Columbus Mckinnon Corporation · NASDAQ:CMCO
Columbus Mckinnon — Sidoti Small Cap Conference (March 2023)
33 slides from Columbus Mckinnon's conference presentation, Mar 22, 2023
Slide 1: Sidoti Small Cap Conference
Sidoti Small Cap Conference Gregory P. Rustowicz Executive Vice President – Finance and Chief Financial Officer March 22, 2023
Slide 2: Safe Harbor Statement
Safe Harbor Statement These slides, and the accompanying oral discussion (together, this “presentation”), contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements concerning expected g
Slide 3: Intelligent Motion Solutions for Material Handling
Intelligent Motion Solutions for Material Handling (1) Columbus McKinnon (Nasdaq: CMCO) Financial & Market Data Transforming from a legacy cyclical industrial company to a top-tier, secular growth, intelligent motion solutions company $936M $1.0B Strategic priorities Revenue Market Cap. • Strengthen
Slide 4: Lifting, Linear Motion and Automation Solutions
Lifting, Linear Motion and Automation Solutions Rich History as Premium Provider of Products for Material Handling Lifting Solutions: #1 U.S. market position in hoists Lifting capacity from 1/8 ton to ~140 tons Manual chain, electric chain and wire rope hoists Reliable, high-quality products Compass
Slide 5: Precision Conveyance Solutions
Precision Conveyance Solutions Developing Leading Platform for Growth Specialty conveying provides growth platform: ~$4B TAM growing at 6% to 8% CAGR Higher margin profile Strong secular growth drivers: Supply chain automation Acceleration of e-commerce adoption Fragmented market provides target ric
Slide 6: CMCO Transformation Strategy
CMCO Transformation Strategy STRATEGIC PLAN TO TRANSFORM COLUMBUS MCKINNON INTO A GLOBAL INTELLIGENT MOTION ENTERPRISE ✓ Advances CMCO to achieve target ~$1.5 billion in revenue and ~21% EBITDA margin in FY27 ✓ Evolves the enterprise from cyclical industrial to top-tier, secular growth, intelligent
Slide 7: Unlocking CMCO's Potential
Unlocking CMCO’s Potential Business System and Core Growth Framework to Transform CMCO CMBS GROWTH FRAMEWORK TRANSFORMATION Framework To Deliver Differentiated Growth, Financial Performance And Shareholder Value 7 © 2023 COLUMBUS MCKINNON CORPORATION
Slide 8: Business Model Transformation
Business Model Transformation Innovation drives strategy and portfolio transformation Revenue FUTURE Growth Rate Specialty FY23 YTD Conveying Linear Motion Linear Automation Motion 14% 9% Automation Specialty Conveying 17% FY21 Lifting Solutions Linear Motion Lifting Solutions & Automation 60% Lifti
Slide 9: Unlocking Potential: Key Strategic Objectives Dashboard
Unlocking Potential Key Strategic Objectives Dashboard STRENGTHEN, GROW, EXPAND AND REIMAGINE CMCO Delivered 7% revenue growth (11% constant currency) under new leadership structure Introduced new precision conveying product line, hand chain hoist and pre-launched VFD controlled wire rope hoist NPD
Slide 10: CMBS to Deliver Margin Expansion
CMBS to Deliver Margin Expansion 80/20 Critical Business Tool 80/20 Embedded in CMBS Focus Area: Product Line Simplification Product Line Simplification Raving fans and priority account program Customer list simplification Purchased parts Product SKUs Business Segmentation, Reduced by 40% to Down to
Slide 11: Delivering Innovation
