Manitex International, Inc.
Q1 2013 Earnings Call Transcript

Published: 9 May 2013

[Operator:]

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Manitex International, Inc. First Quarter 2013 Results Conference Call. [Operator Instructions] This conference is being recorded today, May 8, 2013. I would now like to turn the conference over to our host, David Langevin, Chairman and CEO. Please go ahead.

[David J. Langevin:]

Thank you, Liz. Good afternoon, ladies and gentlemen, and thank you for your interest in Manitex International. On the call with me today is our President and COO, Andrew Rooke. Please see our website or our release for replay instructions for this call, which will be available until May 15, 2013. We will again be using slides to assist in this presentation, which are available through the webcast or directly from our Investor Relations section of our website. Refer to the first slide regarding the Safe Harbor statement. Please review this statement and refer to our SEC filings for further guidance on the risks associated with our company. We've organized our call today as in the past, my leading off and making a brief opening statement followed by a review of our results by Andrew, a closing statement by me, and then Andrew and I will be happy to respond to any questions. So please now refer to Slide #3. Our sales of approximately $60 million for the quarter is a good start to the year, and when compared to $205 million for all of 2012, it is fair to say that we're in a good position to significantly grow over our previous year. Also, as many of you know, the first quarter is typically not a strong quarter. Usually, our strongest quarters are our second and third quarter. As we also know, the fourth quarter is hard to predict with the holidays and less overall production hours to work with during that quarter. I should also mention that we started the second quarter of this year off with a very strong April. I'm sure that many of you remember our goal for last year was simply to execute on our backlog. With the rotation of our business this year back to a more commercial orientation and with the roll out of several new products, we are faced with a different set of challenges for 2013. Andrew will discuss this further in his remarks, but suffice it to say, we have solid objectives for this year and are confident in our execution and in reaching our goals. As on the operations side, as we noted in our press release, there were production inefficiencies in the first quarter associated with new product introductions, which contributed to some of the gross margin decreases in this quarter, although we have seen -- already seen improvement in margins since the end of the quarter, which makes us believe we will return to more normal gross margin in the second quarter. Other factors contributing to a temporary decrease in our margins were the product mix being shifted towards the higher percentage of sales coming from lower tonnage commercial cranes, and lastly, lower part sales as a percentage of our total revenue. This latter point is a result of us having significant increase of new equipment sales and the lag between new equipment sales and the start up of eventual part sales. In the area of our backlog, we've commented several times on the last few quarters on the importance of adjusting our backlog by increasing production to shorten our lead times. It is worth repeating again that we'll be more successful on the sales side, especially for commercial sales if we're able to deliver our products within a fairly reasonable time period. While we always believe our products are the best in the industry, customers will find other alternatives if we are not able to deliver in a timely fashion. The long lead times of a year ago were beyond the norm and not acceptable for today's demands. While we work with our suppliers to successfully increase production and are in a better position today to react to current demands in the marketplace, although I believe we still have probably a quarter to go to get to the satisfactory level of backlog to production. We are happy with our backlog, which is at a very healthy level. I would like to finish my comments by again emphasizing the importance of our new release involving Manitex's new 70-ton crane. We just completed a broad market introduction of this crane to a great number of our dealers in our Texas plant. The reception was great. We have -- we now have orders for over $5 million, which, of course, is not in our reported backlog numbers. It should also be noted that we are moving into new territories for Manitex, and all of the businesses in this area will be additive to our current product sales. The truck crane market where this new product -- where this new crane participates is a much larger overall market with global annual unit sales estimated to be greater than 1,500. If we are able to capture even a small percentage of that market, it means a significant increase in our sales and profits over a period of years. And our plans are to continue bringing innovative products to the market from our internal R&D as well as from acquisitions in order to consistently penetrate new areas where we believe we will add significant value to our company. With that brief overview, I'd like to now turn it over to Andrew to review in more detail our results. Andrew?

