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MNTX Manitex International

Filed: 3 Aug 21, 5:01pm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  

For the quarterly period ended June 30, 2021    

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from               to               

Commission File Number: 001-32401

 

MANITEX INTERNATIONAL, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

Michigan

 

42-1628978

(State or Other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification Number)

 

 

 

9725 Industrial Drive, Bridgeview, Illinois

 

60455

(Address of Principal Executive Offices)

 

(Zip Code)

(708) 430-7500

(Registrant’s Telephone Number, Including Area Code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, no par value

MNTX

The NASDAQ Stock Market LLC

Preferred Share Purchase Rights

N/A

The NASDAQ Stock Market LLC

 

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 (§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, 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

 

  

 

Accelerated filer

 

 

 

 

 

 

 

 

 

Non-accelerated filer

 

  

 

Smaller reporting company

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

The number of shares of the registrant’s common stock, no par, outstanding at Aug 2, 2021 was 19,906,730.

 

 


 

 

MANITEX INTERNATIONAL, INC. AND SUBSIDIARIES

 

GENERAL

 

This Quarterly Report on Form 10-Q filed by Manitex International, Inc. speaks as of June 30, 2021 unless specifically noted otherwise.  Unless otherwise indicated, Manitex International, Inc., together with its consolidated subsidiaries, is hereinafter referred to as “Manitex,” the “Registrant,” “us,” “we,” “our” or the “Company.”

 

Forward-Looking Information

 

Certain information in this Quarterly Report includes forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995).  These statements relate to, among other things, the Company’s expectations, beliefs, intentions, future strategies, future events or future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause actual results, levels of activity, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. In addition, when included in this Quarterly Report or in documents incorporated herein by reference the words “may,” “expects,” “should,” “intends,” “anticipates,” “believes,” “plans,” “projects,” “estimates” and the negatives thereof and analogous or similar expressions are intended to identify forward-looking statements.  However, the absence of these words does not mean that the statement is not forward-looking.  We have based these forward-looking statements on current expectations and projections about future events.  These statements are not guarantees of future performance.  Such statements are inherently subject to a variety of risks and uncertainties that could cause actual results to differ materially from those reflected in such forward-looking statements.  Such risks and uncertainties, many of which are beyond our control, include, without limitation, those described below and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, in the section entitled “Item 1A. Risk Factors”:

 

 

a future substantial deterioration in economic conditions, especially in the United States and Europe;

 

the continuing impact of the COVID-19 pandemic and related economic conditions, including the Company’s assessment of the vulnerability of our customers and vendors in relation to the economic disruptions associated with the pandemic;

 

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;

 

the impact that the material weakness in our internal control over financial reporting;

 

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;

 

difficulties in implementing new systems, integrating acquired businesses, managing anticipated growth, and responding to technological change;

 

the availability of the third-party financing that some of our customers rely on to purchase our products;

 

our operations are in a highly competitive industry and the Company is particularly subject to the risks of such competition;

 

our dependency upon third-party suppliers makes us vulnerable to supply shortages;

 

price increases in materials could reduce our profitability;

 

the Company faces product liability claims and other liabilities due to the nature of its business;

 

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;

 

the volatility of our stock price;

 

our ability to access the capital markets to raise funds and provide liquidity;

1


 

 

 

the willingness of our shareholders and directors to approve mergers, acquisitions, and other business transactions;

 

compliance with changing laws and regulations;

 

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;

 

a substantial portion of our revenues are attributed to a limited number of customers which may decrease or cease purchasing any time;

 

a disruption or breach in our information technology systems;

 

our reliance on the management and leadership skills of our senior executives;

 

the cost of compliance with Section 404 of the Sarbanes-Oxley Act of 2002;

 

impairment in the carrying value of goodwill could negatively affect our operating results; and

 

other factors.

The risks described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 and in this Quarterly Report on Form 10-Q are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or operating results. If any of these risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary significantly from what we projected. We do not undertake, and expressly disclaim, any obligation to update this forward-looking information, except as required under applicable law.

2


 

MANITEX INTERNATIONAL, INC.

FORM 10-Q INDEX

TABLE OF CONTENTS

 

PART I:

 

FINANCIAL INFORMATION

 

4

 

 

 

 

 

ITEM 1:    Financial Statements (Unaudited)

 

4

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets as of June 30, 2021 and December 31, 2020

 

4

 

 

 

 

 

 

 

Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2021 and 2020

 

5

 

 

 

 

 

 

 

Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2021 and 2020

 

6

 

 

 

 

 

 

 

Condensed Consolidated Statement of Shareholders’ Equity for the Three and Six Months Ended June 30, 2021 and 2020

 

7

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2021 and 2020

 

8

 

 

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements

 

9

 

 

 

ITEM 2:    Management’s Discussion And Analysis Of Financial Condition And Results Of Operations

 

29

 

 

 

ITEM 3:    Quantitative And Qualitative Disclosures About Market Risk

 

34

 

 

 

ITEM 4:     Controls And Procedures

 

34

 

 

 

 

 

PART II:

 

OTHER INFORMATION

 

36

 

 

 

ITEM 1:    Legal Proceedings

 

36

 

 

 

ITEM 1A: Risk Factors

 

36

 

 

 

ITEM 2:    Unregistered Sales Of Equity Securities And Use Of Proceeds

 

36

 

 

 

ITEM 3:    Defaults Upon Senior Securities

 

36

 

 

 

ITEM 4:    Mine Safety Disclosures

 

36

 

 

 

ITEM 5:    Other Information

 

36

 

 

 

ITEM 6:    Exhibits

 

36

 

3


 

 

PART 1—FINANCIAL INFORMATION

Item 1—Financial Statements

MANITEX INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(Unaudited)

 

 

 

June 30,

2021

 

 

December 31,

2020

 

ASSETS

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash

 

$

17,170

 

 

$

17,161

 

Cash – restricted

 

 

236

 

 

 

240

 

Trade receivables (net)

 

 

36,658

 

 

 

30,418

 

Other receivables

 

 

89

 

 

 

179

 

Inventory (net)

 

 

60,498

 

 

 

56,055

 

Prepaid expense and other current assets

 

 

3,198

 

 

 

2,218

 

Total current assets

 

 

117,849

 

 

 

106,271

 

Total fixed assets, net of accumulated depreciation of $18,219 and $17,444

   at June 30, 2021 and December 31, 2020, respectively

 

 

17,739

 

 

 

18,723

 

Operating lease assets

 

 

3,648

 

 

 

4,068

 

Intangible assets (net)

 

 

14,160

 

 

 

15,671

 

Goodwill

 

 

26,889

 

 

 

27,472

 

Other long-term assets

 

 

1,143

 

 

 

1,143

 

Deferred tax assets

 

 

247

 

 

 

247

 

Total assets

 

$

181,675

 

 

$

173,595

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

43,473

 

 

$

32,429

 

Accrued expenses

 

 

9,593

 

 

 

7,909

 

Related party payables, net

 

 

36

 

 

 

52

 

Notes payable

 

 

12,727

 

 

 

16,510

 

Current portion of finance lease obligations

 

 

362

 

 

 

344

 

Current portion of operating lease obligations

 

 

1,006

 

 

 

1,167

 

Customer deposits

 

 

3,032

 

 

 

2,363

 

Deferred income liability

 

 

-

 

 

 

3,747

 

Total current liabilities

 

 

70,229

 

 

 

64,521

 

Long-term liabilities

 

 

 

 

 

 

 

 

Revolving term credit facilities, net

 

 

12,682

 

 

 

12,606

 

Notes payable

 

 

13,037

 

 

 

13,625

 

Finance lease obligations (net of current portion)

 

 

4,032

 

 

 

4,221

 

Non-current operating lease obligations

 

 

2,642

 

 

 

2,901

 

Deferred gain on sale of property

 

 

547

 

 

 

587

 

Deferred tax liability

 

 

1,285

 

 

 

1,333

 

Other long-term liabilities

 

 

4,192

 

 

 

4,892

 

Total long-term liabilities

 

 

38,417

 

 

 

40,165

 

Total liabilities

 

 

108,646

 

 

 

104,686

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

Preferred Stock—Authorized 150,000 shares, 0 shares issued or outstanding at

   June 30, 2021 and December 31, 2020

 

 

 

 

 

 

Common Stock—no par value 25,000,000 shares authorized, 19,906,730 and 19,821,090

   shares issued and outstanding at June 30, 2021, and December 31, 2020, respectively

 

 

132,035

 

 

 

131,455

 

Paid in capital

 

 

2,948

 

 

 

3,025

 

Retained deficit

 

 

(59,270

)

 

 

(63,863

)

Accumulated other comprehensive loss

 

 

(2,684

)

 

 

(1,708

)

Total equity

 

 

73,029

 

 

 

68,909

 

Total liabilities and equity

 

$

181,675

 

 

$

173,595

 

 

The accompanying notes are an integral part of these financial statements

4


 

MANITEX INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except for share and per share amounts)

(Unaudited)

 

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net revenues

 

$

60,045

 

 

$

37,115

 

 

$

107,213

 

 

$

85,848

 

Cost of sales

 

 

48,605

 

 

 

31,584

 

 

 

86,968

 

 

 

70,070

 

Gross profit

 

 

11,440

 

 

 

5,531

 

 

 

20,245

 

 

 

15,778

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development costs

 

 

800

 

 

 

771

 

 

 

1,585

 

 

 

1,458

 

Selling, general and administrative expenses

 

 

8,069

 

 

 

6,725

 

 

 

15,813

 

 

 

14,764

 

Impairment of intangibles

 

 

 

 

 

 

 

 

 

 

 

6,722

 

Total operating expenses

 

 

8,869

 

 

 

7,496

 

 

 

17,398

 

 

 

22,944

 

Operating income (loss)

 

 

2,571

 

 

 

(1,965

)

 

 

2,847

 

 

 

(7,166

)

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(558

)

 

 

(924

)

 

 

(1,083

)

 

 

(2,008

)

Interest income

 

 

2

 

 

 

14

 

 

 

6

 

 

 

74

 

Gain on Paycheck Protection Program loan forgiveness

 

 

3,747

 

 

 

 

 

 

3,747

 

 

 

 

Foreign currency transaction loss

 

 

(85

)

 

 

(24

)

 

 

(300

)

 

 

(442

)

Other income (expense)

 

 

5

 

 

 

(159

)

 

 

(15

)

 

 

(156

)

Total other income (expense)

 

 

3,111

 

 

 

(1,093

)

 

 

2,355

 

 

 

(2,532

)

Income (loss) before income taxes from continuing operations

 

 

5,682

 

 

 

(3,058

)

 

 

5,202

 

 

 

(9,698

)

Income tax expense (benefit) from continuing operations

 

 

317

 

 

 

(657

)

 

 

609

 

 

 

