectively.
The Company’s restructuring plan resulted in inventory write-downs of $3.2 million recorded as of December 31, 2021. See Note 23
for information regarding the restructuring plan.
Note 9. Property, Plant and Equipment
Property, plant and equipment consist of the following at December 31, 2021 and 2020, respectively:
$
Machinery and equipment
Buildings
Finance lease - building
Land
Furniture and fixtures
Computer equipment
Leasehold improvements
Construction in progress
Motor vehicles
Totals
Less: accumulated depreciation
Less: accumulated depreciation - finance lease
Net property and equipment
$
2021
2020
10,605 $
9,649
4,606
4,138
2,612
1,728
1,504
187
93
35,122
(16,359)
(2,303)
16,460 $
10,925
10,130
4,606
4,437
2,653
1,683
1,501
139
93
36,167
(15,505)
(1,939)
18,723
Depreciation expense was $2,041 (net of $20 amortization of deferred gain on building) and $2,011 (net of $80 amortization of
deferred gain on building) in 2021 and 2020, respectively. See Note 13 for information regarding finance leases.
The Company’s restructuring plan resulted in an impairment charge to its fixed assets at Badger for less than $0.1 million. See Note
23 for information regarding the restructuring plan.
Note 10. Goodwill and Other Intangible Assets
Intangible assets were comprised of the following as of December 31:
Patented and unpatented
technology
Customer relationships
Trade names and trademarks
Software
Indefinite lived trade names
Total intangible assets, net
Weighted
Average
Amortization
Period
Remaining (in
years)
Gross
Carrying
Amount
Accumulated
Amortization
December 31, 2021 Net
Carrying Amount
3
3
10
5
$
16,848 $
18,077
4,269
160
2,057
(13,845) $
(13,017)
(2,595)
(8)
$
43
3,003
5,060
1,674
152
2,057
11,946
Weighted
Average
Amortization
Period
Remaining (in
years)
Gross
Carrying
Amount
Accumulated
Amortization
December 31, 2020 Net
Carrying Amount
Patented and unpatented
technology
Customer relationships
Trade names and trademarks
Indefinite lived trade names
Total intangible assets, net
6
5
11
$
18,643 $
19,552
4,829
2,664
(14,587) $
(12,753)
(2,677)
$
4,056
6,799
2,152
2,664
15,671
Amortization expense was $2,282 and $2,218 for the periods ended December 31, 2021 and 2020, respectively.
Estimated amortization expense for the next five years and subsequent is as follows:
2022
2023
2024
2025
2026
And subsequent
Total intangibles currently to be amortized
Intangibles with indefinite lives not amortized
Total intangible assets
Amount
2,748
2,748
2,748
496
343
806
9,889
2,057
11,946
$
$
Changes in the Company’s goodwill are as follows:
Balance December 31, 2019
Goodwill impairment
Effects of change in exchange rate
Balance December 31, 2020
Goodwill impairment
Effects of change in exchange rate
Balance December 31, 2021
Goodwill
32,635
(6,585)
1,422
27,472
(1,130)
(1,393)
24,949
$
$
The Company performed its annual impairment assessment as of October 1, 2021. The valuation analysis performed identified an
impairment of goodwill. As the fair value was less than its carrying value, the Company recorded an impairment charge on its Valla
reporting unit of $1.1 million. The Company’s policy is to assess the realizability of its intangible assets, and to evaluate such assets
for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets (or group of assets) may
not be recoverable. Impairment is determined to exist if the estimated future undiscounted cash flows are less than the carrying
value. Future cash flow projections include assumptions for future sales levels, the impact of cost reduction programs, and the level of
working capital needed to support each business. The amount of any impairment then recognized would be calculated as the difference
between the estimated fair value and the carrying value of the asset. Based on the quantitative assessment performed, Valla’s carrying
value of intangible assets is not supported by the enterprise value of the business driven by the cash flows of the business and as such
the intangible assets are fully impaired as of December 31, 2021. An impairment charge to intangible assets was recorded at our Valla
reporting unit in the amount of $0.5 million. In addition, the Company’s restructuring plan resulted in an impairment charge to
intangible assets at Badger for $0.3 million. See Note 23 for information regarding the restructuring plan.
44
The Company performed its annual impairment assessment as of March 31, 2020, prior to its October 1, 2020 annual measurement
date. The valuation analysis was performed at March 31, 2020 due to the Company identifying a triggering event. Subsequently, a step
0 analysis was performed at December 31, 2020 indicating no impairment. As of the valuation date, the global economy and the
financial markets were experiencing severe adverse effects from the (COVID-19) pandemic. While uncertainty remains as to its
ultimate impact and duration, the COVID-19 pandemic is causing tremendous hardships globally and adversely impacting global and
financial market conditions. At March 31, 2020, the Company considered a decrease in its market capitalization to be a triggering
event and as such a valuation analysis was performed and goodwill and intangible assets were determined to be impaired, and as such
non-cash impairment charges were made to selling, general and administrative expense and shown separately on the Consolidated
Statement of Operations as impairment of intangibles. In order to more closely align the estimated fair values of our reporting units to
our overall market capitalization, an increase to our risk premium utilized within our discounted cash flows analysis was applied,
resulting in an impairment charge to goodwill and intangible assets at our PM reporting unit in the amount of $6.6 million and $0.1
million, respectively.
While there was $1.1 million of goodwill impairment recognized as a result of the 2021 annual impairment test related to the Valla
business unit, a reasonably possible unexpected deterioration in financial performance or adverse change in earnings may result in a
further impairment in the other business units.
Note 11. Accrued Expenses
Accrued payroll and benefits
Accrued income tax and other taxes
Accrued vacation expense
Accrued warranty
Accrued expenses—other
Total accrued expenses
Note 12. Revolving Term Credit Facilities and Debt
Debt is summarized as follows:
U.S. Credit Facilities
Italy Short-Term Working Capital Borrowings
Italy Group Term Loan
Other
Total debt
Less: Debt issuance costs
Debt net of issuance costs
As of December 31,
2021
2020
$
$
3,362 $
2,473
1,701
1,578
1,425
10,539 $
2,511
1,127
1,398
1,292
1,581
7,909
December 31, 2021
$
12,800 $
15,676
12,472
342
41,290
(83)
41,207 $
December 31, 2020
12,800
13,603
15,871
661
42,935
(194)
42,741
$
U.S. Credit Facilities
At December 31, 2021, the Company and its U.S. subsidiaries have a Loan and Security Agreement, as amended (the “Loan Agreement”)
with CIBC. The Loan Agreement provides a revolving credit facility with a maturity date of July 20, 2023. The aggregate amount of
the facility is $30 million.
The maximum borrowing available to the Company under the Loan Agreement is limited to: (1) 85% of eligible receivables; plus (2)
50% of eligible inventory valued at the lower of cost or net realizable value subject to a $20 million limit; plus (3) 80% of eligible
used equipment, as defined, valued at the lower of cost or market subject to a $2 million limit; plus (4) 50% of eligible Mexico
receivables (as defined) valued at the lower of cost or net realizable value subject to a $0.4 million limit. At December 31, 2021 and
2020, the maximum the Company could borrow based on available collateral was $24.0 million and $21.9 million, respectively. At
December 31, 2021, the Company had $12.8 million in borrowings (less $0.1 million in debt issuance cost for a net debt of $12.7
million) with approximately $11.2 million available to borrow under its revolving credit facility. At December 31, 2020, the Company
had $12.8 million in borrowings (less $0.2 million in debt issuance cost for a net debt of $12.6 million) with approximately $9.1
million available to borrow under its revolving credit facility. The indebtedness under the Loan Agreement is collateralized by
substantially all of the Company’s assets, except for certain assets of the Company’s subsidiaries.
