Veri-Tek International Corp. Announces 33% Increase in Third Quarter 2007 Revenues

 

Anticipates exceeding previously issued revenue guidance for 2007 full-year revenue range of $95 million to $100 million; reiterates EBITDA margin range forecast of 8.0% to 8.5%Near and long-term outlook remains strong in served markets

  

BRIDGEVIEW, Ill., Nov. 14 /PRNewswire-FirstCall/ -- Veri-Tek International Corp. , a leading provider of engineered lifting solutions including boom truck cranes, rough terrain forklifts and special mission oriented vehicles, today announced financial results for the third quarter ended September 30, 2007.

  

    Third Quarter Financial Highlights (Continuing Operations(1)):

    --  33.0% year-over-year net sales growth to $26.6 million for the third

        quarter of 2007 from $20.0 million for the third quarter of 2006,

        driven by the acquisition of Manitex Liftking

    --  500 basis point improvement in gross margin to 18.8% for the third

        quarter of 2007 from 13.8% in the same period of 2006

    --  100% increase in EBITDA(2) to $2.4 million for the third quarter of

        2007 from $1.2 million in the third quarter of 2006, representing

        EBITDA(2) margin of 8.9% compared to 5.8% for the same quarter of last

        year

    --  Reduced total indebtedness by $12.1 million to $26.2 million as of

        September 30, 2007 from $38.3 million at June 30, 2007 and

        $37.0 million at December 31, 2006, which potentially will decrease

        annual interest expense by approximately $1.0 million

    --  Recorded net income from continuing operations of $0.9 million for the

        third quarter of 2007 as compared to breakeven in the same period of

        2006

  

    Third Quarter Operating Highlights:

    --  Received orders for more than 50 units of the Company's

        highest-capacity 50-ton boom truck, launched in May 2007

    --  Acquired the Noble forklift product line, which the Company will

        integrate with Liftking

    --  Completed sale and closure of Testing and Assembly Equipment segment

    --  Initiated currency hedging program in an effort to limit the Company's

        exposure to transaction movements from Canadian currency exchange rate

        fluctuations

  

Financial Results

 

Net sales for the third quarter of 2007 increased $6.6 million, or 33.0%, to $26.6 million from $20.0 million in the third quarter of 2006. The higher net sales were the result of a $0.9 million increase in Manitex's sales and $5.7 million in sales from Manitex Liftking, driven by consistent demand across the range of the Company's lifting products and strong shipments of Manitex larger tonnage boom trucks.

 

Gross profit was $5.0 million, or 18.8% gross profit margin, for the third quarter of 2007 compared to gross profit of $2.8 million, or 13.8% gross profit margin for the third quarter of 2006. The Company's gross profit was favorably impacted in the third quarter of 2007 by volume and product mix, stronger pricing and the benefit of sourcing materials from lower-cost countries. The favorable mix is a result of an increase in the sales of cranes with higher lifting capacity, partially attributable to sales of our 50 ton crane that was introduced in the second quarter 2007.

 

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

 

During the third quarter of 2007, the Company generated $2.4 million of EBITDA, or 8.9% of sales, compared with $1.2 million of EBITDA, or 5.8% of sales for the same quarter last year. EBITDA for the nine months ended September 30, 2007 was $6.5 million, or 8.2 % of sales, compared to $0.9 million, or 4.7% of sales in the same period of last year. A reconciliation of GAAP net income to EBITDA is provided in the financial tables that accompany this release.

 

Net income from continuing operations for the third quarter was $872,000 or $0.10 per basic and $0.09 per fully diluted share, compared to net income from continuing operations of $0.0 million, or $0.00 per basic and fully diluted share, for the third quarter of 2006. Net income for the third quarter was $918,000, or $0.11 per basic and $0.10 per fully diluted share (earnings per share is based on 8.6 million basic and 9.2 million fully diluted weighted average common shares outstanding) compared to net loss of ($566,000), or ($0.11) per basic and fully diluted share (based on 5.1 million fully diluted and weighted average common shares outstanding) in the same period last year. Foreign currency transaction losses from the Canadian-US dollar exchange rates negatively impacted net results by approximately ($172,000) in the third quarter of 2007.

 

"We experienced significant operating and financial improvements during the quarter," commented David Langevin, Chairman and Chief Executive Officer of Veri-Tek. "With the sale of the discontinued Testing and Assembly Equipment operations for over $1 million in cash, expansion of our sales and margins, and a $12 million, or 32% reduction in our debt, we have positioned the company to grow as a focused, specialized industrial equipment company. Since 2003, Manitex has introduced 21 new models each of which addresses specific customer requirements for increased capacity, payload and reach in specific field applications. As we highlighted in a recent press release, the market's acceptance of our new 50-ton crane has been exceptional, and we're in the process of increasing our production to meet the demand for these boom trucks. With the acquisition of the Noble Rough Terrain Forklift line, which we announced mid-way through the quarter, we expect to experience higher overall operating margins at our Manitex Liftking division, and beginning in 2008 we anticipate meaningful top and bottom line contribution from Noble."

 

"We continue to take advantage of solid demand in our primary end markets of oil and gas, mining, and infrastructure and while we are still in the process of developing our '08 plan, we anticipate continued year-over-year, top and bottom line improvements," concluded Mr. Langevin.

 

Andrew Rooke, Veri-Tek President and Chief Operating Officer, commented, "Results for the quarter were encouraging, particularly from our Manitex operation. Today, our organization has engineering and product skill sets that we believe give us an edge against the competition in our markets and we will continue to exploit these competencies in our identified market sectors. At the same time we are working on strategic actions in technology, selective investment and R&D in an effort to enhance our addressable market and geographies, accelerate our capability for organic growth and strengthen our relative cost position. These efforts are designed to support our medium- and long-term growth objectives."