(253

)

Net income (loss) from continuing operations

 

 

5,365

 

 

 

(2,401

)

 

 

4,593

 

 

 

(9,445

)

Discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations of discontinued operations

 

 

 

 

 

(323

)

 

 

 

 

 

(711

)

Income tax (benefit)

 

 

 

 

 

(47

)

 

 

 

 

 

(3

)

Loss from discontinued operations

 

 

 

 

 

(276

)

 

 

 

 

 

(708

)

Net income (loss)

 

 

5,365

 

 

 

(2,677

)

 

 

4,593

 

 

 

(10,153

)

Income (loss) per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

$

0.27

 

 

$

(0.12

)

 

$

0.23

 

 

$

(0.48

)

Loss from discontinued operations

 

 

 

 

$

(0.01

)

 

 

 

 

$

(0.04

)

Net income (loss)

 

$

0.27

 

 

$

(0.14

)

 

$

0.23

 

 

$

(0.51

)

Diluted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

$

0.27

 

 

$

(0.12

)

 

$

0.23

 

 

$

(0.48

)

Loss from discontinued operations

 

 

 

 

$

(0.01

)

 

 

 

 

$

(0.04

)

Net income (loss)

 

$

0.27

 

 

$

(0.14

)

 

$

0.23

 

 

$

(0.51

)

Weighted average common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

19,902,617

 

 

 

19,762,726

 

 

 

19,873,840

 

 

 

19,748,249

 

Diluted

 

 

19,988,827

 

 

 

19,762,726

 

 

 

19,947,565

 

 

 

19,748,249

 

 

The accompanying notes are an integral part of these financial statements

5


 

MANITEX INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)

 

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net income (loss)

 

$

5,365

 

 

$

(2,677

)

 

$

4,593

 

 

$

(10,153

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

222

 

 

 

319

 

 

 

(976

)

 

 

(189

)

Total other comprehensive income (loss)

 

 

222

 

 

 

319

 

 

 

(976

)

 

 

(189

)

Total comprehensive income (loss)

 

$

5,587

 

 

$

(2,358

)

 

$

3,617

 

 

$

(10,342

)

 

The accompanying notes are an integral part of these financial statements

6


 

MANITEX INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In thousands, except share amounts)

(Unaudited)

 

 

 

 

 

Outstanding shares

 

 

Common Stock

 

 

APIC

 

 

Retained Deficit

 

 

AOCI (Loss)

 

 

Total

 

Balance at December 31, 2020

 

 

19,821,090

 

 

$

131,455

 

 

$

3,025

 

 

$

(63,863

)

 

$

(1,708

)

 

$

68,909

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(772

)

 

 

 

 

 

(772

)

Loss on foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,198

)

 

 

(1,198

)

Employee incentive plan grant

 

 

85,883

 

 

 

584

 

 

 

(584

)

 

 

 

 

 

 

 

 

 

Repurchase to satisfy withholding and cancelled

 

 

(6,183

)

 

 

(48

)

 

 

 

 

 

 

 

 

 

 

 

(48

)

Share-based compensation

 

 

 

 

 

 

 

 

299

 

 

 

 

 

 

 

 

 

299

 

Balance at March 31, 2021

 

 

19,900,790

 

 

$

131,991

 

 

$

2,740

 

 

$

(64,635

)

 

$

(2,906

)

 

$

67,190

 

Net income

 

 

 

 

 

 

 

 

 

 

 

5,365

 

 

 

 

 

 

5,365

 

Loss on foreign currency translation

 

 

 

 

 

 

 

 

(26

)

 

 

 

 

 

222

 

 

 

196

 

Employee incentive plan grant

 

 

5,940

 

 

 

44

 

 

 

(44

)

 

 

 

 

 

 

 

 

 

Share-based compensation

 

 

 

 

 

 

 

 

278

 

 

 

 

 

 

 

 

 

278

 

Balance at June 30, 2021

 

 

19,906,730

 

 

$

132,035

 

 

$

2,948

 

 

$

(59,270

)

 

$

(2,684

)

 

$

73,029

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding shares

 

 

Common Stock

 

 

APIC

 

 

Retained Deficit

 

 

AOCI (Loss)

 

 

Total

 

Balance at December 31, 2019

 

 

19,713,185

 

 

$

130,710

 

 

$

2,793

 

 

$

(50,253

)

 

$

(3,700

)

 

$

79,550

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(7,476

)

 

 

 

 

 

(7,476

)

Loss on foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(508

)

 

 

(508

)

Employee incentive plan grant

 

 

49,884

 

 

 

352

 

 

 

(352

)

 

 

 

 

 

 

 

 

 

Repurchase to satisfy withholding and cancelled

 

 

(2,949

)

 

 

(13

)

 

 

 

 

 

 

 

 

 

 

 

(13

)

Share-based compensation

 

 

 

 

 

 

 

 

222

 

 

 

 

 

 

 

 

 

222

 

Balance at March 31, 2020

 

 

19,760,120

 

 

$

131,049

 

 

$

2,663

 

 

$

(57,729

)

 

$

(4,208

)

 

$

71,775

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(2,677

)

 

 

 

 

 

(2,677

)

Gain on foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

319

 

 

 

319

 

Employee incentive plan grant

 

 

7,360

 

 

 

86

 

 

 

(86

)

 

 

 

 

 

 

 

 

 

Share-based compensation

 

 

 

 

 

 

 

 

203

 

 

 

 

 

 

 

 

 

203

 

Balance at June 30, 2020

 

 

19,767,480

 

 

$

131,135

 

 

$

2,780

 

 

$

(60,406

)

 

$

(3,889

)

 

$

69,620

 

 

The accompanying notes are an integral part of these financial statements

7


 

MANITEX INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Six months ended June 30,

 

 

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income (loss)

 

$

4,593

 

 

$

(10,153

)

Adjustments to reconcile net income (loss) to cash used for operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

2,253

 

 

 

2,136

 

Gain on Paycheck Protection Program loan forgiveness

 

 

(3,747

)

 

 

 

Changes in allowances for doubtful accounts

 

 

128

 

 

 

7

 

Changes in inventory reserves

 

 

(1,018

)

 

 

(543

)

Deferred income taxes

 

 

(13

)

 

 

(69

)

Amortization of deferred debt issuance costs

 

 

77

 

 

 

125

 

Amortization of debt discount

 

 

76

 

 

 

291

 

Gain on forward currency contract

 

 

(333

)

 

 

 

Write down of intangibles

 

 

 

 

 

137

 

Write down of goodwill

 

 

 

 

 

6,585

 

Share-based compensation

 

 

577

 

 

 

424

 

Adjustment to deferred gain on sales and lease back

 

 

(40

)

 

 

 

Reserves for uncertain tax provisions

 

 

 

 

 

(131

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

(Increase) decrease in accounts receivable

 

 

(6,368

)

 

 

6,385

 

Decrease (increase) in other receivable

 

 

90

 

 

 

(642

)

Increase in inventory

 

 

(4,302

)

 

 

(597

)

Increase in prepaid expenses

 

 

(986

)

 

 

(234

)

Increase in other assets

 

 

(36

)

 

 

 

Increase (decrease) in accounts payables and related party payables

 

 

11,970

 

 

 

(28

)

(Decrease) increase in deferred income

 

 

-

 

 

 

3,747

 

Increase in accrued expenses

 

 

2,140

 

 

 

453

 

Increase in other current liabilities

 

 

737

 

 

 

46

 

(Decrease) in other long-term liabilities

 

 

(592

)

 

 

(150

)

Net cash provided by operating activities

 

 

5,206

 

 

 

7,789

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(561

)

 

 

(541

)

Net cash used in investing activities

 

 

(561

)

 

 

(541

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Borrowings on revolving term credit facility

 

 

 

 

 

8,500

 

Payments on convertible debt

 

 

 

 

 

(7,000

)

Net borrowings on working capital facilities

 

 

(3,664

)

 

 

(514

)

New borrowings—other

 

 

748

 

 

 

 

Note payments

 

 

(662

)

 

 

(190

)

Shares repurchased for income tax withholding on share-based compensation

 

 

(48

)

 

 

(13

)

Payments on capital lease obligations

 

 

(171

)

 

 

(230

)

Net cash (used in) provided by financing activities

 

 

(3,797

)

 

 

553

 

Net increase in cash and cash equivalents

 

 

848

 

 

 

7,801

 

Effect of exchange rate changes on cash

 

 

(843

)

 

 

(25

)

Cash and cash equivalents at the beginning of the year

 

 

17,401

 

 

 

23,577

 

Cash and cash equivalents at end of period

 

$

17,406

 

 

$

31,353

 

See Note 1 for supplemental cash flow disclosures

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements

 

8


 

 

MANITEX INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

 

1. Nature of Operations and Basis of Presentation

The unaudited Condensed Consolidated Balance Sheets at  June 30, 2021 and December 31, 2020 and the related Condensed Consolidated Statements of Operations, Condensed Consolidated Statement of Comprehensive Income (Loss), Condensed Consolidated Statements of Shareholders’ Equity, and Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2021 and 2020 have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission, and reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the financial condition, results of operations and cash flows of the Company for the interim periods.  Interim results may not be indicative of results to be realized for the entire year.  The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto, together with management’s discussion and analysis of financial condition and results of operations, contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020.  The Condensed Consolidated Balance Sheet as of December 31, 2020 was derived from our audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States (“GAAP”).  

 

The Company is a leading provider of engineered lifting solutions. The Company reports in a single business segment and has 4 operating segments, under which there are 5 reporting units. The Company has integrated Manitex and Badger reporting units into 1 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 a combined Manitex level. The Company designs, manufactures and distributes a diverse group of products that serve different functions and are used in a variety of industries.    

Manitex, Inc. (“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 Equipment Company (“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”), formerly known as PM Group S.p.A., 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 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.  Although C&M is a distributor of Terex Corporation’s (“Terex”) cranes, C&M’s primary business is the distribution of products manufactured by the Company.

 

COVID-19 Pandemic

 

The Company is continuing to closely monitor the impact of the COVID-19 pandemic and is continually assessing its potential effects on our business and our financial performance as well as the businesses of our customers and vendors, including the impact that we may experience if and when the pandemic subsides. The Company cannot predict the duration or severity of the COVID-19 pandemic, and we cannot reasonably estimate the financial impact that the COVID-19 outbreak will have on our results and significant estimates going forward.

 

9


 

 

Supplemental Cash Flow Information

 

Transactions for the periods ended June 30, 2021 and 2020 are as follows:

 

 

 

Six months ended June 30,

 

 

 

2021

 

 

2020

 

Interest received in cash

 

$

6

 

 

$

74

 

Interest paid in cash

 

 

975

 

 

 

1,933

 

Income tax payments in cash

 

 

856

 

 

 

274

 

 

 

        

Discontinued Operations

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. is 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 a maximum royalty and earnout payments of approximately $2.9 million for years 2021 thru 2023 if certain revenue criteria are met. 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 17 for additional discussion related to the sale of Sabre’s business and assets.