45
The Loan Agreement provides that the Company can opt to pay interest on the revolving credit at either a base rate plus a spread, or a
LIBOR rate plus a spread. The base rate and the LIBOR rate are subject to a floor of 0.50%. The LIBOR spread ranges from 1.75% to
2.25% depending on the Adjusted Excess Availability. Funds borrowed under the LIBOR option can be borrowed for periods of one,
two, or three months and are limited to four LIBOR contracts outstanding at any time. In addition, a fee of 0.375% is applied for the
unused portion of the revolving facility and is payable monthly. In March of 2021, the Company amended the Loan Agreement to include
a Hedging Agreement for interest rate protection with respect to LIBOR Loans. The Company was in compliance with its covenants as
of December 31, 2021.
The Loan Agreement has a Letter of Credit facility of $3 million. As of December 31, 2021, there was no outstanding Letters of Credit
which offset availability under the revolving facility.
PM Group Short-Term Working Capital Borrowings
At December 31, 2021 and 2020, respectively, PM Group had established demand credit and overdraft facilities with five banks in
Italy, one bank in Spain and twelve banks in South America. Under the facilities, as of December 31, 2021 and 2020 respectively, PM
Group can borrow up to $21,449 and $25,133 for advances against invoices, letter of credit and bank overdrafts. These facilities are
divided into two types: working capital facilities and cash facilities. For the year ended December, 31, 2021 and 2020, interest on the
Italian working capital facilities is charged at the 3-month Euribor plus 175 or 200 basis points and 3-month Euribor plus 350 basis
points, respectively. Interest on the South American facilities is charged at a flat rate of points for advances on invoices ranging from
8% - 55%. During June 2021, the loan agreement was renewed removing the existing expiration date.
At December 31, 2021, the Italian banks had advanced PM Group $14,874. There were no advances to PM Group from the Spanish
bank, and the South American banks had advanced PM Group $463. At December 31, 2020, the Italian banks had advanced PM
Group $12,904. There were no advances to PM Group from the Spanish bank, and the South American banks had advanced PM
Group $120.
Valla Short-Term Working Capital Borrowings
At December 31, 2021 and 2020, respectively, Valla had established demand credit and overdraft facilities with two Italian banks.
Under the facilities, Valla can borrow up to $634 for advances against orders, invoices and bank overdrafts. Interest on the Italian
working capital facilities is charged at a flat percentage rate for advances on invoices and orders ranging from 1.67% - 5.75% for both
2021 and 2020. At December 31, 2021 and 2020, the Italian banks had advanced Valla $339 and $579.
PM Group Term Loans
At December 31, 2021 and 2020, PM Group has a $5,930 and $7,035 term loan that is split into a note and a balloon payment and is
secured by PM Group’s common stock. The term loan is charged interest at a fixed rate of 3.5% and has annual principal payments of
approximately $600 per year and a balloon payment of $3,397 in 2026.
At December 31, 2021 and 2020, PM Group has unsecured borrowings totaling $6,542 and $8,836, respectively. The borrowings
have a fixed rate of interest of 3.5%. Annual payments of $1,636 are payable ending in 2025.
At December 31, 2021, PM Group was subject to certain financial covenants including maintaining (1) Net debt to EBITDA, (2) Net
debt to equity, and (3) EBITDA to net financial charges ratios. The covenants were measured on a semi-annual basis. The Company
was in compliance with the loan covenants at December 31, 2021 and 2020. After December 31, 2021, the financial covenants will no
longer apply.
46
Schedule of Debt Maturities
Scheduled annual maturities of the principal portion of debt outstanding at December 31, 2021 in the next five years and the remaining
maturity in aggregate are summarized below. Amounts shown include the debt described above in this footnote.
2022
2023
2024
2025
2026
Thereafter
Debt discount related to non-interest-bearing debt
Debt issuance cost
Total
$
North America
$
353 $
12,800
—
—
—
—
13,153
—
(83)
13,070 $
Italy
Total
17,995 $
2,292
2,286
2,309
3,400
—
28,282
(145)
—
28,137 $
18,348
15,092
2,286
2,309
3,400
—
41,435
(145)
(83)
41,207
At December 31, 2021, the Company’s weighted average interest rate on debt at year end was 2.6%.
Note 13. Leases
The Company leases certain warehouses, office space, machinery, vehicles, and equipment. Leases with an initial term of 12 months
or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the
lease term.
The Company is not aware of any variable lease payments, residual value guarantees, covenants or restrictions imposed by the leases.
Most leases include one or more options to renew, with renewal terms that can extend the lease term. The exercise of lease renewal
options is at our sole discretion. The depreciable life of assets is limited by the expected lease term for finance leases.
If there was a rate explicit in the lease, this was the discount rate used. For those leases with no explicit or implicit interest rate, an
incremental borrowing rate was used. The weighted average remaining useful life for operating and finance leases was 4 and 6 years,
respectively. The weighted average discount rate for operating and finance leases was 5.2% and 12.5% respectively.
Leases (thousands)
Assets
Operating lease assets
Finance lease assets
Total leased assets
Liabilities
Current
Operating
Financing
Noncurrent
Operating
Financing
Total lease liabilities
Classification
12/31/2021
12/31/2020
Operating lease assets
Fixed assets, net
Current liabilities
Current liabilities
Noncurrent liabilities
Noncurrent liabilities
$
$
$
$
3,563 $
2,303
5,866 $
1,064 $
399
2,499
3,822
7,784 $
4,068
2,847
6,915
1,167
344
2,901
4,221
8,633
Lease Cost (thousands)
Operating lease costs
Finance lease cost
Classification
Operating lease assets
Amortization of leased assets
Interest on lease liabilities
Amortization
Interest expense
Lease cost
For the year
ended
December
31, 2021
For the year
ended
December 31,
2020
$
1,194 $
1,009
364
551
2,109 $
1,135
588
2,732
$
47
Other Information (thousands)
Cash paid for amounts included in the
measurement of lease liabilities
Operating cash flows from operating
leases
$
Operating cash flows from finance leases $
Financing cash flows from finance leases $
For the year ended
December 31, 2021
For the year ended
December 31, 2020
1,194 $
551 $
328 $
1,172
588
612
Future minimum lease payments are:
2022
2023
2024
2025
2026
Subsequent
Total undiscounted lease payments
Less interest
Total liabilities
Less current maturities
Non-current lease liabilities
$
$
$
Operating Leases
Finance Leases
1,181
974
627
412
393
342
3,929
(366)
3,563
(1,064)
2,499
$
$
$
904
932
960
988
1,018
1,405
6,207
(1,986)
4,221
(399)
3,822
Operating Leases
The Company leases office and production space under various non-cancellable operating leases that expire no later than 2029.
Certain real estate leases include one or more options to renew. The exercise of lease renewal options is at the Company's sole
discretion. Options to extend the lease are included in the lease term when it is reasonably certain the Company will exercise the
option. The Company also has production equipment, office equipment and vehicles under operating leases. The depreciable life of
assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option that is
reasonably certain of exercise. Certain leases include rental payments adjusted periodically for inflation. The lease agreements do not
contain any material residual value guarantee or material restrictive covenants.
Note 14. Convertible Notes
Related Party
On December 19, 2014, the Company issued a subordinated convertible debenture with a $7,500 face amount payable to Terex, a
related party. The convertible debenture was subordinated, carried a 5% per annum coupon, and was convertible into Company
common stock at a conversion price of $13.65 per share or a total of 549,451 shares, subject to customary adjustment provisions. The
debenture matured on December 19, 2020 and $7,500 was repaid in full during 2020.