[Andrew M. Rooke:]

Thanks, David. And good afternoon, and welcome, everyone. Following our usual format, I'd like to start out by providing a general business update, which is summarized on Slide 4. During the first quarter and currently, overall economic conditions have remained fairly constant since our last update call. That is to say we've seen a great deal of uncertainty having an influence on our dealers and their purchasing decisions every day. And specifically in Europe, we continue to see pronounced weakness. Certain selective international markets and sectors do remain a positive opportunity for us, and we continue to vigorously pursue opportunities in those markets. We've always been a niche provider, serving a wide variety of end markets. And it's this diversity that is enabling us to meet some of the changes that we've seen in the market and continue to grow our revenues, earnings and cash flows for the benefit of our shareholders. Now addressing some of the changes we've seen. Firstly, we have a more positive level of demand from the North American commercial and general construction markets, which is being reflected in sales and in order intake for lower capacity, less specialized boom truck cranes and material handling equipment such as rough terrain forklifts. With the production initiatives we implemented during 2012 in anticipation of this demand such as moving our production of lower-capacity boom trucks to our budget equipment facility, we've been able to respond to this demand quickly, and in addition, increase our market share in this sector. Secondly, as we have previously stated, we have targeted the energy sector with specific product applications that provided very positive growth trends in 2012 and which we believe is a sector that should provide approximately 50% of group revenues over the cycle. Recently, the energy sector has experienced a softening in demand evidenced by a reduction in North American rig counts, which are currently approximately 5% lower than December 2012, although horizontal and directional rigs for fracking are flat over the same period. This has contributed to a decrease in order intake for our higher-capacity equipment. While we believe this softening has bottomed out, we believe that this sector remains a source of significant growth potential for our products in both the short and long term. As I've already referenced with regards to increased production and some changes in the demand profile, our backlog at the end of the first quarter did show a reduction from the December 31, 2012, level, and our booked to orders ratio to sales, or book-to-bill ratio, is 62% for the quarter. Our backlog at the end of the quarter, however, remains at a very healthy $108 million. This backlog is broadly based, but this, of course, have a majority representation of Manitex boom trucks and also reflects anticipated mix of energy to commercial product. Finally, before moving on to the results, please turn to Slide 5. I want to add some more to the announcement we made this week regarding the launch of the Manitex TC700 hydraulic crane. As stated in our releases, this is our entry into the global truck crane market with a product that has the lifting capacity of a truck crane and additionally provides the operating cost in efficiencies with having a commercial chassis but at a lower price point than conventional truck cranes. We have high hopes for this crane, which is targeted at the global market, estimated at 1,500 units, and in which we do not participate today. The TC700 is another result of our recent R&D investments and has been developed through the input from major customers to target their requirements. Initial orders have already been received, and shipments will begin in the second half of the year. Now turning to the financial results. Slide 6 shows the key figures for quarter 1 2013 with comparatives to Q1 2012 and Q4 2012. First quarter 2013 revenues of $59.6 million increased $16.7 million or 39% in the first quarter of 2012, resulting from production increases at several facilities implemented in response to the higher levels of demand experienced over the past 12 months. Approximately 60% of the increase was driven by Manitex boom truck products, with much of the balance from the material handling operations of Liftking and CVS. Boom trucks in the lower tonnage capacities contributed significantly to the increase in revenues in response to improved commercial construction activity, which utilizes the lower capacity of the less specialized cranes, and the specific manufacturing output increases implemented at our Badger Equipment facility to support this market. Improved commercial activity was also responsible for the improvements in