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| And -- but that's something -- you may recall my commitment and Joe's commitment was to get the business on a solid footing, take care of our investment, our investors and show them that these returns in this initiative is working |
| We had another solid quarter in our rental segment as well with revenues up 7% in the fourth quarter as compared to the prior year period |
| And most of those challenges have normalized in the last year, which positions us pretty well |
| In one year of Elevating Excellence, we delivered 40% year-over-year growth in adjusted EBITDA, nearly 240 basis points of adjusted EBITDA growth, margin expansion and a significant reduction in our net leverage profile |
| I mentioned in the last call -- in midyear last year, it was uncomfortable for us to have the length of the backlog, not the size, but the length because from the time you take the order and then you produce the order, a lot of variables have changed, and we're working hard to shorten the delivery time, which improves customer satisfaction and improves our margin profile |
| We're doing that to improve our overall margins and the EBITDA generated by our operations |
| But suffice it to say, I'm very excited about our progress, which enabled us to drive strong results in 2023 and position us for continued success in 2024 and beyond |
| Our fourth quarter performance reflects the second highest quarterly revenue run rate in at least five years, driven by continued strength in our core Lifting segment |
| So what's happened with the backlog is we're becoming more efficient at addressing it faster, which is a good thing |
| So we think -- well, first of all, we're thrilled with the growth of the business |
| Construction activity and demand trends in our North Texas markets remain favorable |
| And at that time, we saw an opportunity to improve our production through better process, better scheduling and better systems |
| Our team in Lubbock is quickly building a strong position in that market |
| We expect to begin to see our working capital usage normalize in the coming quarters, which could result in a reduction of inventory levels, leading to improved free cash flow conversion and even further reduced leverage levels |
| We believe the strategic actions taken over the last year have resulted in a structural positive step change in our margin profile for the business |
| The year-over-year improvement in operating income was driven by the improved gross margin performance and operating leverage |
| This has strengthened the quality of our backlog, something that we will continue to focus on |
| We are pleased to be able to maintain our operating expense levels despite the revenue growth and investments that we are making in the business |
| Entering 2024, demand conditions remain strong |
| As Mike discussed, while our backlog is down from last year, our overall business momentum remains strong and our current backlog remains at roughly nine months of sales, which is a very healthy level and gives us good visibility into 2024 |
| While we took a bit of a pause related to fleet expansion in 2023, we expect to put capital towards new fleet expenditures in 2024 and expect to see continued strength in our rental business, owing to the favorable demand trends in our key markets and strong execution |
| Rental Equipment segment revenue was $7.9 million in the fourth quarter '23, supported by strong end market demand in key North Texas markets, including contributions from our Lubbock, Texas location, which opened in March of '23 |
| While the difficult comparison impacted the reported growth, our Lifting Equipment business continued to benefit from end market strength as well as improved throughput in manufacturing facilities |
| We are also grateful for our customers and dealers and expect another year of solid growth as we continue with our margin expansion |
| Outside of the traditional infrastructure, electrical transmission and distribution continues to be a strong growth for us |
| Manitex is well-positioned to benefit from the growing investments being made by utilities, and we believe much of the infrastructure spending in the coming years will benefit the business as well as the investment cycle that will continue to drive spending by our customers |
| Traditional energy markets and mining activity remains robust |
| We are pleased with the visibility that we have entering 2024 and our outlook |
| Our mining customers have a strong appetite for production and maintenance equipment |
| Our fourth quarter results were a strong finish to a transformative year at Manitex |
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| Fourth quarter revenue growth was negatively impacted by a decline of $1.6 million or approximately 2% from lower truck chassis sales, which are largely pass-through revenue items |
| But pricing in that delivery is actually a point of pain for a lot of our competitors right now |
| Lifting Equipment segment revenue was $70.8 million during the fourth quarter, a decrease of 1% versus the prior year period |
| As of December 31, total backlog was $170 million, down from $230 million a year ago, driven by increased production velocity, the shift in focus to higher-margin products and geographies that Mike discussed and some modest weakness in certain verticals that are more exposed to the elevated interest rates |
| The other thing, quite frankly, is some -- become a little cautious with regard to interest rates and other segments are moving ahead pretty boldly |
| Our Lubbock branch had been delayed earlier in the year, but far outceded its first year sales expectations |
| electrical grid is aged and growing energy demands are putting significant pressure on the system |
| In talking to us is that we're always a little more conservative than some people want us to be, and we're cautious and careful in what we say |
| The second issue with our backlog is we become -- by design, we become more selective |
| We have discontinued certain products which do not meet minimum margin hurdles |
| This is directly related to supply chain headwinds |
| And as I just discussed, lower truck chassis sales impacted fourth quarter results and Lifting Equipment segment revenue would have increased about 2%, excluding the chassis sales |
| And then my last one is backlog is elevated still, even though it's trending down |
| As we've implemented this approach across the organization, combined with our increased manufacturing velocity, our backlog has declined, but this is expected |
| But we had a fairly sizable purchase price variance that really affected us throughout 2023 in the U.S |
| And of course, those things were offset with the headwinds of supply chain dramas and post-pandemic issues that all manufacturers are dealing with |
| We added some surcharges, and that's a painful discussion to have with your customers |
| I guess just when do these fully filter through the backlog? Joseph Doolan Yes, so the steel prices primarily really affected the U.S |
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