Perella Notes
On January 7, 2015, the Company entered into a Note Purchase Agreement with MI Convert Holdings LLC (which is owned by
investment funds constituting part of the Perella Weinberg Partners Asset Based Value Strategy) and Invemed Associates LLC
(together, the “Investors”), pursuant to which the Company agreed to issue $15,000 in aggregate principal amount of convertible notes
due January 7, 2021 (the “Perella Notes”) to the Investors. The Notes were subordinated, carried a 6.50% per annum coupon, and were
convertible, at the holder’s option, into shares of Company common stock, based on an initial conversion price of $15.00 per share,
subject to customary adjustments.
As of December 31, 2020, the Company had paid off the $15,000 balance of the note in full.
48
Note 15. Income Taxes
On March 27, 2020, the “Coronavirus Aid, Relief and Economic Security (CARES) Act” was enacted. The CARES Act, among other
things, includes provisions relating to net operating loss carrybacks, alternative minimum tax credit refunds, a modification to the net
interest deduction limitations and a technical correction to tax depreciation methods for qualified improvement property.
The Company’s assertion to indefinitely reinvest its foreign earnings remains unchanged despite the US taxation of its undistributed
foreign earnings and new tax law, which includes a 100% dividend received deduction. This means that future distributions of foreign
earnings will generally not be taxable in the US. However, upon remittance of these earnings, the Company would be subject to
withholding tax, US tax on foreign currency gains and losses related to previously taxed earnings, and some state income tax. It is not
practicable to estimate the tax impact of the reversal of the outside basis difference, or the repatriation of cash due to the complexity
associated with these calculations.
Information pertaining to the Company’s income before income taxes from continuing operations is as follows:
(Loss) income before income taxes:
Domestic
Foreign
Total net (loss) income before income taxes
Years ended December 31,
2020
2021
$
$
(5,467) $
2,111
(3,356) $
(6,566)
(5,479)
(12,045)
Information pertaining to the Company’s provision for income taxes for continuing operations is as follows:
Expense (benefit) for income taxes:
Current:
Federal
State and local
Foreign
Deferred:
Federal
State and local
Foreign
Total expense for income taxes
Years ended December 31,
2020
2021
$
$
(4) $
(58)
1,330
1,268
—
52
(103)
(51)
$
1,217
(28)
(112)
488
348
32
187
107
326
674
49
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and income tax purposes.
Significant components of the Company’s deferred tax assets and liabilities are as follows:
Deferred tax assets:
Accrued expenses
Inventory
Other liabilities
Deferred gain
Net operating loss carryforwards
Tax credit carryforwards
Capital loss carryforwards
Unrealized foreign currency loss
Interest expense
Property, plant and equipment
Total deferred tax asset
Deferred tax liabilities:
Intangibles
Discount on convertible notes
Deferred State Income Tax
Debt
Total deferred tax liability
Valuation allowance
Net deferred tax (liability) asset
Year ended December 31,
2021
2020
$
$
$
669
2,337
1,696
118
6,385
1,395
233
70
2,888
6
15,797
2,432
—
386
2,199
5,017
(11,676)
(896) $
532
1,924
1,465
137
5,473
1,341
238
110
3,566
296
15,082
3,696
—
396
2,382
6,474
(9,694)
(1,086)
In assessing the realizability of deferred tax assets, we evaluate whether it is more likely than not (more than 50%) that some portion
or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of
future taxable income in those periods in which temporary differences become deductible and/or net operating losses can be utilized.
We assess all positive and negative evidence when determining the amount of the net deferred tax assets that are more likely than not
to be realized. This evidence includes, but is not limited to, prior earnings history, scheduled reversal of taxable temporary differences,
tax planning strategies and projected future taxable income. Significant weight is given to positive and negative evidence that is
objectively verifiable.
As required by the authoritative guidance on accounting for income taxes, the Company evaluates the realizability of deferred tax
assets on a jurisdictional basis at each reporting date. Accounting for income taxes requires that a valuation allowance be established
when it is more likely than not that all or a portion of the deferred tax assets will not be realized. In circumstances where there is
sufficient negative evidence indicating that the deferred tax assets are not more likely than not realizable, we establish a valuation
allowance. Any further increases or decreases in the valuation allowance could have an unfavorable or favorable impact on the
Company’s income tax provision and net income in the period in which such determination is made.
As of December 31, 2021, the Company had U.S. federal and foreign net operating loss carryforwards of $23.9 million. U.S. net
operating loss carryforwards of $4.1 million expire in 2036. The remaining U.S. federal net operating loss carryforward of $16.1
million and the majority of the foreign loss carryforwards of $3.7 million are available for carryforward indefinitely. The Company
has state net operating losses of approximately $0.5 million that are set to expire at varying periods between 2025 and 2041 if not
utilized. As of December 31, 2021, the Company has a Texas Margin Tax Credit of $1.0 million and U.S. federal R&D credits of $0.1
million that may be utilized through 2026 and 2037, respectively. The Company has capital loss carryforwards of $1.0 million
expiring in 2022.
50
The effective tax rate before income taxes varies from the current U.S. federal statutory income tax rate as follows:
Statutory rate
State and local taxes
Permanent differences
Tax credits
Foreign operations
Uncertain tax positions
Valuation allowance
Other
Years ended December 31,
2021
2020
21.0%
(1.2)%
8.8%
0.0%
(3.3)%
7.3%
(59.1)%
(9.8)%
(36.3)%
21.0%
0.5%
(19.4)%
0.0%
(1.3)%
(0.8)%
(5.1)%
(0.5)%
(5.6)%
A reconciliation of the beginning and ending amount of unrecognized tax benefits, including interest and penalties, is as follows:
Balance at January 1,
(Decrease) increases in tax positions for current years
Other
Lapse in statute of limitations
Settlements
Balance at December 31,
2021
2020
3,546 $
123
(14)
(515)
(112)
3,028 $
4,295
(375)
(42)
(235)
(97)
3,546
$
$
Of the amounts reflected in the above table at December 31, 2021, approximately $1.2 million would reduce the Company’s annual
effective tax rate if recognized. This amount considers the indirect effects of offsetting tax positions in different jurisdictions. The
Company records accrued interest and penalties related to income tax matters in the provision for income taxes in the accompanying
consolidated statements of operations. For the years ended December 31, 2021 and 2020, interest and penalties recognized on
unrecognized tax benefits were $(187) and $(287), respectively. The accrued balance as of December 31, 2021 and 2020 was $309
and $495, respectively. Included in the unrecognized tax benefits is a liability for the Romania income tax audit for tax years 2012-
2016. Depending upon the final resolution of the audits, the uncertain tax position liabilities could be higher or lower than the amount
recorded at December 31, 2021.
The Company files income tax returns in the United States, Italy, Romania, Argentina, and Chile as well as various state and local tax
jurisdictions with varying statutes of limitations. With a few exceptions, the Company is no longer subject to examination by the tax
authorities for U.S. federal or state for the years before 2018, or foreign examinations for years before 2012.
Note 16. Supplemental Cash Flow Disclosures
Interest received and paid and income taxes paid (refunds) during the years ended December 31, 2021 and 2020 were as follows:
Interest received in cash
Interest paid in cash
Income taxes paid (refunds) in cash
$
2021
2020
43 $
2,148
1,342
97
4,345
536
Note 17. Employee Benefits
U.S. Plan
The Company sponsors a 401(k) plan. The plan is intended to cover all non-union United States based employees. The plan is open to
employees 21 years of age and older. There is no minimum employment duration required before eligibility. The plan allows for
monthly enrollment and contribution changes.
51
The Company currently matches dollar for dollar participants’ contributions up to 3% of the participants’ gross income and a 50%
match on the next 2% of gross income. There is no dollar limit regarding matched funds and the plan also calls for immediate vesting
of the employer contribution component.