 

2. Significant Accounting Policies and New Accounting Pronouncements  

The summary of the Company’s significant accounting policies 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 generally accepted accounting principles and have been consistently applied in the preparation of the financial statements.

 

Cash and Cash Equivalents

 

For purposes of the statement of cash flows, the Company considers all short-term securities purchased with maturity dates of three months or less to be cash equivalents. The cash in the Company's U.S. banks (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 $236 and $240 at June 30, 2021 and December 31, 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.

10


 

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.

Accounts Receivable and 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 U.S. 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 $2.6 million at June 30, 2021 and December 31, 2020. 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 the date of acquisition for property and equipment acquired in connection with the acquisition of a company. 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 three and six months ended June 30, 2021 were $545 and $1,096, respectively. Depreciation expense for the three and six months ended June 30, 2020 were $515 and $1,013.

 

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. The Company recognized $0.1 million in impairment related to tradenames during the six months ended June 30, 2020. NaN impairment expense was recognized for the three months ended June 30, 2020. NaN impairment expense was recognized for the three and six months ended June 30, 2021.

Goodwill

The Company’s methodology for allocating the purchase price of acquisitions is based on established valuation techniques that reflect the consideration of a number of factors, including valuations performed by third-party appraisers when appropriate. Goodwill is measured as the excess of the cost of an acquired entity over the fair value assigned to identifiable assets acquired and liabilities assumed.

The Company annually tests goodwill for impairment on the first day of its fiscal fourth quarter, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. The Company also performs an interim review for indicators of impairment each quarter to assess whether an interim impairment review is required for any reporting unit. As part of its interim reviews, management analyzes potential changes in the value of individual reporting units based on each reporting unit’s operating results for the period compared to expected results as of the prior year’s annual impairment test. In addition, management considers how other key assumptions, including discount rates and expected long-term growth rates, used in the last annual impairment test, could be impacted by changes in market conditions and economic events.

The Company recognized $6.6 million in impairment related to goodwill during the six months ended June 30, 2020. NaN impairment expense was recognized for the three months ended June 30, 2020. NaN impairment expense was recognized for the three and six months ended June 30, 2021.

 

   

 

 

 

11


 

 

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.

Accrued Warranties

Warranty costs are accrued at the time revenue is recognized. The Company’s products are typically sold with a warranty covering defects that arise during a fixed period of time. The specific warranty offered is a function of customer expectations and competitive forces.

A liability for estimated warranty claims is accrued at the time of sale. 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 June 30, 2021 and December 31, 2020, accrued warranties were $1,578 and $1,292, respectively.

 

Accounting for Paycheck Protection Program Loan

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. The Paycheck Protection Program, 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 Paycheck Protection Program loan was evidenced by a promissory note between the Company and CIBC bank. 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. NaN payments of principle or interest were due during the six-month period beginning on the date of the promissory note. Beginning on the seventh month following the date of the promissory note, we were required to make 18 monthly payments of principal and interest.

Under the terms of the CARES Act, The Paycheck Protection Program recipients can apply for and be granted forgiveness for all or portion of loan granted under the Paycheck Protection Program, 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 Paycheck Protection Program 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 on the Paycheck Protection Program loan during November 2020. During June 2021, the Company received notice from the CIBC bank that CIBC had received confirmation from the SBA that the application for forgiveness of the Paycheck Protection Program loan had been approved. The loan forgiveness request of $3.7 million was applied to the Company’s entire outstanding Paycheck Protection Program loan balance from CIBC bank.

The Company recorded the forgiveness as Gain on Paycheck Protection Program loan forgiveness in Other Income (Expense) on the Condensed 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.

12


 

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 Condensed 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 three and six months ended June 30, 2021, research and development expenses were $800 and $1585, respectively. For the three and six months ended June 30, 2020, research and development expenses were $771 and $1,458.

 

 

Advertising

Advertising costs are expensed as incurred and were $146 and $274 for the three and six months ended June 30, 2021, respectively. Advertising costs were $69 and $234 for the three and six months ended June 30, 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 (SG&A or COGS) in the Condensed Consolidated Statements of Operations and the accrual is recorded in other long-term liabilities in the Condensed 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.

 

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 12, 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.

13


 

 

Comprehensive Income

 

Comprehensive income includes, in addition to net earnings, other items that are reported as direct adjustments to shareholders’ equity. Currently, the comprehensive income adjustment required for the Company is a foreign currency translation adjustment, the result of consolidating its foreign subsidiary.

 

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.

 

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 direct deduction from the carrying amount of that debt liability, consistent with debt discount.  Deferred financing costs associated with revolving lines of credit are included with Revolving term credit facilities on the Company’s Condensed Consolidated Balance Sheets.

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 (“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, warrants, restricted stock, convertible debt, 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 Condensed Consolidated Statements of Operation over the service period (generally the vesting period).

 

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. In the second quarter of 2018, published inflation indices indicated that the three-year cumulative inflation in Argentina exceeded 100 percent, and as of July 1, 2018, we elected to adopt highly inflationary accounting for our subsidiary in Argentina (“PM Argentina”). 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 June 30, 2021, PM Argentina had a small net peso monetary position. Net sales of PM Argentina were less than 5 percent of our consolidated net sales for the years ended June 30, 2021 and December 31, 2020, respectively.

 

14


 

 

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. We are currently evaluating the potential effects of the adoption of this guidance on our Consolidated Financial Statements.

 

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.

 

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.

 

3. Revenue Recognition  

The following table disaggregates our revenue for the three and six months ended June 30, 2021 and 2020:

 

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Equipment sales

 

$

51,600

 

 

$

30,890

 

 

$

90,432

 

 

$

71,765

 

Part sales

 

 

7,265

 

 

 

5,668

 

 

 

14,468

 

 

 

12,836

 

Installation services

 

 

1,180

 

 

 

557

 

 

 

2,313

 

 

 

1,247

 

Total Revenue

 

$

60,045

 

 

$

37,115

 

 

$

107,213

 

 

$

85,848

 

 

The Company attributes revenue to different geographic areas based on where items are shipped to or services are performed. The following table provides detail of revenues by geographic area for the three and six months ended June 30, 2021 and 2020:

 

 

 

Three Months Ended

June 30,

 

 

 

Six Months Ended

June 30,

 

 

 

2021

 

 

2020

 

 

 

2021

 

 

2020

 

United States

 

 

24,384

 

 

$

16,518

 

 

 

$

41,822

 

 

$

40,991

 

Italy

 

 

9,839

 

 

 

4,448

 

 

 

 

16,552

 

 

 

9,781

 

Canada

 

 

5,450

 

 

 

1,333

 

 

 

 

8,325

 

 

 

3,813

 

Chile

 

 

3,118

 

 

 

1,262

 

 

 

 

6,338

 

 

 

3,347

 

France

 

 

2,688

 

 

 

2,310

 

 

 

 

6,454

 

 

 

5,093

 

Other

 

 

14,566

 

 

 

11,245

 

 

 

 

27,722

 

 

 

22,824

 

 

 

$

60,045

 

 

$

37,115

 

 

 

$

107,213

 

 

$

85,848

 

 

 

15


 

 

Total Company Revenues by Sources

The sources of the Company’s revenues are summarized below for the three and six months ended June 30, 2021 and 2020:

 

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Boom trucks, knuckle boom & truck cranes

 

$

44,653

 

 

$

27,156

 

 

$

77,879

 

 

$

61,943

 

Part sales

 

 

7,265

 

 

 

5,668

 

 

 

14,468

 

 

 

12,836

 

Rough terrain cranes

 

 

1,759

 

 

 

2,028

 

 

 

3,797

 

 

 

5,162

 

Other equipment

 

 

5,188

 

 

 

1,706

 

 

 

8,756

 

 

 

4,660

 

Installation services

 

 

1,180

 

 

 

557

 

 

 

2,313

 

 

 

1,247

 

Total Revenue

 

$

60,045

 

 

$

37,115

 

 

$

107,213

 

 

$

85,848

 

 

Customer Deposits

 

At times, the Company may require an upfront deposit related to its contracts.  In instances where an upfront deposit has been received by the Company and the revenue recognition criteria have not yet been met, the Company records a contract liability in the form of a customer deposit, which is classified as a short-term liability on the balance sheet.  That customer deposit 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 six months ended June 30 as follows:

 

 

 

June 30,

2021

 

 

June 30,

2020

 

Customer deposits

 

$

2,363

 

 

$

1,493

 

Additional customer deposits received where revenue has not yet been recognized

 

 

3,375

 

 

 

2,456

 

Revenue recognized from customer deposits

 

 

(2,613

)

 

 

(2,540

)

Effect of change in exchange rates

 

 

(93

)

 

 

(35

)

 

 

$

3,032

 

 

$

1,374

 

 

4. Fair Value Measurements

The following tables set forth the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of June 30, 2021 and December 31, 2020 by level within the fair value hierarchy. As required by ASC 820-10, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

The following is summary of items that the Company measures at fair value on a recurring basis:

 

 

 

Fair Value at June 30, 2021

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Forward currency exchange contracts

 

$

 

 

$

66

 

 

$

 

 

$

66

 

Total current assets at fair value

 

$

 

 

$

66

 

 

$

 

 

$

66

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Valla contingent consideration

 

$

 

 

$

 

 

$

217

 

 

$

217

 

Total recurring liabilities at fair value

 

$

 

 

$

 

 

$

217

 

 

$

217

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value at December 31, 2020

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Valla contingent consideration

 

$

 

 

$

 

 

$

224

 

 

$

224

 

Forward currency exchange contracts

 

 

 

 

 

267

 

 

 

 

 

 

267

 

Total liabilities at fair value

 

$

 

 

$

267

 

 

$

224

 

 

$

491

 

 

16


 

 

 

 

Fair Value

Measurements Using

Significant

Unobservable Inputs

(Level 3)

 

 

Valla

Contingent

Consideration

 

 

Liabilities:

 

 

 

 

 

Balance at January 1, 2021

 

$

224

 

 

Effect of change in exchange rates

 

 

(7

)

 

Balance at June 30, 2021

 

$

217

 

 

 

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.

