Weak crane demand has sapped large OEMs like Terex and Manitowoc, as well as smaller OEMs like Manitex.
Manitex continues to build out the business, with the most recent transaction adding Terex’s struggling ASV operations.
Weak oil prices threaten a major Manitex end market, but internal integration/improvement efforts can still generate value, as can a recovery in infrastructure, construction, utility, and transportation markets.
There are certainly still clouds on the horizon, as rental fleets likely do not need to refresh aging fleets on a one-to-one basis and housing/infrastructure spending hasn’t caught fire. Even more concerning to Manitex, oil and gas spending is likely to drop meaningfully next year as energy companies respond to a sudden drop in oil prices that has pushed many drilling projects below breakeven.
Amidst the challenges, Manitex has continued to build its business toward a critical mass in specialty equipment and 2015 could see the company break out over $500 million in revenue. Pushing out my expectations for organic growth and margin improvement has dropped my fair value in the low-to-mid teens and the debt magnifies the risk, but Manitex is still targeting growth in recovering sectors like infrastructure and industrial capex.
Cranes Stubbornly Refuse To Rise
Even though formerly reliable indicators like rental fleet utilization, used crane pricing, and ABI numbers have been looking relatively positive for the crane industry, Terex, Manitowoc, and Manitex have just not seen the orders develop as hoped in 2014. Construction has continued to recover slowly, and the recent plunge in oil prices is likely to curtail demand in a market that accounts for about 10% of the North American crane market and more than a quarter of Manitex’s sales.