The amount paid in matching contributions by the company for 2021 and 2020 were $319 and $336, respectively.
Non-U.S. Plan
Employees in Italy are entitled to Trattamento di Fine Rapporto (“TFR”), commonly referred to as an employee leaving indemnity,
which represents deferred compensation for employees in the private sector. Under Italian law, an entity is obligated to accrue for TFR
on an individual employee basis payable to each individual upon termination of employment (including both voluntary and
involuntary dismissal). The annual accrual is approximately 7% of total pay, with no ceiling, and is revalued each year by applying a
pre-established rate of return of 1.50%, plus 75% of the Consumer Price Index, and is recorded by a book reserve. TFR is an unfunded
plan.
The accrued employee severance indemnity must be transferred to the Fund for the payment of severance pay to employees in the
private sector, managed by the INPS (the National Social Contributions Authority), on behalf of the State, on a special account opened
at the State Treasury. In this case the workers continue to have as their sole interlocutor the employer, who will provide monthly
payment of the amount due (together with the social contributions due to INPS). In this situation, the Company will pay the severance
to the employees leaving and then those amounts will be compensated by the payments to be made in favor of INPS.
The amount paid by the company for 2021 and 2020 was $385 and $521, respectively. The amount allocated to the Employee
severance indemnity provision in 2021 and 2020 were $810 and $689, respectively.
Note 18. Accrued Warranties
A liability for estimated warranty claims is accrued at the time of sale. The liability is established using historical warranty claim
experience. Historical warranty experience is reviewed by management.
The current provision may be adjusted to take into account unusual or non-recurring events in the past or anticipated changes in future
warranty claims. Adjustments to the initial warranty accrual are recorded if actual claim experience indicates that adjustments are
necessary. Warranty reserves are reviewed to ensure critical assumptions are updated for known events that may impact the potential
warranty liability.
The following table summarizes the changes in product warranty liability:
Balance January 1,
Provision for warranties issued during the year
Warranty services provided
Changes in estimates
Foreign currency translation
Balance December 31,
2021
2020
$
1,292
3,625
(3,293)
-
(46)
$
1,578
1,604
2,573
(3,091)
177
29
1,292
$
$
52
Note 19. Equity
Stock issued to employees and Directors
The Company issued shares of common stock to employees and Directors at various times in 2021 and 2020 as restricted stock units
issued under the Company’s 2004 and 2019 Incentive Plan. Upon issuance entries were recorded to increase common stock and
decrease paid in capital for the amounts shown below. The following is a summary of stock issuances that occurred during the two-
year period:
Shares Issued
Employees or
Director
Employee
Directors
Employees
Directors
Employee
Directors
Employees
Directors
Directors
Employee
Employee
Employee
Employee
Employees or
Director
Employee
Directors
Employee
Employee
Directors
Directors
Employee
Employee
Employee
Employee
Employee
Value of
Shares Issued
(in thousands)
20
47
147
93
15
133
130
43
44
93
10
17
16
807
3,300 $
7,920
24,923
12,000
2,000
18,060
17,680
5,940
9,900
16,500
2,211
3,630
2,640
$
126,704
Value of
Shares Issued
(in thousands)
13
47
292
6
79
44
4
2
93
210
16
806
2,250 $
7,920
39,714
560
6,800
9,900
333
335
16,500
34,075
2,640
121,027
$
Shares Issued
Date of Issue
January 1, 2021
March 6, 2021
March 6, 2021
March 8, 2021
March 8, 2021
March 13, 2021
March 13, 2021
June 3, 2021
August 14, 2021
September 1, 2021
October 20, 2021
December 10, 2021
December 31, 2021
Date of Issue
January 1, 2020
March 6, 2020
March 13, 2020
May 15, 2020
May 31, 2020
August 14, 2020
August 20, 2020
August 21, 2020
September 1, 2020
October 2, 2020
December 31, 2020
53
Stock Repurchase
The Company purchased shares of Common Stock at various times from certain employees at the closing price on date of purchase.
The stock was purchased from the employees to satisfy employees’ withholding tax obligations related to stock issuances described
above. The following is a summary of common stock purchased during 2021 and 2020:
Date of Purchase
March 6, 2021
March 8, 2021
March 13, 2021
December 10, 2021
March 13, 2020
August 20, 2020
August 21, 2020
October 2, 2020
Shares
Purchased
Closing Price
on Date of
Purchase
2,779 $
692 $
2,712 $
1,124 $
7,307
2,949 $
116 $
116 $
9,941 $
13,122
7.43
7.73
8.29
6.99
4.34
4.37
4.23
4.74
Manitex International, Inc. 2019 Equity Incentive Plan
In 2019, the Company adopted the Manitex International, Inc. 2019 Equity Incentive Plan (the “Plan”). In 2020, the Plan was
amended to increase the number of shares authorized for issuance under the Plan from 279,717 to 779,717. The total number of shares
reserved for issuance however, can be adjusted to reflect certain corporate transactions or changes in the Company’s capital structure.
The Company’s employees and members of the board of directors who are not our employees or employees of our affiliates are
eligible to participate in the plan. The plan is administered by a committee of the board comprised of members who are outside
directors. The plan provides that the committee has the authority to, among other things, select plan participants, determine the type
and number of awards, determine award terms, fix all other conditions of any awards, interpret the plan and any plan awards. Under
the plan, the committee can grant stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares
and performance units, except Directors may not be granted stock appreciation rights, performance shares and performance units.
During any calendar year, participants are limited in the number of grants they may receive under the plan. In any year, an individual
may not receive options for more than 15,000 shares, stock appreciation rights with respect to more than 20,000 shares, more than
20,000 shares of restricted stock and/or an award for more than 10,000 performance shares or restricted stock units or performance
units. The plan requires that the exercise price for stock options and stock appreciation rights be not less than fair market value of the
Company’s common stock on date of grant.
Restricted Stock Awards
Restricted stock units are subject to the same conditions as the restricted stock awards except the restricted stock units do not have
voting rights and the common stock will not be issued until the vesting criteria are satisfied.
The Company awarded a total of 177,800 and 176,000 restricted stock units to employees and directors during 2021 and 2020,
respectively. The weighted average grant date fair value of awards made in 2021 was $7.48 per share, compared to $5.49 at 2020. The
restricted stock units are subject to the same conditions as the restricted stock awards except the restricted stock units will not have
voting rights and the common stock will not be issued until the vesting criteria are satisfied.