 

5. 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 Condensed 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 June 30, 2021, the Company had entered into a forward currency exchange contract that matures on Aug 5, 2021.  Under the contract the Company is obligated to sell 2,290,000 Chilean pesos for 2,683 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 Condensed Consolidated Balance Sheet as of June 30, 2021:

17


 

 

 Total derivatives NOT designated as a hedge instrument

 

 

 

 

 

Fair Value

 

 

 

Balance Sheet Location

 

June 30,

2021

 

 

December 31,

2020

 

Asset Derivatives

 

 

 

 

 

 

 

 

 

 

Foreign currency exchange contract

 

Prepaid expense and other current assets

 

$

66

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities Derivatives

 

 

 

 

 

 

 

 

 

 

Foreign currency exchange contract

 

Accrued expenses

 

$

 

 

$

267

 

 

The following tables provide the effect of derivative instruments on the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2021 and 2020:

 

 

 

 

 

Gain (loss)

 

 

Gain (loss)

 

 

 

Location of gain or (loss)

recognized in the

Statement of Operations

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

 

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Derivatives Not Designated

   as Hedge Instruments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Forward currency contracts

 

Foreign currency

transaction gains

 

$

197

 

 

$

(152

)

 

$

333

 

 

$

236

 

 

 

 

 

$

197

 

 

$

(152

)

 

$

333

 

 

$

236

 

 

 

During the three and six months ended June 30, 2021 and 2020, there were 0 forward currency contracts designated as cash flow hedges.  As such, all gains and loss related to forward currency contracts during the three and six months ended June 30, 2021 and 2020 were recorded in current earnings and did not impact other comprehensive income.

 

6. Inventory, net

The components of inventory are as follows:

 

 

 

 

June 30,

2021

 

 

December 31,

2020

 

Raw materials and purchased parts, net

 

$

39,022

 

 

$

33,172

 

Work in process, net

 

 

3,622

 

 

 

3,845

 

Finished goods, net

 

 

17,854

 

 

 

19,038

 

Inventory, net

 

$

60,498

 

 

$

56,055

 

 

The Company has established reserves for obsolete and excess inventory of $7,367 and $8,451 as of June 30, 2021 and December 31, 2020, respectively.

 

7. Goodwill and Intangible Assets

 

Intangible assets and accumulated amortization by category as of June 30, 2021 is as follows:

 

 

 

Weighted Average

 

Gross

 

 

 

 

 

 

Net

 

 

 

Amortization

 

Carrying

 

 

Accumulated

 

 

Carrying

 

 

 

Period (in years)

 

Amount

 

 

Amortization

 

 

Amount

 

Patented and unpatented technology

 

5

 

$

18,385

 

 

$

(14,845

)

 

$

3,540

 

Customer relationships

 

5

 

 

19,190

 

 

 

(13,204

)

 

 

5,986

 

Trade names and trademarks

 

11

 

 

4,829

 

 

 

(2,775

)

 

 

2,054

 

Indefinite lived trade names

 

 

 

 

2,580

 

 

 

 

 

 

 

2,580

 

Total intangible assets, net

 

 

 

 

 

 

 

 

 

 

 

$

14,160

 

 

 

 

18


 

 

Intangible assets and accumulated amortization by category as of December 31, 2020 is as follows:

 

 

 

 

Weighted Average

 

Gross

 

 

 

 

 

 

Net

 

 

 

Amortization

 

Carrying

 

 

Accumulated

 

 

Carrying

 

 

 

Period (in years)

 

Amount

 

 

Amortization

 

 

Amount

 

Patented and unpatented technology

 

6

 

$

18,643

 

 

$

(14,587

)

 

$

4,056

 

Customer relationships

 

5

 

 

19,552

 

 

 

(12,753

)

 

 

6,799

 

Trade names and trademarks

 

11

 

 

4,829

 

 

 

(2,677

)

 

 

2,152

 

Indefinite lived trade names

 

 

 

 

2,664

 

 

 

 

 

 

 

2,664

 

Total intangible assets, net

 

 

 

 

 

 

 

 

 

 

 

$

15,671

 

 

 

 

Amortization expense for intangible assets was $578 and $540, and $1,157 and $1,080 for the three and six months ended June 30, 2021 and 2020, respectively.

 

 

 

Estimated amortization expense for the next five years for the period ending June 30 and subsequent is as follows:

 

 

 

Amount

 

2022

 

$

2,233

 

2023

 

 

2,233

 

2024

 

 

2,206

 

2025

 

 

2,163

 

2026

 

 

1,507

 

And subsequent

 

 

1,238

 

Total intangibles currently to be amortized

 

 

11,580

 

Intangibles with indefinite lives not amortized

 

 

2,580

 

Total intangible assets

 

$

14,160

 

 

 

 

Changes in goodwill for the six months ended June 30, 2021 are as follows:

 

 

 

Total

 

Balance January 1, 2021

 

$

27,472

 

Effect of change in exchange rates

 

 

(583

)

Balance June 30, 2021

 

$

26,889

 

 

                                                                        

The Company performed an impairment assessment as of December 31, 2020. No additional triggers for an interim impairment test have been identified. While there was no additional impairment of goodwill recognized as a result of the 2020 annual impairment test, a reasonably possible unexpected deterioration in financial performance or adverse change in earnings may result in an impairment.

 

8. Accrued Expenses

 

 

 

June 30,

2021

 

 

December 31,

2020

 

Accrued payroll

 

 

2,040

 

 

 

1,306

 

Accrued vacation

 

 

1,815

 

 

 

1,398

 

Accrued warranty

 

 

1,578

 

 

 

1,292

 

Accrued income tax and other taxes

 

 

1,389

 

 

 

1,127

 

Accrued employee benefits

 

 

595

 

 

 

910

 

Accrued interest

 

 

352

 

 

 

244

 

Accrued expenses—other

 

 

1,824

 

 

 

1,632

 

Total accrued expenses

 

$

9,593

 

 

$

7,909

 

 

 

19


 

 

9. Accrued Warranty

 

A liability for estimated warranty claims is accrued 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 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:

 

 

 

 

For the six months ended

 

 

 

June 30,

 

 

 

2021

 

 

2020

 

Balance January 1,

 

$

1,292

 

 

$

1,604

 

Provision for warranties issued during the year

 

 

1,867

 

 

 

978

 

Warranty services provided

 

 

(1,566

)

 

 

(1,145

)

Changes in estimate

 

 

-

 

 

 

(6

)

Foreign currency translation

 

 

(15

)

 

 

(8

)

Balance June 30,

 

$

1,578

 

 

$

1,423

 

 

 

10. Credit Facilities and Debt

 

U.S.  Credit Facilities

At June 30, 2021, the Company and its U.S. subsidiaries have a Loan and Security Agreement, as amended (the “Loan Agreement”) with CIBC Bank USA (“CIBC”), formerly known as “The Private Bank and Trust Company”.  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 June 30, 2021 and December 31, 2020, the maximum the Company could borrow based on available collateral was $25.4 million and $21.9 million, respectively. At June 30, 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 $12.6 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 $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.

 

 

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 4 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 June 30, 2021. 

 

The Loan Agreement has a Letter of Credit facility of $3 million, which is fully reserved against availability. As of June 30, 2021, the outstanding Letters of Credit were $0.2 million which is offset against availability under the revolving facility.

 

Notes Payable—Bank

At June 30, 2021, the Company has a $411 term note payable to a bank. The note dated January 6, 2021 had an original principal amount of $748 and an annual interest rate of 3.49%. Proceeds from the note were used to pay annual premiums for certain insurance policies carried by the Company. The holder of the note has a security interest in the insurance policies it financed and has the right upon default to cancel these policies and receive any unearned premiums. There are 6 remaining monthly payments of $69 on this note.

20


 

At June 30, 2021, the Company has a $80 term note payable to a bank. The note dated November 13, 2020 had an original principal amount of $289 and an annual interest rate of 5.81%. Proceeds from the note were used to pay annual premiums for certain insurance policies carried by the Company. The holder of the note has a security interest in the insurance policies it financed and has the right upon default to cancel these policies and receive any unearned premiums. There are 3 remaining monthly payments of $27 on this note.

Note Payable—Winona Facility Purchase

At June 30, 2021 and December 31, 2020, Badger has a balance on a note payable to Avis Industrial Corporation of $126 and $180, respectively.  Badger is required to make 60 monthly payments of $10 that began on August 1, 2017.  The note dated July 26, 2017, had an original principal amount of $500 and annual interest rate of 8.00%. The note matures on July 1, 2022 and is guaranteed by the Company.

PM Group Short-Term Working Capital Borrowings

At June 30, 2021 and December 31, 2020, respectively, PM Group had established demand credit and overdraft facilities with 5 banks in Italy, 1 bank in Spain and 11 banks in South America. Under the facilities, as of June 30, 2021 and December 31, 2020 respectively, PM Group can borrow up to €19,201 ($22,749) and €20,550 ($25,133) for advances against invoices, letter of credit and bank overdrafts with €5,700 ($6,749) and €2,000 ($2,440) available to borrow under these facilities. These facilities are divided into two types: working capital facilities and cash facilities. At June 30, 2021 and December 31, 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 June 30, 2021, the Italian banks had advanced PM Group €7,454 ($8,832). There were 0 advances to PM Group from the Spanish bank, and the South American banks had advanced PM Group €288 ($341). At December 31, 2020, the Italian banks had advanced PM Group €10,551 ($12,904). There were 0 advances to PM Group from the Spanish bank, and the South American banks had advanced PM Group €98 ($120).

PM Group Term Loans

At June 30, 2021 and December 31, 2020, PM Group has a €5,752 ($6,815) and €5,752 ($7,035) term loan with Davy Global Fund Management, an Irish fund that purchased the debt from BPER, an Italian bank. The term loan 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%. The note is payable in annual installments of principal, €513 for 2021, €531 for 2022, €549 for 2023, €569 for 2024, and €588 for 2025.  The balloon payment is payable in a single payment of €3,002 in 2026.

An adjustment in the purchase accounting to value the non-interest- bearing debt at its fair market value was made. At March 6, 2018 it was determined that the fair value of the debt was €480 or $550 less than the book value. This reduction is not reflected in the above descriptions of PM debt. This discount is being amortized over the life of the debt and being charged to interest expense. As of June 30, 2021 and December 31, 2020, the remaining balance was €57 ($68) and €114 ($140), respectively, and has been offset to the debt.

At June 30, 2021 and December 31, 2020, PM Group has unsecured borrowings with an Italian bank (MPS) and an Irish fund (Davy Global Fund Management) totaling €7,225 ($8,560) and €7,225 ($8,836), respectively. The borrowings have a fixed rate of interest of 3.5%.

Annual payments of €1,445 are payable ending in 2025.  

 

PM Group is 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 are measured on a semi-annual basis as of June 30 and December 31 of each year. The Company was in compliance with the loan covenants at June 30, 2021. 

At June 30, 2021 and December 31, 2020, Autogru PM had a term note with an outstanding principal balance of €65 ($77) and €116 ($142), respectively. The note is payable in monthly installments and matures in December 2021. The note is charged interest at the 1-month Euribor plus 250 basis points, for an effective rate of 2.50% at June 30, 2021 and December 31, 2020.