material handling revenues. Our CVS container handling equipment provided a strong performance with local currency sales increasing 55% compared to the first quarter 2012, demonstrating its ability to secure international orders and diversify from its European base. Total part sales as a percentage of revenue for the quarter were approximately 33% lower than the prior year quarter due to the increase in new product revenues but were only marginally down compared to the prior year period. Gross profit of $10.2 million is equal to 17.2% of sales compared to 20% for the first quarter of 2012. The reduction in gross margin percent was generated by an increase in the mix of lower-capacity cranes and chassis, a lower percentage of higher margin part sales and a short-term increase in manufacturing expense arising from unabsorbed manufacturing expense and start-up inefficiencies from the introduction of new products. Part sales are anticipated to return in-line with the historical levels over time as the recent rapid increase in new equipment sales become increasingly deployed and utilized. Start-up inefficiencies are expected to be resolved in the near term as new product configurations are better assimilated into the production process. Operating expense was $0.9 million higher in the first quarter of 2013, of which R&D expenditures accounted for $0.1 million of the increase as new product development activities were initiated to bring new products to the market. Increased selling expenses of approximately $0.5 million were incurred from an expansion in the sales organization, commission and other selling-related costs, with employee-related costs and additional staff and costs for Sarbanes Oxley comprising the balance. Our commitment to cost control and higher efficiency remains a key objective, and our SG&A as a percentage of sales improved again in the first quarter 2013 by declining to 10.4% from 12.6% in the first quarter of 2012. Net income for the first quarter of 2013 of $1.9 million or $0.16 per share was an increase of $0.7 million, 52.7% or $0.05 per share over the first quarter 2012. Earnings per share for the quarter of $0.16 was a 45% increase from the first quarter 2012, again a higher growth rate than for revenues. Slide 7 is a bridge for the 53% increase in net income from quarter 1 2012 net income of $1.3 million with net income for quarter 1 2013 of $1.9 million. Moving to the reconciliation table, a $16.7 million improvement in revenue resulted in the gross profit benefit of $3.3 million, which was reduced by $1.7 million, the effect of a reduction in the gross margin percent. As previously discussed, this reduction was the impact of the lower percentage of higher margin part sales and total revenues, an increase in the mix of lower capacity cranes and chassis and the short-term increase in manufacturing expense arising from start-up inefficiencies from the introduction of new products. In addition, as we continued our production ramp-up in boom truck volumes, we incurred unabsorbed manufacturing expenses, which however, we expect to decrease substantially in the second quarter as production increases are realized. The combination of volume and mix provided a net gross profit increase of $1.6 million. The other key contributor to the net income movement between the 2 periods was an increase in SG&A expense of $0.8 million principally generated from $0.5 million increase in sales-related costs together with employee-related costs from additional staff and costs for Sarbanes Oxley comprising the balance. Although taxable increase -- taxable income increased quarter-over-quarter, our tax cost did not increase as quarter 1 2013 benefited from the reduction in the annual estimated tax rate, 31%, due to the federal R&D tax credit for 2012, which was retroactively restored by legislation passed in January 2013, and the domestic product activity deduction. Slide 8 shows our key working capital ratios that support our working capital increase of $3.5 million from December 2012, which was there to support the revenue growth targets. These ratios remain in a good position. Slide 9 shows our capitalization and liquidity position. Total debt at the end of the quarter was $52.1 million, of which approximately 10% relates to the prior acquisitions and facility leases. The increase in debt in the quarter, net of cash, was $2.7 million, which was for working capital purposes. Quarter 1 2013 12-month trailing EBITDA was $18.7 million, which provides a strong interest coverage ratio of 7.8x and a debt-to-EBITDA ratio modestly improved to 2.8x from 2.7x at December 31, 2012. Both of these position us well to continue our growth strategy. I'd now like to hand back to David for his final summary.