54
The following is a summary of restricted stock units that were awarded during 2021 and 2020:
2021 Grants
March 8, 2021
March 8, 2021
June 3, 2021
November 23, 2021
December 31, 2021
2020 Grants
January 1, 2020
March 6, 2020
March 6, 2020
August 14, 2020
October 20, 2020
December 10, 2020
Vesting Date
March 8, 2021 12,000 units;
March 8, 2022 12,000 units;
March 8, 2023 12,000 units
March 8, 2021 2,000 units;
March 8, 2022, 30,294
March 8, 2023 30,294 units;
March 8, 2024 31,212 units
June 3, 2021 5,940 units;
June 3, 2022 5,940 units;
June 3, 2023 6,120 units
November 23, 2022 6,600 units;
November 23, 2023 6,600 units;
November 23, 2024 6,800 units
December 31, 2022 3,300 units;
December 31, 2023 3,300 units;
December 31, 2024 3,400 units
Vesting Date
January 1, 2021 4,950 units;
January 1, 2022 4,950 units;
January 1, 2023 5,100 units
March 6, 2020 7,920 units;
March 6, 2021 7,920 units;
March 6, 2022 8,160 units
March 6, 2021 28,380 units;
March 6, 2022 28,380 units;
March 6, 2023 29,240 units
August 14, 2020 9,900 units;
August 14, 2021 9,900 units;
August 14, 2022 10,200 units
October 20, 2020 3,300 units;
October 20, 2021 2,211 units;
October 20, 2022 2,211 units;
October 20, 2023 2,278 units
December 10, 2021 3,630 units;
December 10, 2022 3,630 units;
December 10, 2023 3,740 units
Number of
Restricted
Stock Units
Closing Price on
Date of Grant
Value of
Restricted Stock
Units Issued
36,000 $
7.73 $
278
93,800 $
7.73 $
725
18,000 $
7.29 $
131
20,000 $
6.60 $
132
10,000 $
6.36 $
64
177,800
$
1,330
Number of
Restricted
Stock Units
Closing Price on
Date of Grant
Value of
Restricted Stock
Units Issued
15,000 $
5.95 $
89
24,000 $
5.89 $
141
86,000 $
5.89 $
507
30,000 $
4.41 $
132
10,000 $
4.60 $
11,000 $
4.67 $
46
51
176,000
$
966
The following table contains information regarding restricted stock units for the years ended December 31, 2021 and 2020,
respectively:
Outstanding on January 1,
Units granted during period
Vested and issued
Vested—issued and repurchased for income tax withholding
Forfeited
Outstanding on December 31
55
Restricted Stock Units
2020
2021
198,717
242,586
176,000
177,800
(107,905)
(119,397)
(13,122)
(7,307)
(11,104)
(7,455)
242,586
286,227
Stock Options
On September 1, 2019, 50,000 stock options were granted at $5.62 per share and vest ratably on each of the first three anniversary
dates. The following table illustrates the various assumptions used to calculate the Black-Scholes option pricing model for stock
options granted on September 1, 2019:
Dividend yields
Expected volatility
Risk free interest rate
Expected life (in years)
Fair value of the option granted
Grant date
September 1, 2019
—
51%
1.42%
6
2.76
$
Compensation expense in 2021 and 2020 includes $1,056 and $1,038 related to restricted stock units and stock options, respectively.
Compensation expense related to restricted stock units and stock options granted will be $688, $307, and $37 for 2022, 2023, and
2024, respectively.
Note 20. Transactions between the Company and Related Parties
In the course of conducting its business, the Company has entered into certain related party transactions.
C&M conducts business with RAM P&E LLC for the purposes of obtaining parts business as well as buying, selling, and renting
equipment. In 2021, $0.1 million was invoiced by Crane and Machinery, Inc. through government parts contracts awarded to RAM
P&E LLC.
C&M is a distributor of Terex rough terrain and truck cranes. As such, C&M purchases cranes and parts from Terex. The Company
had a convertible note with a face amount of $7.5 million paid to Terex. This note was paid off in full in December 2020.
PM is a manufacturer of cranes. PM sold cranes, parts, and accessories to Tadano Ltd. during 2020 and 2021.
As of December 31, 2021, and 2020, the Company had accounts receivable and accounts payable with related parties as shown below:
Accounts Receivable
Tadano
Ram P&E
Accounts Payable
Terex
Tadano
Net Related Party
Accounts Payable
December 31, 2021
$
December 31, 2020
62
13
75
— $
—
- $
23 $
180
203 $
203 $
47
80
127
52
$
$
$
$
56
The following is a summary of the amounts attributable to certain related party transactions as described in the footnotes to the table,
for the years ended December 31:
Bridgeview Facility (1)
Sales to:
Tadano (3)
Terex (4)
RAM P&E (2)
Total Sales
Inventory Purchases from:
Tadano (3)
Terex (4)
Total Inventory Purchases
2021
2020
$
- $
167
43
122
332 $
303
403
706 $
$
$
276
708
43
13
764
96
499
595
(1)
(2)
(3)
(4)
The Company leased its 40,000 sq. ft. Bridgeview facility from an entity controlled by Mr. David Langevin, the Company’s Executive
Chairman and former CEO, through December 31, 2020. Pursuant to the terms of the lease, the Company makes monthly lease payments
of $23. The Company is also responsible for all the associated operations expenses, including insurance, property taxes, and repairs. The
entity controlled by Mr. David Langevin sold the building on December 31, 2020 to an unaffiliated third-party. The new terms of the
building lease are substantially the same.
RAM P&E is owned by the Company’s Executive Chairman’s daughter.
Tadano is a significant shareholder of the Company and conducts business with the Company in the ordinary course of business.
Terex is a significant shareholder of the Company and conducts business with the Company in the ordinary course of business.
Note 21. Legal Proceedings and Other Contingencies
The Company is involved in various legal proceedings, including product liability, employment related issues, and workers’
compensation matters which have arisen in the normal course of operations. The Company has product liability insurance with self-
insurance retention that range from $50 to $500.
When it is probable that a loss has been incurred and possible to make a reasonable estimate of the Company’s liability with respect to
such matters, a provision is recorded for the amount of such estimate to estimate the amount within the range that is most likely to
occur. Certain cases are at a preliminary stage, and it is not possible to estimate the amount or timing of any cost to the Company for
these cases. However, the Company does not believe that these contingencies, in the aggregate, will have a material adverse effect on
the Company.
The Company has been named as a defendant in several multi-defendant asbestos related product liability lawsuits. In certain
instances, the Company is indemnified by a former owner of the product line in question. In the remaining cases the plaintiff has, to
date, not been able to establish any exposure by the plaintiff to the Company’s products. The Company is uninsured with respect to
these claims but believes that it will not incur any material liability with respect to these claims.
During 2020, the Company changed its insurance coverage and no longer has a deductible obligation. The Company is fully insured
for any amount on any individual claim that exceeds the deductible and for any additional amounts of all claims once the aggregate
deductible is reached.
On May 5, 2011, Company entered into two separate settlement agreements with two plaintiffs. As of December 31, 2021, the
Company has a remaining obligation under the agreements to pay the plaintiffs $950 without interest in 10 annual installments of $95
on or before May 22 of each year. The Company has recorded a liability for the net present value of the liability. The difference
between the net present value and the total payment will be charged to interest expense over payment period.
It is reasonably possible that the estimated reserve for product liability claims may change within the next 12 months. A change in
estimate could occur if a case is settled for more or less than anticipated, or if additional information becomes known to the Company.
57
Romania Income Tax Audit
As described in Note 15, included in the unrecognized tax benefits is a liability for the Romania income tax audit for tax years 2012-
2016. Depending upon the final resolution of the audits, the liability could be higher or lower than the amount recorded at December
31, 2021.
Note 22. Discontinued Operations
Assets and Liabilities Classified as Held for Sale
On August 21, 2020, the Company entered into an Asset Purchase Agreement to sell Manitex Sabre, Inc. to an affiliate of Super Steel,
LLC for cash proceeds of $1.5 million, subject to certain adjustments based on closing date accounts receivable and inventory.
In addition to the cash proceeds from the sale of $1.5 million in cash received, the Company may receive maximum royalty and earn-
out payments of up to approximately $2.9 million for years 2021 through 2023 if certain revenue criteria are met. The Company has
received approximately $0.1 million of such payments to date. The Company will account for the contingent consideration as a gain in
accordance with ASC 450. Under this approach, we will recognize the contingent consideration in earnings after the contingency is
resolved.
During the year ended December 31, 2020, the Company recorded a gain on the sale of Manitex Sabre of $319.
The calculation of the gain on sale for the year ended December 31, 2020 is as follows:
Proceeds from sale
Transaction Costs
working capital adjustment
Net proceeds
Net assets sold
Gain on sale before taxes
Taxes on gain
Gain on sale, net of tax
For the year ended
December 31, 2020
1,489
(126)
190
1,553
(1,234)
319
—
319
$
$
After August 21, 2020, additional invoices of $57 related to Sabre were received resulting in a Gain of Sale, net of tax of $319 as of
December 31, 2020.