Autogru PM had another term note with an outstanding principal balance of €129 ($153) and €164 ($201) at June 30, 2021 and December 31, 2020, respectively. The note is divided in three parts: the first part is payable in 60 monthly installments of €1 ($1) plus interest at the 6-month Euribor plus 275 basis points, for an effective rate of 2.75% at June 30, 2021 and December 31, 2020, maturing in February 2023; the second part is payable in 60 monthly installments of €4 ($5) plus interest at the 6-month Euribor plus 275 basis points, for an effective rate of 2.75% at June 30, 2021 and December 31, 2020, maturing in April 2023; the third part is payable in 60

21


 

monthly installments of €1 ($1) plus interest at the 6-month Euribor plus 275 basis points, for an effective rate of 2.75% at June 30, 2021 and December 31, 2020, maturing in September 2023.

 

Valla Short-Term Working Capital Borrowings

At June 30, 2021 and December 31, 2020, Valla had established demand credit and overdraft facilities with 2 Italian banks. Under the facilities, Valla can borrow up to approximately €500 ($592) 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% at June 30, 2021 and December 31, 2020. At June 30, 2021 and December 31, 2020, the Italian banks had advanced Valla €343 ($407) and €474 ($579).

Valla Term Loans

Valla had a term loan with Carisbo that was payable in quarterly principal installments beginning on October 30, 2017 of €8 ($10), plus interest at the 3-month Euribor plus 470 basis points, for an effective rate of 4.36% at December 31, 2020. The note matured on January 31, 2021. At June 30, 2021 and December 31, 2020, the outstanding principal balance of the note was €0 ($0) and €8 ($10), respectively.

 

Valla has a term loan with BPER that is payable in monthly principal installments beginning on July 10, 2022 of €0.5 ($1), plus interest at an effective rate of 1.46% at June 30, 2021 and December 31, 2020. The note matures in December 2025. At June 30, 2021 and December 31, 2020, the outstanding principal balance of the note was €25 ($30) and €25 ($31), respectively.

 

  

11. 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 5 and 7 years, respectively. The weighted average discount rate for operating and finance leases was 5.2% and 12.5% respectively.

 

 

Leases

 

Classification

 

June  30, 2021

 

 

December 31, 2020

 

Assets

 

 

 

 

 

 

 

 

 

 

Operating lease assets

 

Operating lease assets

 

$

3,648

 

 

$

4,068

 

Financing lease assets

 

Fixed assets, net

 

 

2,485

 

 

 

2,847

 

Total leased assets

 

 

 

$

6,133

 

 

$

6,915

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

 

 

 

 

 

Operating

 

Current liabilities

 

$

1,006

 

 

$

1,167

 

Financing

 

Current liabilities

 

 

362

 

 

 

344

 

 

 

 

 

 

 

 

 

 

 

 

Non-current

 

 

 

 

 

 

 

 

 

 

Operating

 

Non-current liabilities

 

 

2,642

 

 

 

2,901

 

Financing

 

Non-current liabilities

 

 

4,032

 

 

 

4,221

 

Total lease liabilities

 

 

 

$

8,042

 

 

$

8,633

 

 

22


 

 

 

 

 

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

Lease Cost

 

Classification

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Operating lease costs

 

Operating lease assets

 

$

398

 

 

$

269

 

 

$

702

 

 

$

531

 

Finance lease cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation/amortization of

   leased assets

 

Depreciation

 

 

91

 

 

 

113

 

 

 

182

 

 

 

227

 

Interest on lease liabilities

 

Interest expense

 

 

139

 

 

 

148

 

 

 

280

 

 

 

299

 

Lease cost

 

 

 

$

628

 

 

$

530

 

 

$

1,164

 

 

$

1,057

 

 

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

Other Information

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Cash paid for amounts included in the

   measurement of lease liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating cash flows from operating

   leases

 

$

426

 

 

$

259

 

 

$

758

 

 

$

512

 

Operating cash flows from finance

   leases

 

$

139

 

 

$

114

 

 

$

280

 

 

$

227

 

Financing cash flows from finance

   leases

 

$

95

 

 

$

148

 

 

$

171

 

 

$

299

 

 

Future principal minimum lease payments period ending June 30 are:

 

 

 

Operating Leases

 

 

Capital Leases

 

2022

 

$

1,166

 

 

$

891

 

2023

 

 

935

 

 

 

918

 

2024

 

 

610

 

 

 

945

 

2025

 

 

424

 

 

 

974

 

2026

 

 

396

 

 

 

1,003

 

And subsequent

 

 

550

 

 

 

1,919

 

Total undiscounted lease payments

 

 

4,081

 

 

 

6,650

 

Less interest

 

 

(433

)

 

 

(2,256

)

Total liabilities

 

$

3,648

 

 

$

4,394

 

Less current maturities

 

 

(1,006

)

 

 

(362

)

Non-current lease liabilities

 

$

2,642

 

 

$

4,032

 

 

Bridgeview Facility

 

Beginning on January 1, 2021, the Company leases its 40,000 sq. ft. Bridgeview facility from an unaffiliated third party. Until December 31, 2020 the property was owned by an entity controlled by Mr. David J. Langevin, the Company’s Executive Chairman.

12. 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 Cares Act did not have a material impact on the Company’s consolidated financial statements.

 

 

For the three months ended June 30, 2021, the Company recorded an income tax provision of $317, which includes a discrete income tax benefit of $440. The calculation of the overall income tax provision for the three months ended June 30, 2021 primarily consists of foreign income taxes and a discrete income tax benefit related to the expiration of the statute of limitations for various state and foreign jurisdictions. For the three months ended June 30, 2020, the Company recorded an income tax benefit of $657, which includes a discrete income tax benefit of $28, primarily consisting of foreign income taxes.

  

The effective tax rate for the three months ended June 30, 2021 was an income tax provision of 5.58% on pretax income of $5,682 compared to an income tax benefit of 21.48% on a pretax loss of $3,058 in the comparable prior period. The effective tax rate for the three months ended June 30, 2021 differs from the U.S. statutory rate of 21% primarily due to a valuation allowance in the U.S. and

23


 

partial valuation allowance in Italy, nondeductible foreign permanent differences, income taxed in foreign jurisdictions at varying tax rates, and a decrease in unrecognized tax benefits related to the expiration of the statute of limitations for various state and foreign jurisdictions.

 

For the six months ended June 30, 2021, the Company recorded an income tax provision of $609, which includes a discrete income tax benefit of $486. The calculation of the overall income tax provision for the six months ended June 30, 2021 primarily consists of foreign income taxes and a discrete income tax benefit related to the expiration of the statute of limitations for various state and foreign jurisdictions. For the six months ended June 30, 2020, the Company recorded an income tax benefit of $253, which includes a discrete income tax benefit of $344, primarily consists of foreign income taxes and a discrete income tax benefit related to the expiration of the statute of limitations for various state and foreign jurisdictions, and the settlement of the Romanian tax audit for 2017 and 2018.

 

The effective tax rate for the six months ended June 30, 2021 was an income tax provision of 11.71% on pretax income of $5,202 compared to an income tax benefit of 2.61% on a pretax loss of $9,698 in the comparable prior period. The effective tax rate for the six months ended June 30, 2021 differs from the U.S. statutory rate of 21% primarily due to a valuation allowance in the U.S. and partial valuation allowance in Italy, nondeductible foreign permanent differences, income taxed in foreign jurisdictions at varying tax rates, and a decrease in unrecognized tax benefits related to the expiration of the statute of limitations for various state and foreign jurisdictions.

 

The Company’s total unrecognized tax benefits as of June 30, 2021 and 2020 were approximately $3.1 million and $4.0 million, respectively. Included in the unrecognized tax benefits is a liability for the disputed Romania income tax audit assessment for tax years 2012-2016. The Company settled the 2016 audit with the Italian taxing authorities. The impact of the settlement did not have a material impact on the financial statements. Depending on the final resolution of the audit, the uncertain tax position liability could be higher or lower than the amount recorded at June 30, 2021.

 

 

13. Net Earnings (Loss) per Common Share

Basic net earnings per share is computed by dividing net income by the weighted average number of common shares outstanding for the period. Details of the calculations are as follows:

 

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net income (loss) from continuing operations

 

$

5,365

 

 

$

(2,401

)

 

$

4,593

 

 

$

(9,445

)

Loss from operations of discontinued operations,

   net of income taxes

 

 

 

 

 

(276

)

 

 

 

 

 

(708

)

Net income (loss)

 

$

5,365

 

 

$

(2,677

)

 

$

4,593

 

 

$

(10,153

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

$

0.27

 

 

$

(0.12

)

 

$

0.23

 

 

$

(0.48

)

   Loss from discontinued operations

 

$

 

 

$

(0.01

)

 

$

 

 

$

(0.04

)

Net income (loss)

 

$

0.27

 

 

$

(0.14

)

 

$

0.23

 

 

$

(0.51

)

Diluted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

$

0.27

 

 

$

(0.12

)

 

$

0.23

 

 

$

(0.48

)

         Loss from discontinued operations

 

$

 

 

$

(0.01

)

 

$

 

 

$

(0.04

)

Net income (loss)

 

$

0.27

 

 

$

(0.14

)

 

$

0.23

 

 

$

(0.51

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

19,902,617

 

 

 

19,762,726

 

 

 

19,873,840

 

 

 

19,748,249

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

19,902,617

 

 

 

19,762,726

 

 

 

19,873,840

 

 

 

19,748,249

 

Dilutive effect of restricted stock units and stock options

 

 

86,210

 

 

 

 

 

 

73,725

 

 

 

 

Basic and Dilutive

 

 

19,988,827

 

 

 

19,762,726

 

 

 

19,947,565

 

 

 

19,748,249

 

 

24


 

 

Potential shares of common stock relating to stock options and restricted stock units excluded from the earnings per share calculation because their effect would be anti-dilutive were 307,442 and 1,905,559 for the three months ended June 30, 2021 and June 30, 2020, respectively, and 319,927 and 1,905,559 for the six months ended June 30, 2021 and June 30, 2020, respectively.