[David J. Langevin:]

Thank you, Andrew. In summary, we like where we are positioned in the emphasis of our company. As we've stated on many occasions, our objective is to remain overall roughly 50% concentrated in the energy markets and 50% with the commercial exposure. The precise percentages between these 2 areas will deviate depending on the respective strengths of these end markets at any given time. Right now, we see more commercial business, but our expectations are for an expansion of our energy business as we roll through the year and into the future. We had a good increase in sales for the first quarter, but more importantly, when comparing the growth in earnings per share in the first quarter of this year to the same period of last year, our percentage increase from profit is greater than our percentage increase in sales. We've also maintained a solid balance sheet with strong ratios of EBITDA to debt, and EBITDA to interest coverage. This allows us to continue to grow our business both with internal product introductions and with the flexibility to look at acquisitions, which will expand our growth even faster in the coming years. With that, Liz, we would like to open it up for questions.

[Operator:]

[Operator Instructions] Our first question comes from the line of Joe Bess with Roth Capital Partners.

[Joseph Bess:]

Dave, can you comment on what the year-over-year change in orders for the commercial market was in the quarter?

[David J. Langevin:]

I don't know precisely the components of the backlog from the first quarter of last year to the first quarter of this year. My general sense is -- I have the backlog information for this year. It's clearly, just as you would expect in the marketplace, because I think we all know that the markets principally that we serve -- certainly on the crane side are North America and those markets have improved on the commercial side in very strong pockets around the United States. But I don't have the exact mix between the 2 respective quarters.

[Joseph Bess:]

Okay. But it's safe to say that the commercial market orders increased year-over-year?

[David J. Langevin:]

That's correct. No doubt about it. Last year, we were -- as we all stated on numerous occasions, we were getting orders very heavily on the energy side where this year, we're getting orders leaning more towards the commercial side.

[Joseph Bess:]

Okay. And then can you comment on lead times, year-over-year change, when we think about -- when we think about where backlog is and your guys' manufacturing facility, where is it now and where do you think the lead times can be over the next couple of quarters?

[David J. Langevin:]

Well, as we've stated, we've been steadily trying to increase production. I mean, if you look at the last 12 months, last year, we started the first quarter, $42 million in production, went to $52 million to $53 million to $56 million, and now that's $60 million. So we've been steadily increasing our production. Obviously, we've been doing it with the optimism that the markets seem to be improving and there's no reason to stop increasing production, which is something we have done in the past where we've gone and kind of managed the production levels so that we can smooth out the production. Now we're just going to keep increasing production because clearly, the tenure for the markets that we serve seems to be positive. On the delivery side, we're down to -- as I said in my prepared remarks, we probably have another quarter to go to get to the level where I think we're properly balanced between the need to serve the market and our production lead times. We're into, we have the second quarter at Crane, so the Crane division booked. A lot of the other facilities work on shorter lead times because of the nature of their products. But the driver, of course, is the Crane facility. So we're in the next 2 quarters with pretty good production levels. But again, in the short run, the next 90 days are fully booked at our Crane facilities and I think comfortably booked at all of our other facilities. But we're just running -- we're running as we all have been with overtime, not with additional people at most of our facilities. So we're in good shape from a utilization and efficiency standpoint and improving. As Andrew mentioned, in the first quarter, we had some -- we sent a lot of new products through the Badger facility and had some work to do there and have some more work to do there, but they're nicely improving, and we think the second quarter we will return to the margins that we've normally seen in the 20% range.

[Joseph Bess:]

Okay. And then switching over to the part sales, can you give us an idea of where that is on the percentage of total revenue right now? And then also, thinking about the growth that you guys have seen in your purchase orders, about how long out until you start to see part sales related to the purchase orders that you guys have been seeing?

[David J. Langevin:]

Yes. On the second part of your question, the part sales, you have a 1-year warranty. You have a 1-year warranty period. So the increase in -- as we've said, the increase in production that we've done, those units have not converted to part sales yet at this point. So we have a lag there. And of course, as a percentage of overall sales, as the overall sales continue to increase, you generally -- we didn't in this quarter, we had a modest decrease in the overall part sales, but generally, we've had an increase in the whole dollar amount of part sales, but we've had a decrease in the percentage because of the increase in new equipment sales. I don't know exactly what the first quarter was. I assume, Andrew, it's probably in the 12%, 13% range that the...

[Andrew M. Rooke:]

That's correct, yes. As you know, we historically run at between 17% and 20%. We reported that, that was down about 33% over -- in the quarter. As you say, it's down to around about 12% [indiscernible].

[Joseph Bess:]

Okay. So it's safe to assume that moving forward with the meaningful growth you guys have seen that part sales will be able support our revenue expectations going forward as well?

[David J. Langevin:]

Yes. I mean, we should see an increase in the whole dollar amount of part sales, but we will also, at least, as far as we can tell right now, continue to increase our new equipment sales, which means that the overall percentage of parts and new equipment may not recover back to what we saw during the downturn, but that's what you'd expect. During the downturn, we were running at much higher percentage of the parts sales to the overall sales.