Cash flows:
For the year ended December 31, 2020, cash flows used for operating activities was $1,586, this consisted of depreciation expense of
$44, no purchases of fixed assets and no amortization expense. Cash flows provided by investing activities consisted of proceeds from
sale of assets was $1,553.
Net revenues
Cost of sales
Selling, general and administrative expenses
Interest expense
Other income
Net loss from discontinued operations before income
tax
Income tax expense related to
discontinued operations
Net loss on discontinued operations
58
For the year ended
December 31,
2020
$
$
3,276
3,594
840
62
332
(888)
3
(891)
Note 23. Subsequent Events
On January 12, 2022, Manitex International, Inc. (the “Company”) announced a restructuring plan (the “Restructuring”) that will
result in the closure of its Badger Equipment facility in Winona, Minnesota. As part of the Restructuring, the Company intends to
move the manufacturing of their straight mast boom cranes and aerial platforms now produced in Winona to its Georgetown, Texas
facility. The Restructuring is expected to be completed around March 31, 2022.
The Company recorded a one-time pre-tax charge of $3.6 million related to inventory write-downs, impairment of fixed assets, and
impairment of intangible assets in the fourth quarter of 2021. The Company estimates that it will incur severance and other plant
closure costs of approximately $0.2 million to $0.4 million in the first quarter of 2022.
These estimates are subject to a number of assumptions, and actual results may differ. The Company may also incur additional costs
not currently contemplated due to events that may occur as a result of, or that are associated with, the Restructuring.
59
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
With the participation of our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial
officer) and under the supervision of the Audit Committee of the Board of Directors, our management conducted an evaluation of the
effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the
Exchange Act, as of December 31, 2021. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded
that our disclosure controls and procedures, as of December 31, 2021, were effective and provided reasonable assurance that the
information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized,
and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and
communicated to management as appropriate to allow timely decisions regarding required disclosure.
Management’s Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules
13a-15(f) and 15d-15(f) of the Exchange Act. The Company’s internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of its financial reporting and the preparation of its financial statements for external
purposes in accordance with GAAP and includes those policies and procedures that: (i) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and that
receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the
Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the Company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions or that the degree of compliance with the policies or procedures may deteriorate.
Under the supervision of and with the participation of management, the Company conducted an evaluation of the effectiveness of its
internal control over financial reporting based on the criteria in Internal Control—Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this evaluation, our management concluded that we
maintained effective internal controls over financial reporting as of December 31, 2021.
Management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2021,
has been audited by Grant Thornton LLP, our independent registered public accounting firm, as stated in their report which appears
herein.
Changes in Internal Control Over Financial Reporting
For the quarter ending December 31, 2021, we have completed enhancements to the design effectiveness of certain internal controls
over financial reporting, including enhancements over information technology controls implemented in the fourth quarter of 2021 in
response to the previously reported material weakness. There were no other changes in our internal control over financial reporting
identified in management’s evaluation pursuant to Rules 13a-15(f) and 15d-15(f) of the Exchange Act during the year ended
December 31, 2021, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
These actions, being implemented through the fourth quarter of 2021, allow us to conclude that the material weakness has been fully
remediated.
ITEM 9B. OTHER INFORMATION
None.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
None.
60
PART III
Certain information required by Part III is omitted from this Form 10-K as the Company intends to file with the SEC its definitive
Proxy Statement for its 2022 Annual Meeting of Shareholders (the “2022 Proxy Statement”) pursuant to Regulation 14A of the
Exchange Act, not later than 120 days after December 31, 2021.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information under the headings “Nominees to Serve Until the 2023 Annual Meeting,” “Executive Officers of the Company who
are not also Directors,” “Delinquent Section 16(a) Reports,” “Committee on Directors and Board Governance,” and “Audit
Committee” in our 2022 Proxy Statement is incorporated herein by reference.
Our directors, executive officers and stockholders with ownership of 10% or greater are required, under Section 16(a) of the Exchange
Act, to file reports of their ownership and changes to their ownership of our securities with the SEC. Based solely on our review of the
reports and any written representations we received that no other reports were required, we believe that, during the year ended
December 31, 2021, all of our officers, directors and stockholders with ownership of 10% or greater complied with all Section 16(a)
filing requirements applicable to them.
Code of Ethics
The Company has adopted a code of ethics applicable to our principal executive officer and principal financial and accounting officer,
in accordance with Section 406 of the Sarbanes-Oxley Act of 2002, the rules of the SEC promulgated thereunder, and the NASDAQ
rules. The code of ethics also applies to all employees of the Company as well as the Board of Directors. In the event that any changes
are made or any waivers from the provisions of the code of ethics are made, these events would be disclosed on the Company’s
website or in a report on Form 8-K within four business days of such event. The code of ethics is posted on our website at
www.manitexinternational.com. Copies of the code of ethics will be provided free of charge upon written request directed to Investor
Relations, Manitex International, Inc., 9725 Industrial Drive, Bridgeview, Illinois 60455.
ITEM 11. EXECUTIVE COMPENSATION
The information under the headings “Compensation Committee Interlocks and Insider Participation,” “Compensation Committee
Report on Executive Compensation” “Compensation Discussion and Analysis,” “Executive Compensation,” and “Director
Compensation” in our 2022 Proxy Statement is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
The information under the headings “Equity Compensation Plan Information” and “Principal Stockholders” in our 2022 Proxy
Statement is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information under the headings “Transactions with Related Persons,” “Corporate Governance,” “Compensation Committee,” and
“Audit Committee” in our 2022 Proxy Statement is incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information under the heading “Audit Committee” in our 2022 Proxy Statement is incorporated herein by reference.
61
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)
The following documents are filed as part of this Report:
PART IV
(1)
Financial Statements
See Index to Financial Statements on page 23.
(2)
Supplemental Schedules
None.
All schedules have been omitted because the required information is not present in amounts sufficient to require submission of the
schedules, or because the required information is included in the consolidated financial statements or notes thereto.
(b)
Exhibits
62
Exhibit No.
Description
Exhibit Index
3.1
3.2
4.1
4.2
4.3
4.4
4.5
Articles of Incorporation, as amended (incorporated by reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q
filed on November 13, 2008) (File No. 001-32401).
Amended and Restated Bylaws of Veri-Tek International, Corp. (now known as Manitex International, Inc.), as amended
(incorporated by reference to Exhibit 3.2 to the Annual Report on Form 10-K filed on March 27, 2008) (File No. 001-
32401).
Specimen Common Stock Certificate of Manitex International, Inc. (incorporated by reference to Exhibit 4.1 to the
Annual Report on Form 10-K filed on March 25, 2009) (File No. 001-32401).
Rights Agreement, dated as of October 17, 2008, between Manitex International, Inc. and American Stock Transfer &
Trust Company, LLC (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed on October 21,
2008) (File No. 001-32401).
Amendment No. 1, dated as of May 24, 2018, to Rights Agreement, dated October 17, 2008, by and between Manitex
International, Inc. and American Stock Transfer & Trust Company, LLC (incorporated by reference to Exhibit 10.3 to
the Current Report on Form 8-K filed on May 31, 2018).
Amendment No. 2, dated as of October 2, 2018, to Rights Agreement, dated October 17, 2008, by and between Manitex
International, Inc. and American Stock Transfer & Trust Company, LLC (incorporated by reference to Exhibit 4.1 to the
Current Report on Form 8-K filed on October 3, 2018).
Description of Registrant's securities registered pursuant to Section 12 of the Securities Exchange Act of 1934
(incorporated by reference to Exhibit 4.6 to the Annual Report on Form 10-K filed on March 10, 2020) (File No. 001-
32401).