 

 

 

As of June 30,

 

 

 

2021

 

 

2020

 

Unvested restricted stock units

 

 

296,215

 

 

 

258,671

 

Options to purchase common stock

 

 

97,437

 

 

 

97,437

 

Convertible subordinated notes

 

 

 

 

 

1,549,451

 

 

 

 

393,652

 

 

 

1,905,559

 

 

14. Equity

 

Stock Issued to Employees and Directors

The Company issued shares of common stock to employees and Directors as restricted stock units issued under the Company’s 2004 Incentive Plan vested. 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 period:

 

Date of Issue

 

Employees or

Director

 

Shares Issued

 

 

Value of

Shares Issued

 

January 1, 2021

 

Employee

 

 

3,300

 

 

$

5.16

 

March 6, 2021

 

Directors

 

 

7,920

 

 

 

7.43

 

March 6, 2021

 

Employees

 

 

24,923

 

 

 

7.43

 

March 8, 2021

 

Directors

 

 

12,000

 

 

 

7.73

 

March 8, 2021

 

Employee

 

 

2,000

 

 

 

7.73

 

March 13, 2021

 

Directors

 

 

18,060

 

 

 

8.29

 

March 13, 2021

 

Employees

 

 

17,680

 

 

 

8.29

 

June 3, 2021

 

Directors

 

 

5,940

 

 

 

7.29

 

 

 

 

 

 

91,823

 

 

$

7.77

 

 

Stock Repurchase

The Company purchases shares of Common Stock from certain employees at the closing share price on the date of purchase. The stock is purchased from the employees to satisfy employees’ withholding tax obligations related to stock issuances described above. The below table summarizes shares repurchased from employees during the current year through June 30, 2021:

 

Date of Purchase

 

Shares

Purchased

 

 

Closing Price

on Date of

Purchase

 

March 6, 2021

 

 

2,779

 

 

$

7.43

 

March 8, 2021

 

 

692

 

 

$

7.73

 

March 13, 2021

 

 

2,712

 

 

$

8.29

 

 

 

 

6,183

 

 

 

 

 

 

 

Restricted Stock Awards

The following table contains information regarding restricted stock units:

 

 

 

June 30,

2021

 

Outstanding on January 1, 2021

 

 

242,586

 

Units granted during the period

 

 

147,800

 

Vested and issued

 

 

(85,640

)

Vested-issued and repurchased for income tax withholding

 

 

(6,183

)

Forfeited

 

 

(2,348

)

Outstanding on June 30, 2021

 

 

296,215

 

25


 

 

 

The value of the restricted stock is being charged to compensation expense over the vesting period. Compensation expense includes expense related to restricted stock units of $269 and $182, and $558 and $382 for the three and six months ended June 30, 2021 and 2020 , respectively.  Additional compensation expense related to restricted stock units will be $465, $692 and $321 for the remainder of 2021, 2022 and 2023, respectively.

 

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. Compensation expense related to stock options were $9 and $19 for the three and six months ended June 30, 2021 compared to $21 and $42 for the comparable period. Additional compensation expense will be $12 and $10 for the remainder of 2021 and 2022, respectively.  

 

 

15. 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 limits that range from $50 to $500.

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.

For claims originated in 2020, the Company changed its insurance coverage for worker’s compensation 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 is reached. The Company currently has several workers’ compensation claims related to injuries that occurred after December 31, 2011 and therefore are subject to a deductible. The Company does not believe that the contingencies associated with these workers’ compensation claims in aggregate will have a material adverse effect on the Company.

On May 5, 2011, the Company entered into 2 separate settlement agreements with 2 plaintiffs. As of June 30, 2021, the Company has a remaining obligation under the agreements to pay the plaintiffs an aggregate of $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 the payment period.

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. However, the Company does not believe that these contingencies, in the aggregate, will have a material adverse effect on the Company.

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.

SEC Settlement

The Company is continuing to work to resolve its two remaining material weaknesses in compliance with the previously-disclosed settlement between the Company and the SEC that was entered into in connection with the Company’s restatement of certain prior financial statements.

 

 

16. Transactions between the Company and Related Parties

In the course of conducting its business, the Company has entered into certain related party transactions.

C&M conducts business with RAM P&E LLC for the purposes of obtaining parts business as well as buying, selling, and renting equipment. In 2021, less than $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.

26


 

PM is a manufacturer of cranes. PM sold cranes, parts, and accessories to Tadano during 2020 and 2021.

As of June 30, 2021 and December 31, 2020, the Company had accounts receivable and payable with related parties as shown below:

 

 

 

 

 

June 30, 2021

 

 

December 31, 2020

 

Accounts Receivable

 

Tadano

 

$

 

 

$

62

 

 

 

Terex

 

 

25

 

 

 

 

 

 

RAM P&E (2)

 

 

22

 

 

 

13

 

 

 

 

 

$

47

 

 

$

75

 

 

 

 

 

 

 

 

 

 

 

 

Accounts Payable

 

Terex

 

 

55

 

 

 

47

 

 

 

Tadano

 

 

28

 

 

 

80

 

 

 

 

 

$

83

 

 

$

127

 

Net Related Party Accounts

   Payable

 

 

 

$

36

 

 

$

52

 

 

The following is a summary of the amounts attributable to certain related party transactions as described in the footnotes to the table, for the periods indicated:

 

 

 

 

 

Three Months Ended

June 30, 2021

 

 

Three Months Ended

June 30, 2020

 

 

Six Months Ended

June 30, 2021

 

 

Six Months Ended

June 30, 2020

 

Rent paid:

 

Bridgeview Facility (1)

 

 

 

 

$

69

 

 

 

 

 

$

138

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales to:

 

Terex

 

$

29

 

 

$

13

 

 

$

42

 

 

$

27

 

 

 

Tadano

 

 

12

 

 

 

62

 

 

 

140

 

 

 

612

 

 

 

RAM P&E (2)

 

 

33

 

 

 

 

 

 

87

 

 

 

 

Total Sales

 

 

 

$

74

 

 

$

75

 

 

$

269

 

 

$

639

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases from:

 

Terex

 

$

117

 

 

$

133

 

 

$

233

 

 

$

280

 

 

 

Tadano

 

 

35

 

 

 

 

 

 

96

 

 

 

 

Total Purchases

 

 

 

$

152

 

 

$

133

 

 

$

329

 

 

$

280

 

 

 

 

          

 

 

(1)

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 operating 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 in all material respects.

 

 

(2)

RAM P&E is owned by Mr. David Langevin’s daughter.    

 

 

Note 17. 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. Accordingly, Manitex Sabre, Inc. is reported as a discontinued operation for 2020.

 

In addition to the proceeds from sale of $1.5 million in cash received, the Company may receive a maximum royalty and earnout payments of approximately $2.9 million for years 2021 thru 2023 if certain revenue criteria are met. 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.  

 

27


 

 

For the six months ended June 30, 2020, cash flows provided by operating activities was $331, this consisted of depreciation expense of $45, 0 purchases of fixed assets and 0 amortization expense.

 

 

 

For the Three Months

Ended June 30,

 

 

For the Six Months

Ended June 30,

 

 

 

2020

 

 

2020

 

Net revenues

 

$

1,386

 

 

$

2,885

 

Cost of sales

 

 

1,411

 

 

 

2,966

 

Selling, general and administrative expenses

 

 

280

 

 

 

593

 

Interest expense

 

 

24

 

 

 

48

 

Other income

 

 

6

 

 

 

11

 

Net loss of discontinued operations before income

   tax

 

 

(323

)

 

 

(711

)

Income tax benefit related to

   discontinued operations

 

 

(47

)

 

 

(3

)

Net loss on discontinued operations

 

$

(276

)

 

$

(708

)

           

 

28


 

 

Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations

Recent Developments

 

Impact of COVID-19

 

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 every necessary step 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 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 has experienced and may continue to experience disruptions or delays in its supply chain, which would result in higher supply chain costs to the Company in order to maintain the supply of materials and components for its products. In addition, the Company has modified its business practices (including practices regarding employee travel, employee work locations, and cancellation of physical participation in meetings, events and conferences). We continue to take steps to minimize the negative impact of the COVID-19 pandemic on our business and to protect the safety of our employees and customers.

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.

 

Backlog

 

The Company’s backlog was approximately $111 million and $68 million at June 30, 2021 and December 31, 2020, respectively.

Results of Condensed Consolidated Operations

MANITEX INTERNATIONAL, INC.

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

June 30,

 

 

 

 

 

 

 

 

 

 

 

2021

 

 

2020

 

 

$ Change

 

 

% Change

 

Net revenues

 

$

60,045

 

 

$

37,115

 

 

$

22,930

 

 

 

61.8

%

Cost of sales

 

 

48,605

 

 

 

31,584

 

 

 

17,021

 

 

 

53.9

%

Gross profit

 

 

11,440

 

 

 

5,531

 

 

 

5,909

 

 

 

106.8

%

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development costs

 

 

800

 

 

 

771

 

 

 

29

 

 

 

3.8

%

Selling, general and administrative expenses

 

 

8,069

 

 

 

6,725

 

 

 

1,344

 

 

 

20.0

%

Total operating expenses

 

 

8,869

 

 

 

7,496

 

 

 

1,373

 

 

 

18.3

%

Operating income (loss)

 

 

2,571

 

 

 

(1,965

)

 

 

4,536

 

 

 

(230.8

)%

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(558

)

 

 

(924

)

 

 

366

 

 

 

(39.6

)%

Interest income

 

 

2

 

 

 

14

 

 

 

(12

)

 

 

(85.7

)%

Gain on Paycheck Protection Program loan forgiveness

 

 

3,747

 

 

 

 

 

 

3,747

 

 

 

100.0

%

Foreign currency transaction loss

 

 

(85

)

 

 

(24

)

 

 

(61

)

 

 

254.2

%

Other income (expense)

 

 

5

 

 

 

(159

)

 

 

164

 

 

 

(103.1

)%

Total other income (expense)

 

 

3,111

 

 

 

(1,093

)

 

 

4,204

 

 

 

(384.6

)%

Income (loss) before income taxes from continuing operations

 

 

5,682

 

 

 

(3,058

)

 

 

8,740

 

 

 

(285.8

)%

Income tax expense (benefit) from continuing operations

 

 

317

 

 

 

(657

)

 

 

974

 

 

 

(148.2

)%

Net income (loss) from continuing operations

 

 

5,365

 

 

 

(2,401

)

 

 

7,766

 

 

 

(323.4

)%

29


 

 

 

Three Months Ended June 30, 2021 Compared to Three Months Ended June 30, 2020

Net income (loss) from continuing operations for the three-month periods ended June 30, 2021 and 2020

For the three months ended June 30, 2021, the Company had net income of $5.4 million compared to net losses of ($2.4) million for the three months ended June 30, 2020.            

Net revenues and gross profit —For the three months ended June 30, 2021, net revenues and gross profit were $60.0 million and $11.4 million, respectively. Gross profit as a percent of revenues was 19.1% for the three months ended June 30, 2021. For the three months ended June 30, 2020, net revenues and gross profit were $37.1 million and $5.5 million, respectively. Gross profit as a percent of revenues was 14.9% for the three months ended June 30, 2020.   

 

Net revenues increased $22.9 million or 61.8% to $60.0 million for the three months ended June 30, 2021 from $37.1 million for the comparable period in 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 from the Company’s foreign subsidiaries, primarily due to the partial recovery in the global market from the COVID-19 pandemic, growth in the Italian market supported by government incentives for sustainable projects, and a favorable impact of a stronger Euro, which accounted for approximately $2.9 million. 