[Joseph Bess:]

Right. And that's derivative of top line growth from new products. And then thinking about gross margins, can you quantify what gross margins would've been excluding the inefficiencies with the start-up costs?

[David J. Langevin:]

I didn't run that calculation. We know that we had -- I mean, between the 2 -- between the decrease of Manitex in gross margins because we were running lower margin -- lower tonnage cranes through there and the change in production at Badger, I don't know, those would be 3% or something like that, I would assume.

[Andrew M. Rooke:]

Well, yes, the total decrease, though, was 2.8 percentage points. And the parts were about just under 50% of that total percentage, and the rest would be absorption, the chassis and the new product sales.

[David J. Langevin:]

So I think we would have been back to our normalized levels, except for those exceptions, which as I've stated, we expect to return back to in the near term.

[Joseph Bess:]

Okay. And then last question, thinking about SG&A on a sequential basis is down, and that's from an absolute dollar standpoint, as well as on a percentage of sales basis. Is this 6.2 kind of a good normalized run rate that we should be expecting for the year?

[David J. Langevin:]

Well, it depends on what we end up accruing. And I would think that we might have some more incentive comp accruals as we go forward because I believe our -- we'll be earning at a higher level, so our guys will get -- our folks will get more incentive comps. So I believe it will fluctuate a little bit. But I would assume that it'll probably be somewhere around 11% range going forward. 10.4% in the last quarter.

[Operator:]

And our next question comes from the line of Kristine Kubacki with Avondale Partners.

[Thomas Finan:]

It's actually Tom Finan in for Kristine. So a couple of mine were already answered, but you said in the other call there that you believe the energy demand would come back later in the year. Could you just expand a little bit on what you're seeing that would make you think that versus just stay at current levels?

[David J. Langevin:]

Yes. I mean, I guess it's probably we're in the same environment that a lot of people on this call and yourself can get through your own analysis. But do you like the energy area environment that we face in North America, and I would be very positive about that from my perspective. And from talking -- I just got back and I started my remarks from Texas, and I was talking to a lot of our dealers and our salesmen and there's just a lot of activity going on. So I expect that some of that activity and proposals and opportunities will convert to orders. So that's the basis for my comments.

[Thomas Finan:]

Okay. No, that's helpful. I know you said a few times, obviously, that commercial construction is really driving demand. Are you seeing the same strength in residential construction?

[David J. Langevin:]

I haven't -- I think that will probably be more prevalent in some of our material handling businesses, which, as Andrew mentioned, especially Liftking, has seen some nice activity there. So certainly, it's prevalent in some of our products, but on the Crane side, which is the biggest component of our company, it's really sits more in the commercial side than the residential side.

[Thomas Finan:]

Right. And then I may have missed this, but just on the 70-ton crane, what end markets does that serve?

[David J. Langevin:]

Well, it's a lot of the same markets, but it's just higher tonnage. So the higher lifting capacity. So you're just getting into a much bigger program of lifting capacity that you run into. But it's the same -- anything where you're lifting from piping to drilling to -- well, a lot of the same. It's just that everybody's going bigger and it's a bigger product. And of course, we believe we have an economic advantage, and so we're really looking forward to having a similar impact of what we did a couple years ago when we introduced the 50-ton and then we had all kinds of deviations from the start of the normal 50-ton to different boom sizes. So just the number, I don't know how many we have now, Andrew, 8, I think? Something like 8 different...

[Andrew M. Rooke:]

The basic platform is now back at to about 9 variants, yes.

[David J. Langevin:]

9, 9 platforms?

[Andrew M. Rooke:]

Yes.

[David J. Langevin:]

Okay. So that's really what we're looking for, is to get into -- have a big enough break between the 70- and the 50-ton so that we can get into a whole new category.

[Thomas Finan:]

Yes. And you said you have orders for 5 million for that 70-ton crane already, and that was not in the first quarter backlog, right?

[David J. Langevin:]

That's correct. It's orders we've taken since we reported the first quarter numbers in this release.

[Operator:]

Our next question comes from the line of Scott Blumenthal with Emerald Advisers.