 

"The continued weakening of the US dollar adversely affected our financial performance in the quarter and year-to-date and we have taken active steps to address this as well. Having implemented a currency hedging program in the quarter, we expect to avoid substantial future transaction losses, such as those incurred in the second and third quarters of 2007, although we remain exposed to some adverse margin impact that we are striving to offset through operational activities. The quarter's results were also negatively affected by our acquisition of the Noble Rough Terrain Forklift line, as we incurred various initial integration and manufacturing costs and experienced only limited sales in the period. We have taken steps to manage these items, which we believe will result in improved financial results for our company," concluded Mr. Rooke.

 

For the first nine months of fiscal 2007, net sales were $79.7 million and the Company's gross profit was $15.0 million, representing a gross margin of 18.9%, compared to $20.0 million and $2.8 million, or 13.8%, respectively, in the same period last year.

 

Selling, general and administrative expense for the nine months ended September 30, 2007 was $9.6 million compared to $1.8 million for the comparable period in 2006. The increase is principally related to the Manitex and Manitex Liftking acquisitions. Net income from continuing operations was $1.4 million compared to a net loss from continuing operations of $(0.1) million for the first nine months of 2006.

 

Reported net income was $230,000 for the nine-month period ended September 30, 2007, consisting of net income from continuing operations of $1.4 million offset by loss from discontinued operations of $1.2 million and a loss on closure of discontinued operations of $48,000. The Company's reported net loss of $1.4 million for the nine months ended September 30, 2006, consisted of a net loss from continuing operations of $144,000 and a loss from discontinued operations of $1.2 million. Foreign currency transaction losses from the strong Canadian dollar relative to the US dollar negatively impacted net results $662,000 for the nine-month period ended September 30, 2007.

 

The Company completed the quarter ended September 30, 2007 with $19.7 million in working capital and a current ratio (defined as current assets divided by current liabilities) of 2.2 to 1. Long term debt decreased in the third quarter of 2007 by $12.1 million from June 30, 2007, reflecting the repayment of notes payable and a reduction in the amount drawn on the company's line of credit. Shareholder's equity increased 62.0% to $29.8 million from $18.4 million as of December 31, 2006. See the financial tables that accompany this press release for a complete definition of working capital and current ratio.

 

Outlook:

 

Management anticipates that it will exceed its previously issued revenue guidance range of $95 million to $100 million for fiscal year 2007 and reiterated its expectation that EBITDA as a percentage of sales will be in the range of 8.0% to 8.5%. Management currently expects that full year revenues for 2007 will be approximately $105 million.

 

About Veri-Tek International, Corp.

 

Veri-Tek International, Corp. is a leading provider of engineered lifting solutions including boom truck cranes, rough terrain forklifts and special mission oriented vehicles. Our Manitex subsidiary manufactures and markets a comprehensive line of boom trucks and sign cranes. Our boom trucks and crane products are primarily used in industrial projects, energy exploration and infrastructure development, including roads, bridges, and commercial construction. The Manitex Liftking subsidiary, which includes the Noble forklift product line, manufactures and sells a complete line of rough terrain forklifts and special mission oriented vehicles, as well as other specialized carriers, heavy material handling transporters and steel mill equipment. Manitex Liftking's rough terrain forklifts are used in both commercial and military applications.

 

Forward-Looking Statement:

 

Safe Harbor Statement under the U.S. Private Securities Litigation Reform Act of 1995: This release contains statements that are forward-looking in nature which express the beliefs and expectations of management including statements regarding the Company's expected results of operations or liquidity; statements concerning projections, predictions, expectations, estimates or forecasts as to our business, financial and operational results and future economic performance; and statements of management's goals and objectives and other similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by terminology such as "anticipate," "estimate," "plan," "project," "continuing," "ongoing," "expect," "we believe," "we intend," "may," "will," "should," "could," and similar expressions. Such statements are based on current plans, estimates and expectations and involve a number of known and unknown risks, uncertainties and other factors that could cause the Company's future results, performance or achievements to differ significantly from the results, performance or achievements expressed or implied by such forward-looking statements. These factors and additional information are discussed in the Company's filings with the Securities and Exchange Commission and statements in this release should be evaluated in light of these important factors. Although we believe that these statements are based upon reasonable assumptions, we cannot guarantee future results. Forward-looking statements speak only as of the date on which they are made, and the Company undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

  

     Company Contact

 

     Veri-Tek International, Corp.              Hayden Communications

     David Langevin                             Peter Seltzberg or Brett Maas

     Chairman and Chief Executive Officer       Investor Relations

     (708) 237-2060                             (646) 415-8972

     djlangevin@manitex.com                     peter@haydenir.com

 

    (1)  Prior to July 3, 2006, the Company operated in a single segment of

         business: the Testing and Assembly Equipment segment. Following the

         decision of the Board on March 29, 2007 to sell these operations,

         this segment is reported as a discontinued operation. For the nine

         month period ended September 30, 2007 the Company's continuing

         operations were composed of the Lifting Equipment segment established

         through the acquisitions of Manitex Inc., Liftking Industries, Inc.

         ("Manitex Liftking") and the Noble forklift product line in July 2006,

         November 2006 and July 2007, respectively.  Consequently, financial

         and operating results for year-to-date 2007 include nine months of

         results for Manitex and Manitex Liftking and two months for the Noble

         product line. Financial and operating results for the nine-month

         comparative period ending September 30, 2006 include only three

         months of results for Manitex, Inc.

    (2)  EBITDA is a non-GAAP (generally accepted accounting principles in the

         United States of America) financial measure.  This measure may be

         different from non-GAAP financial measures used by other companies.

         We encourage investors to review the section below entitled "Non-GAAP

         Financial Measures."