Our gross profit increased $5.9 million to $11.4 million for the three months ended June 30, 2021 from $5.5 million for the comparable period in 2020. The increase in gross profit is attributable to increases in revenues and product mix offset by higher material cost.  The increase in gross profit percentage is primarily driven by product mix as higher margin products were sold offset by higher material cost for the three months ended June 30, 2021.

Research and development —Research and development expense was $0.8 million for the three months ended June 30, 2021 consistent with $0.8 million for the same period in 2020. The Company’s research and development spending reflects our continued commitment to develop and introduce new products that give the Company a competitive advantage.

Selling, general and administrative expense —SG&A expense for the three months ended June 30, 2021 was $8.1 million compared to $6.7 million for the comparable period in 2020, an increase of $1.4 million. The increases are primarily related to higher bonus accruals during 2021, higher professional fees, and an unfavorable impact of a stronger euro, which accounted for approximately $0.3 million.

       

Interest expense —Interest expense was $0.6 million for the three months ended June 30, 2021 compared to $0.9 million for the comparable period in 2020. 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.

Foreign currency transaction losses —For the three months ended June 30, 2021, the Company had foreign currency losses of $0.1 million compared to less than $0.1 million for the comparable period in 2020.  A substantial portion of the losses relate to changes in the Chilean peso.

 

Gain on Paycheck Protection Program loan forgiveness —Gain on loan forgiveness was $3.7 million for the three months ended June 30, 2021 due to the loan forgiveness 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.

 

Other income (expense) —Other income (expense) was less than $0.1 million for the three months ended June 30, 2021 compared to ($0.2) million for the comparable period in 2020. The decrease is primarily due to an overseas office closure expense recorded in 2020.

  

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 condensed consolidated financial statements.

 

For the three months ended June 30, 2021, the Company recorded an income tax provision of $0.3 million, which includes a discrete income tax benefit of $0.4 million. The calculation of the overall income tax provision for the three months ended June 30, 2021 primarily consists of foreign income taxes and a discrete income tax benefit related to the expiration of the statute of limitations for various state and foreign jurisdictions. For the three months ended June 30, 2020, the Company recorded an income tax benefit of $0.7 million, which includes a discrete income tax benefit of less than $0.1 million, primarily consist of foreign income taxes.

30


 

 

The effective tax rate for the three months ended June 30, 2021 was an income tax provision of 5.58% on pretax income of $5.7 million compared to an income tax benefit of 21.5% on a pretax loss of $3.1 million in the comparable prior period. The effective tax rate for the three months ended June 30, 2021 differs from the U.S. statutory rate of 21% primarily due to the valuation allowance in the U.S. and a partial valuation allowance in Italy, nondeductible permanent differences, income taxed in foreign jurisdictions at varying tax rates and a decrease in unrecognized tax benefits related to the expiration of the statute of limitations for various state and foreign jurisdictions.

    

 

 

 

Six Months Ended

June 30,

 

 

 

 

 

 

 

 

 

 

 

2021

 

 

2020

 

 

$ Change

 

 

% Change

 

Net revenues

 

$

107,213

 

 

$

85,848

 

 

$

21,365

 

 

 

24.9

%

Cost of sales

 

 

86,968

 

 

 

70,070

 

 

 

16,898

 

 

 

24.1

%

Gross profit

 

 

20,245

 

 

 

15,778

 

 

 

4,467

 

 

 

28.3

%

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development costs

 

 

1,585

 

 

 

1,458

 

 

 

127

 

 

 

8.7

%

Selling, general and administrative expenses

 

 

15,813

 

 

 

14,764

 

 

 

1,049

 

 

 

7.1

%

Impairment of intangibles

 

 

 

 

 

6,722

 

 

 

(6,722

)

 

 

(100.0

)%

Total operating expenses

 

 

17,398

 

 

 

22,944

 

 

 

(5,546

)

 

 

(24.2

)%

Operating income (loss)

 

 

2,847

 

 

 

(7,166

)

 

 

10,013

 

 

 

(139.7

)%

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(1,083

)

 

 

(2,008

)

 

 

925

 

 

 

(46.1

)%

Interest income

 

 

6

 

 

 

74

 

 

 

(68

)

 

 

(91.9

)%

Gain on Paycheck Protection Program loan forgiveness

 

 

3,747

 

 

 

 

 

 

3,747

 

 

 

100.0

%

Foreign currency transaction loss

 

 

(300

)

 

 

(442

)

 

 

142

 

 

 

(32.1

)%

Other income (expense)

 

 

(15

)

 

 

(156

)

 

 

141

 

 

 

(90.4

)%

Total other income (expense)

 

 

2,355

 

 

 

(2,532

)

 

 

4,887

 

 

 

(193.0

)%

Income (loss) before income taxes from continuing operations

 

 

5,202

 

 

 

(9,698

)

 

 

14,900

 

 

 

(153.6

)%

Income tax expense (benefit) from continuing operations

 

 

609

 

 

 

(253

)

 

 

862

 

 

 

(340.7

)%

Net income (loss) from continuing operations

 

 

4,593

 

 

 

(9,445

)

 

 

14,038

 

 

 

(148.6

)%

Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020

Net income (loss) from continuing operations for the six-month periods ended June 30, 2021 and 2020

For the six months ended June 30, 2021 the Company had net income of $4.6 million compared to net losses of ($9.4) million for the six months ended June 30, 2020.            

Net revenues and gross profit —For the six months ended June 30, 2021, net revenues and gross profit were $107.2 million and $20.2 million, respectively. Gross profit as a percent of revenues was 18.9% for the six months ended June 30, 2021. For the six months ended June 30, 2020, net revenues and gross profit were $85.8 million and $15.8 million, respectively. Gross profit as a percent of revenues was 18.4% for the six months ended June 30, 2020.   

 

Net revenues increased $21.4 million or 24.9% to $107.2 million for the six months ended June 30, 2021 from $85.8 million for the comparable period in 2020. The increase in revenues is primarily due to increases in sales of knuckle boom cranes from the Company’s foreign subsidiaries, primarily due to the partial recovery in the global market from the COVID-19 pandemic, growth in the Italian market supported by government incentives for sustainable projects, and a favorable impact by a stronger Euro, which accounted for approximately $5.4 million.  

Our gross profit increased $4.4 million to $20.2 million for the six months ended June 30, 2021 from $15.8 million for the comparable period in 2020. The increase in gross profit is attributable to increases in revenues and product mix offset by higher material cost. The increase in gross profit percentage is primarily driven by product mix as higher margin products were sold, partially offset by higher material cost for the three months ended June 30, 2021.

31


 

Research and development —Research and development expense was $1.6 million for the six months ended June 30, 2021 compared with $1.5 million for the same period in 2020. The Company’s research and development spending reflects our continued commitment to develop and introduce new products that give the Company a competitive advantage.

Selling, general and administrative expense —SG&A expense for the six months ended June 30, 2021 was $15.8 million compared to $14.8 million for the comparable period in 2020, an increase of $1.0 million. The increases are primarily related to higher bonus accrual in 2021, higher stock compensation expense, higher professional fees, aided by an unfavorable impact of a stronger euro, which accounted for approximately $0.7 million offset by trade show expenses that did not recur in 2021.

Impairment of goodwill and intangibles- For the six months ended June 30, 2021, the Company had no impairment of goodwill or intangibles compared to $6.7 million for the six months ended June 30, 2020. The impairment in 2020 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 $1.1 million for the six months ended June 30, 2021 compared to $2.0 million for the comparable period in 2020. 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.

Foreign currency transaction losses —For the six months ended June 30, 2021, the Company had foreign currency losses of $0.3 million compared to $0.4 million for the comparable period in 2020.  A substantial portion of the losses relate to changes in the Chilean peso.

 

Gain on Paycheck Protection Program loan forgiveness —Gain on loan forgiveness was $3.7 million for the six months ended June 30, 2021  due to the loan forgiveness 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.

 

Other income (expense) —Other income (expense) was less than $0.1 million for the six months ended June 30, 2021 compared to ($0.2) million for the comparable period in 2020. The decrease is primarily due to an overseas office closure expense recorded in 2020.

 

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 condensed consolidated financial statements.

 

For the six months ended June 30, 2021, the Company recorded an income tax provision of $0.6 million, which includes a discrete income tax benefit of $0.5 million. The calculation of the overall income tax provision for the six months ended June 30, 2021 primarily consists of foreign income taxes and a discrete income tax benefit related to the expiration of the statute of limitations for various state and foreign jurisdictions. For the six months ended June 30, 2020, the Company recorded an income tax benefit of $0.3 million, which includes a discrete income tax benefit of $0.3 million, primarily consist of foreign income taxes, and a discrete income tax benefit related to the expiration of the statute of limitations for various state and foreign jurisdictions, and the settlement of the Romanian tax audit for 2017 and 2018.

 

The effective tax rate for the six months ended June 30, 2021 was an income tax provision of 11.71% on pretax income of $5.2 million compared to an income tax benefit of 2.61% on a pretax loss of $9.7 million in the comparable prior period. The effective tax rate for the six months ended June 30, 2021 differs from the U.S. statutory rate of 21% primarily due to a valuation allowance in the U.S. and partial valuation allowance in Italy, nondeductible foreign permanent differences, income taxed in foreign jurisdictions at varying tax rates and a decrease in unrecognized tax benefits related to the expiration of the statute of limitations for various state and foreign jurisdictions.

 

Liquidity and Capital Resources

 

The ultimate duration and severity of the COVID-19 pandemic remains highly uncertain at this time.  Accordingly, its impact on the global economy generally and our customers and suppliers specifically, as well as the potential negative financial impact to our results of operations and liquidity position cannot be reasonably estimated at this time, but could be material. In the context of these uncertain conditions, we are actively managing the business to maintain cash flow and ensure that we have sufficient liquidity for a variety of scenarios. We believe that such strategy will allow us to meet our anticipated funding requirements.

 

32


 

 

Cash, cash equivalents and restricted cash were $17.4 million at June 30, 2021 and  December 31, 2020. In addition, the Company has a U.S. revolving credit facility with a maturity date of July 20, 2023. At June 30, 2021, the Company had approximately $12.6 million available to borrow under its U.S. revolving credit facility.

 

At June 30, 2021, the PM Group had established working capital facilities with five Italian, one Spanish and eleven South American banks. Under these facilities, the PM Group can borrow $24.0 million against orders, invoices and letters of credit. At June 30, 2021, the PM Group had availability under these facilities of $6.7 million. Future advances are dependent on having available collateral.

 

If our revenues were to increase significantly in the future, the provision limiting borrowing against accounts receivable and inventory would limit future borrowings. If this were to occur, we would attempt to negotiate higher inventory caps with our banks.  There is, however, no assurance that the banks would agree to increase the caps.