[Scott B. Blumenthal:]

Dave, can you talk about -- you've mentioned a couple times on the call that you have a little bit of a price advantage or you believe you have a little bit of price advantage with the new product. Could you maybe give us an idea as to the magnitude of that without, I guess, coming out and stating a dollar figure?

[David J. Langevin:]

Yes. I think as you know already, it's hard to kind of state empirically because of the configuration. But just the basic -- what has differentiated us from some of the competition in the marketplace, and I can refer back to the 50-ton, is -- and the same thing is going to apply to the 70-ton, we build our cranes on a commercial chassis. So obviously, that's a lower price point starting on out of box [ph] because the commercial chassis is, I don't want to say, it's a commodity, but it's a lower-cost alternative to a custom chassis. As you know, as see increase the size of the lifting capacity of the crane, the custom chassis base has to get larger. Same thing with our truck. I mean, we have to have a good size. These aren't F-150 trucks that you're mounting a 70-ton crane on. So these are big trucks but they are much cheaper and easier maintenance, lower cost, easier to operate. For all those types of things, easier on maintenance going forward. We have found the acceptance of our 50-ton to be overwhelming because of that different -- and they also lift and perform in the same way because obviously, you have to make sure that you have the same quality, the same standards with the same lifting capability of any of the competition. So that's why we generally believe that it will be enough [ph] and that's a 10% type of differential, I guess, we could say just very generally, which is meaningful when you're up to a pretty pricey piece of equipment.

[Scott B. Blumenthal:]

Yes, certainly. And I would imagine that, that would make such a product easier to service or at least serviceable at more locations.

[David J. Langevin:]

Yes, it is. That's exactly right. It's easier and it's serviceable at more locations. That's right.

[Scott B. Blumenthal:]

Okay. And do you have an idea, based upon some of your internal information, how much of your product is going into rental right now?

[David J. Langevin:]

Generally, we don't sell, of course, as you know, to a great extent to the large national rental houses, at least on the Crane side. Clearly, on some of the material handling side, we do sell to the rental houses. But on the Crane side, some of our dealers are large, some are even public. You have Rush, you have H&A, some of those that we obviously sell to a great extent. But the majority of ours are still going to places where there's not a huge emphasis on the rental pool. Or if it is in the rental pool, it's a rent-to-own process. So I mean, I guess we don't have an exact number, but maybe 25%, 35%. Andrew, would that seem reasonable to you?

[Andrew M. Rooke:]

As you say, it's difficult to say. I think that the good way to answer this, Dave, is it's that fair that there's the lower capacity, which does go into the rental piece, but the houses that you're talking about...

[David J. Langevin:]

Yes, that's right. I mean, we have the national houses, right.

[Andrew M. Rooke:]

Yes, that's right. So we have seen that increase, but you're right. A lot of the other equipment is going into the specialized unit -- into the specialized rental units or the rent to purchase.

[David J. Langevin:]

Right.

[Scott B. Blumenthal:]

Okay. Yes, that's really helpful. I know that one of your customers recently did talk about how they've reached pretty close to full utilization in cranes and they were going to be going out looking for more. So that looks like it's a pretty good market, and you've timed this one pretty well.

[David J. Langevin:]

Yes, those guys -- I think they're the same ones that I spent a lot of time in the last couple of days and they're a good customer.

[Scott B. Blumenthal:]

Does an increasing percentage into -- now that the commercial markets have heated up, does that -- does the increasing percentage of sales into a commercial market as opposed to the energy market, Dave, does that signify -- necessarily signify a change in your ability to get margin?

[David J. Langevin:]

Well, I wouldn't say it significantly changes because obviously, we've run, over the years, between 16% and 24% with a large concentration of that in the commercial markets on a historical basis. But it is a shift. We have -- as we mentioned in our release, we have shifted some things around over the last 6 months, which caused some inefficiencies. We obviously had, as a percentage of sales, a lower component of parts. And so it's just a mixture of things. But again, as we've stated several times on this call, we don't expect it to be something that's going to hang around. We expect in the second quarter that we'll be back up to normalized levels. So I don't think it's really that big of a difference, although again, when you initially start producing on a commercial level, you have to adapt a little quicker. But we're working our way through that.