10.1
*
Employment Agreement, dated December 12, 2012, between Manitex International, Inc. and David J. Langevin
(incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-k filed on December 17, 2012) (File No.
001-32401).
10.2
10.3
10.4
10.5
10.6
10.7
10.8
Lease dated April 17, 2006 between Krislee-Texas, LLC and Manitex, Inc. for facility located in Georgetown, Texas
(incorporated by reference to Exhibit 10.21 to the Annual Report on Form 10-K filed on April 13, 2007) (File No. 001-
32401).
Lease Agreement, dated May 26, 2010, between Manitex International, Inc. and KB Building, LLC (incorporated by
reference to Exhibit 10.1 to the Current Report on Form 8-K filed on May 28, 2010) (File No. 001-32401).
Lease Amendment, dated June 6, 2014 between Manitex International, Inc. and KB Building, LLC (incorporated by
reference to Exhibit 10.2 to the Current Report on Form 8-K filed on June 6, 2014).
Loan and Security Agreement, dated as of July 20, 2016, by and among The PrivateBank and Trust Company, as
administrative agent and sole lead arranger, Manitex International, Inc., Manitex Inc., Manitex Sabre, Inc., Badger
Equipment Company, Crane and Machinery, Inc., Crane and Machinery Leasing, Inc., Liftking, Inc. and Manitex, LLC
(as the US Borrowers) and Manitex Liftking, ULC (as the Canadian Borrower) (incorporated by reference to Exhibit
10.1 to the Current Report on Form 8-K filed July 25, 2016).
First Amendment to Loan and Security Agreement, dated as of August 4, 2016, by and among Manitex International,
Inc., Manitex Inc., Manitex Sabre, Inc., Badger Equipment Company, Crane and Machinery, Inc., Crane and Machinery
Leasing, Inc., Liftking, Inc., Manitex, LLC and Manitex Liftking, ULC, The Private Bank and Trust Company and the
lenders party thereto (incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q filed November 9,
2016).
Consent and Second Amendment to Loan and Security Agreement, dated as of September 30, 2016, by and among
Manitex International, Inc., Manitex Inc., Manitex Sabre, Inc., Badger Equipment Company, Crane and Machinery, Inc.,
Crane and Machinery Leasing, Inc., Liftking, Inc. and Manitex, LLC, The Private Bank and Trust Company and the
lenders party thereto (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on October 3, 2016).
Third Amendment to Loan and Security Agreement, dated as of November 8, 2016, by and among Manitex
International, Inc., Manitex Inc., Manitex Sabre, Inc., Badger Equipment Company, Crane and Machinery, Inc., Crane
and Machinery Leasing, Inc., and Manitex, LLC, The Private Bank and Trust Company and the lenders party thereto
(incorporated by reference to Exhibit 10.4 to the Current Report on Form 10-Q filed November 9, 2016).
63
Exhibit No.
Description
10.9
10.10
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
10.19
Fourth Amendment to Loan and Security Agreement, dated as of February 10, 2017, by and among Manitex
International, Inc., Manitex Inc., Manitex Sabre, Inc., Badger Equipment Company, Crane and Machinery, Inc., Crane
and Machinery Leasing, Inc., and Manitex, LLC, The Private Bank and Trust Company and the lenders party thereto
(incorporated by reference to Exhibit 10.28 to the Annual Report on Form 10-K filed on March 10, 2017).
Fifth Amendment to Loan and Security Agreement, dated as of April 26, 2017, by and among Manitex International,
Inc., Manitex Inc., Manitex Sabre, Inc., Badger Equipment Company, Crane and Machinery, Inc., Crane and Machinery
Leasing, Inc. and Manitex LLC, The Private Bank and Trust Company (incorporated by reference to Exhibit 10.2 to the
Quarterly Report on Form 10-Q filed on May 4, 2017.
Sixth Amendment to Loan and Security Agreement, dated as of March 9, 2018, by and among Manitex International,
Inc., Manitex Inc., Manitex Sabre, Inc., Badger Equipment Company, Crane and Machinery, Inc., Crane and Machinery
Leasing, Inc., and Manitex, LLC, CIBC Bank USA (f/k/a The PrivateBank and Trust Company) and the lenders party
thereto (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on March 14, 2018).
Seventh Amendment to Loan and Security Agreement, dated as of July 23, 2018, by and among Manitex International,
Inc., Manitex Inc., Manitex Sabre, Inc., Badger Equipment Company, Crane and Machinery, Inc., Crane and Machinery
Leasing, Inc., and Manitex, LLC, CIBC Bank USA (f/k/a The PrivateBank and Trust Company) and the lenders party
thereto (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on July 26, 2018)
Eighth Amendment to Loan and Security Agreement, dated as of September 30, 2019, by and among Manitex
International, Inc., Manitex Inc., Manitex Sabre, Inc., Badger Equipment Company, Crane and Machinery, Inc., Crane
and Machinery Leasing, Inc., Manitex, LLC, and CIBC Bank USA (f/k/a The PrivateBank and Trust Company) and the
lenders party thereto. (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on October 2,
2019)
Ninth Amendment to Loan and Security Agreement, dated as of December 22, 2020, by and among Manitex
International, Inc., Manitex Inc., Manitex Sabre, Inc., Badger Equipment Company, Crane and Machinery, Inc., Crane
and Machinery Leasing, Inc., Manitex, LLC, and CIBC Bank USA (f/k/a The PrivateBank and Trust Company) and the
lenders party thereto (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on December
23, 2020).
Tenth Amendment to Loan and Security Agreement, dated as of March 16, 2021, by and among Manitex International,
Inc., Manitex Inc., Manitex Sabre, Inc., Badger Equipment Company, Crane and Machinery, Inc., Crane and Machinery
Leasing, Inc., Manitex, LLC, and CIBC Bank USA (f/k/a The PrivateBank and Trust Company) and the lenders party
thereto (incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q filed on May 6, 2021).
Investment Agreement, dated July 21, 2014, between Manitex International, Inc., IPEF III Holdings n° 11 S.A and
Columna Holdings Limited (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on
July 25, 2014).
Debt Assignment Agreements, dated July 21, 2014, between Manitex International, Inc. and Banca Popolare del’Emilia
Romagna S.C. (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed on July 25, 2014).
Debt Assignment Agreements, dated July 21, 2014, between Manitex International, Inc. and Unicredit S.P.A.
(incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed on July 25, 2014).
* Option Agreement, dated July 21, 2014, by and between Manitex International, Inc. and Banca Popolare del’Emilia
Romagna S.C. (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed on July 25, 2014).
10.20
* Commitment Letter dated July 21, 2014 the Company and PM Group (incorporated by reference to Exhibit 10.5 to the
Current Report on Form 8-K filed on July 25, 2014).
10.21
* Manitex International, Inc. 2019 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the Current Report
on Form 8-K filed on June 13, 2019).
10.22
First Amendment to the Manitex International, Inc. 2019 Equity Incentive Plan (incorporated by reference to Exhibit
10.1 to the Current Report on Form 8-K filed on June 4, 2020).
64
Exhibit No.
10.23
10.24
Description
* Employment Agreement, effective as of September 1, 2019, between Manitex International, Inc. and Steve Filipov
(incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on August 22, 2019).
* Amendment to Employment Agreement, effective as of September 1, 2019, between Manitex International, Inc. and
David J. Langevin (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed on August 22,
2019).
10.25
* Employment Agreement, effective as of October 20, 2020, between Manitex International, Inc. and Joseph Doolan
(incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on October 5, 2020).
21.1
23.2
24.1
31.1
31.2
32.1
101
(1) Subsidiaries of Manitex International, Inc.