The Company expects cash flows from operations and existing availability under the current revolving credit and working capital facilities will be adequate to fund future operations. If in the future, we were to determine that additional funding is necessary, we believe that it would be available. There is, however, no assurance that such financing will be available or, if available, on acceptable terms.

 

Cash flows for the six-month period ended June 30, 2021 compared to the six-month period ended June 30, 2020

 

 

Operating Activities - For the six months ended June 30, 2021, cash flow provided by operating activities was $5.2 million compared to $7.8 million used for the same period in the prior year. Cash provided by working capital was $1.3 million for the six months ended June 30, 2021 compared to $5.8 million for the same period in the prior year. The change in accounts receivable used $6.4 million in cash for the six months ended June 30, 2021 compared to $6.4 million provided by cash for the same period in the prior year. Effective accounts payable management generated $12.0 million in cash for the first six months of 2021 compared to less than $0.1 million used in cash for the same period in the prior year.  Inventory represented a cash outflow of $4.3 million for the first six months of 2021 compared to $0.6 million for the same period in the prior year.  During April 2020, the Company was granted $3.7 million from a bank under the Paycheck Protection Program. During June 2021, the Company’s loan was forgiven for the entire $3.7 million balance.

 

Investing Activities - Cash used in investing activities was $0.6 million in the first six months of 2021, compared to $0.5 million in the same period a year ago.  Cash used in both the six-month periods was related to cash payments for property and equipment.

 

Financing Activities - Cash used in financing activities was an outflow of $3.8 million for the six months ended June 30, 2021 which included a decrease in working capital borrowing of $3.7 million and repayments of notes of $0.7 million offset by borrowings for insurance agreements of $0.7 million and payments on capital lease obligations of $0.2 million. Cash provided by financing activities was an inflow of $0.6 million for the six months ended June 30, 2020, which included borrowings on the revolving credit facility of $8.5 million , repayments of the convertible debt of $7.0 million , and a decrease in working capital borrowing of $0.5 million,.

 

Off-Balance Sheet Arrangements

CIBC has issued 2 standby letters of credit at June 30, 2021.  The first standby letter of credit is $0.2 million in favor of an insurance carrier to secure obligations which may arise in connection with future deductible payments that may be incurred under the Company’s worker’s compensation insurance policies.  The second standby letter of credit is less than $0.1 million in favor of a governmental agency to secure obligations which may arise in connection with worker’s compensation claims.

Related Party Transactions

See Note 16, Transactions between the Company and Related Parties, in the accompanying Condensed Consolidated Financial Statements for a description of the Company’s related party transactions.

Critical Accounting Policies

See Item 7, Management’s Discussion and Analysis of Results of Operations and Financial Condition, in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 for a discussion of the Company’s critical accounting policies.

Impact of Recently Issued Accounting Standards

 

See Note 2, in the accompanying Condensed Consolidated Financial Statements for a summary of recently issued accounting standards.

 

33


 

 

Item 3—Quantitative and Qualitative Disclosures about Market Risk

The Company’s market risk disclosures have not materially changed since the Annual Report on Form 10-K for the fiscal year ended December 31, 2020 was filed. The Company’s quantitative and qualitative disclosures about market risk are incorporated by reference from Part II, Item 7A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

Item 4—Controls and Procedures

Disclosure Controls and Procedures

 

With the participation of our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer) and under the supervision of the Audit Committee of the Board of Directors, our management conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, as of June 30, 2021.  Our management’s evaluation has identified certain material weaknesses in its internal control over financial reporting as further described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020. Based on the evaluation of these material weaknesses, our Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were not effective as of June 30, 2021 to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Despite the existence of these material weaknesses, our Chief Executive Officer and Chief Financial Officer have concluded that the condensed consolidated financial statements in this Quarterly Report fairly present, in all material respects, our financial position, results of operations and cash flows as of the dates, and for the periods, presented, in conformity with GAAP.

Internal Control over Financial Reporting

 

Our Chief Executive Officer and Chief Financial Officer have determined that there were deficiencies in our internal control over financial reporting that constitute material weaknesses, as defined by SEC regulations, at June 30, 2021, with respect to procedures for:

 

 

 

1.

We did not maintain an effective control environment over information technology general controls, based on the criteria established in the COSO framework, to enable identification and mitigation of risks of material accounting errors.

 

 

2.

The Company historically has acquired a number of non-public companies. In the course of integrating these companies’ financial reporting methods and systems with those of the Company, the Company has not effectively designed and implemented effective internal control activities, based on the criteria established in the COSO framework, across the organization in connection with such acquisitions.  We have identified deficiencies in the principles associated with the control activities component of the COSO framework.  Specifically, these control deficiencies constitute material weaknesses, either individually or in the aggregate, relating to (i) our ability to attract, develop, and retain sufficient personnel to perform control activities, (ii) selecting and developing control activities that contribute to the mitigation of risks and support achievement of objectives, (iii) deploying control activities through consistent policies that establish what is expected and procedures that put policies into action, and (iv) holding individuals accountable for their internal control related responsibilities.

 

 

Accordingly, our Chief Executive Officer and Chief Financial Officer have concluded that our internal control over financial reporting and disclosure controls and procedures, as defined by SEC regulations, were not effective at June 30, 2021.

 

Management’s Remediation Activities

 

During 2021, management continued to invest significant time and effort to remediate the remaining two material weaknesses identified in 2018. The Company continued to progress on implementing Enterprise Resource Planning (“ERP”) software in the Company’s U.S. subsidiaries. In Italy, we are working towards the implementation of a new ERP system. In addition, the Company continued to progress on the remediation of the remaining control deficiencies.

 

Other than the changes disclosed above, there were no changes in internal control over financial reporting (as defined by Rules 13a-15 and 15d-15) that occurred during the six months ended June 30, 2021, that have materially affected, or are likely to materially affect, the Company's internal control over financial reporting.

34


 

Plan for Remediation of the Material Weaknesses in Internal Control Over Financial Reporting

Management has been actively engaged in the planning for, and implementation of, remediation efforts to address the remaining material weaknesses, as well as other identified areas of risk. These remediation efforts, outlined below, are intended both to address the identified material weaknesses and to enhance the Company’s overall financial control environment. Management’s ongoing actions and planned actions for fiscal year 2021 to further address these issues include:

 

 

During 2021, the Company continues to work toward completion of the Company’s U.S planned Enterprise Resource Planning implementation and is progressing with the implementation of the ERP software at our remaining United States subsidiaries. In July 2021, one of the U.S subsidiaries has implemented the new ERP software;

 

During 2021, the Company is progressing with the implementation a new ERP system in certain international locations, including Italy. The Company has hired a new senior IT employee to manage the implementation of the new system;  

 

The Company continues to strengthen its control environment to reduce or eliminate our control deficiencies; and

 

Executive oversight will continue to be improved through additional reporting requirements, reviews and meetings.

 

Management continues to execute on the plan that has been provided to the audit committee for the implementation of the foregoing remedial measures (to the extent not already completed) and the audit committee will continue to monitor the anticipated timetable. Management continues to monitor completion of actions as outlined in the plan and have been providing updates to the audit committee on a periodic basis. In addition, under the direction of the audit committee, management will continue to review and make necessary changes to the overall design of the Company’s internal control environment, as well as policies and procedures to improve the overall effectiveness of internal control over financial reporting.

 

Management believes the measures described above will remediate the control deficiencies the Company has identified and strengthen its internal control over financial reporting. Management is committed to continuous improvement of the Company’s internal control processes and will continue to diligently review the Company’s financial reporting controls and procedures. As management continues to evaluate and work to improve internal control over financial reporting, the Company may determine to take additional measures to address control deficiencies or determine to modify, or in appropriate circumstances not to complete, certain of the remediation measures described above.

 

 

35


 

 

PART II—OTHER INFORMATION

Item 1—Legal Proceedings

The information set forth in Note 15 (Legal Proceedings and Other Contingencies) to the accompanying Condensed Consolidated Financial Statements included in Part I.  Item 1 “Financial Statements” of this Quarterly Report on Form 10-Q is incorporated herein by reference.

Item 1A—Risk Factors

As of the date of this filing, there have been no material changes from the risk factors disclosed in the Company’s Annual Report on Form 10-K filed for the fiscal year ended December 31, 2020.

 

Item 2—Unregistered Sales of Equity Securities and Use of Proceeds.

The Company’s credit agreement with CIBC directly restricts the Company’s ability to declare or pay dividends without CIBC’s consent. In addition, pursuant to the Company’s credit agreement with CIBC and other lenders, the Company must maintain as specified in the agreements certain fixed coverage ratios and debt to EBITDA ratios.

ISSUER PURCHASES OF EQUITY SECURITIES

 

Period

 

(a) Total

Number of

Shares

(or Units)

Purchased

 

 

(b) Average

Price Paid

per Share

(or Unit)

 

 

(c) Total

Number of

Shares

(or Units)

Purchased as

Part of

Publicly

Announced

Plans or

Programs

 

 

(d) Maximum

Number (or

Approximate

Dollar Value)

of Shares

(or Units) that

May Yet Be

Purchased

Under the

Plans or

Programs

 

April 1—April 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

May 1—May 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

June 1—June 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

`

 

 

 

 

 

 

 

 

Item 3—Defaults Upon Senior Securities

None

Item 4—Mine Safety Disclosures

Not applicable.

Item 5—Other Information

 

None.

 

Item 6—Exhibits

See the Exhibit Index set forth below for a list of exhibits included with this Quarterly Report on Form 10-Q.

 

36


 

 

EXHIBIT INDEX

 

Exhibit

Number

  

Exhibit Description

 

 

 

31.1*

  

Certification by the Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

31.2*

  

Certification by the Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

32.1**

  

Certification by the Chief Executive Officer and the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

101.INS*

 

Inline XBRL Instance Document- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

 

 

 

101.SCH*

 

Inline XBRL Taxonomy Extension Schema Document.

 

 

 

101.CAL*

 

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

 

 

 

101.LAB*

 

Inline XBRL Taxonomy Extension Label Linkbase Document.

 

 

 

101.PRE*

 

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

 

 

 

101.DEF*

 

Inline XBRL Taxonomy Extension Definition Linkbase Document.

 

 

 

104

 

Cover Page Interactive Data File-The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

 

*

Filed herewith

**

Furnished herewith

37


 

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

August 3, 2021

 

 

 

By:

 

/s/ STEVE FILIPOV

 

 

 

 

Steve Filipov

 

 

 

 

Chief Executive Officer and Director

 

 

 

 

(Principal Executive Officer)

 

August 3, 2021

 

 

 

By:

 

/s/ JOSEPH DOOLAN

 

 

 

 

Joseph Doolan

 

 

 

 

Chief Financial Officer

(Principal Financial and Accounting Officer)

 

 

38