[Scott B. Blumenthal:]

Okay. And I think that the last time -- the last call, you committed to releasing -- or I think you mentioned that you're going to be releasing about 7 new products this year. Do you see that -- do you believe that you're going to be able to stick to that schedule? And can you tell us if those are going to be more geared towards commercial now?

[David J. Langevin:]

Well, I think what we will try to do is concentrate on any changes that we make. I don't think we'll have anything major. I'm trying to think of any of the major products that we have going forward. The 70-ton, as I recall, Andrew, our most major introduction. We have a smaller tonnage crane that we will be introducing through Badger that we believe will fit a niche there as well. But generally speaking, I think it is configurations of the products that we have. So new product introductions around the basis that we have and then expansion of the new products that we have introduced in the last year. So I think we will see some concentration on the R&D efforts of the past year, so we can realize some benefits from those introductions.

[Scott B. Blumenthal:]

Okay. And at that point, Andrew, how many platforms and variants are you going to be able to produce?

[Andrew M. Rooke:]

In connection with what I'm afraid -- as David indicated, the 50-ton, we've gone from an initial platform to 9 basic variants, for want of a better description with different movements [ph], different lifting, to heavy lifting or not. I would expect us to start to develop the 70-ton in the similar way.

[Scott B. Blumenthal:]

Okay, okay. And I guess one last one, Dave. What's currently driving interest -- is there anything currently driving interest in container handling product?

[David J. Langevin:]

Well, container handlers, as we know, is pretty much dependent on the port activities around the world. As we mentioned in our remarks, I think they've done a great job of -- I can't remember the exact percentage that you just quoted, Andrew. Was it 50 some percent increase in dollar...

[Andrew M. Rooke:]

Yes. 55.

[David J. Langevin:]

55% quarter-over-quarter over last year increase in the production out of that business, and that's phenomenal when you consider how lousy Europe is. Well, I think they've done a great job of finding pockets around the world to sell port equipment to and to continue to grow their business. I just think it's a job well done on their part.

[Scott B. Blumenthal:]

Is anyone preparing for the expansion of the Panama Canal yet?

[David J. Langevin:]

Yes, sure. I know some companies are, and I'm sure we're -- we've opened up an office in North America to participate, and the North America and the South America and everything in between is growth. So I'm sure we'll participate as well.

[Andrew M. Rooke:]

We have built some equipment down there, Dave.

[David J. Langevin:]

Yes.

[Operator:]

[Operator Instructions] Our next question comes from Jeffrey Loan [ph] with Tuxedo RD Associates [ph].

[Unknown Analyst:]

At a point in time, Liftking was very important to the total results of the corporation. Can you comment on where the demand came from since you highlighted, Liftking? Liftking historically was oriented towards the military. And secondly, who is the competition in the 70-ton?

[David J. Langevin:]

Thanks, Jeff. The last question was competition on the 70-ton. As I mentioned in the truck crane category is people that you would expect, Terex, Manitowoc, Liftking, [indiscernible] Liftking, Link-Belt. Those are some of the dominant names that we compete with in a lot of our categories as well, and that will be the same for the 70-ton. As far as Liftking goes, they've really done a nice job of -- the military, as we know, is around the world, is shifting, decreasing. And so while that's a good steady source of business for us, it has been for over 40 years and will continue to be for the Liftking folks, they've done a good job of going after business with the commercial business expanding that kind of hits them in their sweet spot. So they are the ones have seen increase and they've been doing it in very efficient levels. So they're making more money. And I don't know, Andrew, if you quoted the exact percentage of increase at Liftking.

[Andrew M. Rooke:]

No, we didn't, Dave.

[David J. Langevin:]

Okay. Suffice it to say, they're doing a good job and it's a solid increase quarter-over-quarter.

[Operator:]

And I am showing no further questions. I'll turn the call back over to management for any closing remarks.

[David J. Langevin:]

Okay. Thank you very much, everyone, for your interest in Manitex, and we look forward to our next call. Thank you very much. Bye-bye.

[Operator:]

Ladies and gentlemen, this concludes our conference call for today. We thank you for your participation, and you may now disconnect.