(1) Consent of Grant Thornton LLP
(1) Power of Attorney (included on signature page).
(1)
(2)
Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of
1934, as amended.
Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of
1934, as amended.
(1) Certification by Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. 1350.
(1)
The following financial information from the Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2021, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements
of Operations for the fiscal years ended December 31, 2021 and 2020, (ii) Consolidated Balance Sheets as of December
31, 2021 and 2020, (iii) Consolidated Statements of Shareholders’ Equity and Comprehensive Loss, (iv) Consolidated
Statements of Cash Flows and (v) Notes to Consolidated Financial Statements.
104
(1) Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
*
(1)
(2)
Denotes a management contract or compensatory plan or arrangement.
Filed herewith.
Furnished herewith.
(c)
Financial Statement Schedules
ITEM 16. FORM 10-K SUMMARY
None.
65
SCHEDULE II- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
Balance
Beginning
of Year
Charges
to
Earnings
Other
Deductions
(2)
Balance
End of
Year
Year ended December 31, 2021
Deducted from asset accounts:
Allowance for doubtful accounts $
Reserve for inventory
Valuation allowance for deferred
tax assets
Totals
Year ended December 31, 2020
Deducted from asset accounts:
Allowance for doubtful accounts $
Reserve for inventory
Valuation allowance for deferred
tax assets
Totals
$
2,580
8,451
156 $
3,813 (5)
(208) $
(174)
(96) $
(2,196)
2,432
9,894
9,694
$ 20,725 $
2,529
6,498 $
(167)
11,676
(549) $ (2,672) $ 24,002
(380)
2,842 (4)$
9,196 (4)
236 $
1,112
256 (1)$
223 (1)
(754) $
(2,080)
2,580 (4)
8,451 (4)
10,282
$ 22,320 $
1,182
2,530 $
(1,339)(3)
9,694
(860) $ (3,265) $ 20,725
(431)
(1)
(2)
(3)
(4)
Primarily represents the impact of foreign currency exchange, business divestitures and other amounts recorded to accumulated other
comprehensive income (loss).
Primarily represents the utilization of established reserves, net of recoveries.
During the fourth quarter of 2020, the Company made a downward adjustment to its U.S. net operating loss carryforward disclosed in the
deferred tax assets and liabilities table in the comparable reporting period by approximately $1.3 million with an offsetting adjustment to the
valuation allowance.
The Company previously presented only the change in the account balances for reserve for inventory and allowance for doubtful accounts.
During 2020, the Company changed to reporting the ending account balances. The adjustment to 2020 reserve for inventory and allowance for
doubtful accounts are for disclosures only, no financial statements were impacted.
(5)
Includes approximately $3.2 million of inventory write-downs related to Badger restructuring plan.
66
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
Dated: March 9, 2022
MANITEX INTERNATIONAL, INC.
By:
/s/ JOSEPH. DOOLAN
Joseph Doolan,
Chief Financial Officer
(On behalf of the Registrant and as
Principal Financial and Accounting Officer)
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoint David J.
Langevin his or her attorneys-in-fact, each with the power of substitution, for him in any and all capacities, to sign any amendments to
this Annual Report on Form 10-K, and to file the same, with Exhibits thereto and other documents in connection therewith with the
Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or substitute or
substitutes may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates indicated.
/s/ DAVID J. LANGEVIN
David J. Langevin,
Executive Chairman and Director
/s/ STEVE FILIPOV
Steve Filipov,
Chief Executive Officer and Director
(Principal Executive Officer)
/s/ JOSEPH DOOLAN
Joseph Doolan,
Chief Financial Officer
(Principal Financial and Accounting Officer)
/s/ RONALD M. CLARK
Ronald M. Clark,
Director
/s/ ROBERT S. GIGLIOTTI
Robert S. Gigliotti,
Director
/s/ FREDERICK B. KNOX
Frederick B. Knox,
Director
/s/ MARVIN B. ROSENBERG
Marvin B. Rosenberg,
Director
/s/ INGO SCHILLER
Ingo Schiller,
Director
/s/ STEPHEN J. TOBER
Stephen J. Tober,
Director
March 9, 2022
March 9, 2022
March 9, 2022
March 9, 2022
March 9, 2022
March 9, 2022
March 9, 2022
March 9, 2022
March 9, 2022
67
1. Quantum Value Management LLC—a Michigan limited liability company
Subsidiaries of Manitex International, Inc.
Exhibit 21.1
2. Manitex, LLC—a Delaware limited liability company
3. Manitex, Inc.—a Texas corporation
4.
Badger Equipment Company—a Minnesota corporation
5. Manitex Sabre, Inc.—a Michigan corporation
6.
7.
8.
Crane and Machinery, Inc.- an Illinois corporation
Crane and Machinery Leasing, Inc.-an Illinois corporation
PM Oil & Steel S.p.A. – an Italian corporation
9. Manitex Valla S.r.L. – an Italian corporation
10. PM Argentina Sistemas De Elevacion S.A.-an Argentinean corporation
11. PM Chile S.P.A.-a Chilean corporation
12. PM North America LLC-an Illinois corporation
13. PM Oil & Steel Mexico S.A. de C.V.-a Mexican corporation
14. Autogru PM RO S.r.l-a Romanian corporation
15. PM Oil & Steel France Sarl-a French corporation
16. PM Oil & Steel Iberica S.L. Unipersonal-a Spanish corporation
17. PM Oil & Steel Asia PTE. LTD.-a Singapore corporation
18. PM Oil & Steel UK LTD-a United Kingdom corporation
68
Consent of Independent Registered Public Accounting Firm
Exhibit 23.2
We have issued our reports dated March 9, 2022, with respect to the consolidated financial statements and internal
control over financial reporting included in the Annual Report of Manitex International, Inc. on Form 10-K for the
year ended December 31, 2021. We consent to the incorporation by reference of said report in the Registration
Statements of Manitex International, Inc. on Form S-3 (No. 333-233155) and on Form S-8 (No. 333-232357).
/s/ GRANT THORNTON LLP
Chicago, Illinois
March 9, 2022
Exhibit 31.1
CERTIFICATIONS
I, Steve Filipov, certify that:
1. I have reviewed this annual report on Form 10-K of Manitex International, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in
this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such
evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected,
or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the
equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information;
and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Date: March 9, 2022
By:
Name:
Title:
/ S / STEVE FILIPOV
Steve Filipov
Chief Executive Officer and Director
(Principal Executive Officer
of Manitex International, Inc.)
Exhibit 31.2
CERTIFICATIONS
I, Joseph Doolan, certify that:
1. I have reviewed this annual report on Form 10-K of Manitex International, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in
this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such
evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected,
or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the
equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information;
and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Date: March 9, 2022
By:
Name:
Title:
/ S / JOSEPH DOOLAN
Joseph Doolan
Chief Financial Officer
(Principal Financial and Accounting Officer
of Manitex International, Inc.)
CERTIFICATION PURSUANT TO 18 U.S.C. 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-
OXLEY ACT OF 2002
Solely for the purpose of complying with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, we,
the undersigned Chief Executive Officer and Chief Financial Officer of Manitex International, Inc. (the “Company”), hereby certify
that, to the best of our knowledge, the Annual Report of the Company on Form 10-K for the year ended December 31, 2021 (the
“Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that the information
contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Exhibit 32.1
By:
Name:
Title:
/ S / STEVE FILIPOV
Steve Filipov
Chief Executive Officer and Director
(Principal Executive Officer
of Manitex International, Inc.)
Dated: March 9, 2022
By:
Name:
Title:
/ S / JOSEPH DOOLAN
Joseph Doolan
Chief Financial Officer
(Principal Financial and Accounting Officer
of Manitex International, Inc.)
Dated: March 9, 2022