Driving Organic Growth with New Products New xxx Product Development Supports Core Growth Framework • Improved facility safety for large complex loads Tandem Hoist • Available in Compass™ configurator Delivering Innovation Precision • Unique, beltless zone control for pallet and tray handling Pallet
Slide 12: Driving Innovation Through Automation
Driving Innovation Through Automation Intelli-Crane™ Solutions Intelli-Protect™ System Intelli-Lift™ Auto Detection Intelli-Connect™+ Mobile App • Protection boundaries for • Visible and audible warnings • Provides critical crane and improved facility safety when off-center pick is hoist status info
Slide 13: Strong Track Record Creating Value Through M&A
Strong Track Record Creating Value Through M&A September 2015 January 2017 April 2021 December 2021 Acquisition of STAHL Acquisition of Dorner for $485M Acquisition of Magnetek, Inc. CraneSystems from Konecranes advances Intelligent Motion Acquisition of Garvey for for ~$182M added for ~$218M streng
Slide 14: Secular Growth Markets Provide Tailwinds
Secular Growth Markets Provide Tailwinds Precision Conveying Platform Added Attractive Vertical Markets with Enduring Tailwinds Food, Custom designed sanitary and Beverage & easy to clean conveyors Consumer engineered to the strictest USDA ~6% of FY22 sales* Goods guidelines Customizable designs bui
Slide 15: FY2027 Financial Targets
FY2027 Financial Targets Key Assumptions Growing Sales by >10% CAGR • Organic growth of ~5% driven by go-to-market structure and strategic initiatives SALES • Inorganic growth of ~6% from programmatic M&A inclusive of market growth • No material changes to current market conditions Expanding Gross M
Slide 16: Financial Targets
Financial Targets ($ in millions) SALES & ADJUSTED EBITDA & ADJUSTED GROSS MARGIN ADJUSTED EBITDA MARGIN 550 28.0% $2,000 $1,800 ~40% 39.0% 450 ~21% 23.0% $1,600 36.1% 36.2% $1,500 35.0% 35.4% $1,400 33.7% 34.1% $325 350 15.7% 15.4% 15.7% ~$315 18.0% $1,200 34.0% 15.1% 13.7% $1,000 11.9% $80 250 13.
Slide 17: Revenue Bridge
Revenue Bridge ($ in millions) REVENUE FY22 TO FY27E Strategy Expected to Deliver >10% Revenue Growth 17 © 2023 COLUMBUS MCKINNON CORPORATION
Slide 18: Adjusted EBITDA Margin Bridge
Adjusted EBITDA Margin Bridge ($ in millions) ADJUSTED EBITDA MARGIN FY22 to FY27E ~21% ~19% Actions Pricing & In Process Freight $309M Recovery Backlog at 3/31/22 Expanding Adjusted EBITDA Margins ~550 bps Driven by Cost Actions & Scale 18 © 2023 COLUMBUS MCKINNON CORPORATION
Slide 19: Capital Allocation Priorities
Capital Allocation Priorities GROWTH New product development Invest in growth initiatives and CapEx Decreasing Priority Acquisitions Continue programmatic M&A BALANCE SHEET De-lever the balance sheet Manage capital structure responsibly Fund pension contributions above Terminate plans when feasible
Slide 20: Free Cash Flow and Net Leverage
Free Cash Flow and Net Leverage ($ in millions) FREE CASH FLOW GENERATION & NET DEBT & CONVERSION(1) NET LEVERAGE RATIO(2) 5.00 951% 1000.0 200 4.00 800% 2.8x 2.7x $160 2.6x 3.00 800.0 250% 2.0x 150 163% 300% 1.7x 2.00 121% 98% 1.1x $630 158% 600.0 0.6x 1.00 $97 62% 100 $87 -200% 0.00 $67 $396 $400
Slide 21: CMCO Peer Group Comparison
CMCO Peer Group Comparison Industrial Peers vs. Motion Control Peers (Based on average TTM ending 3/31/2022) YOY SALES GROWTH ADJ. GROSS ADJ. EBITDA EBITDA TRADING MARGIN(1) MARGIN MULTIPLE(2) Motion Control 22.4% 33.3% 18.8% 11.3x Target: ~21% CMCO 39.5% 36.1% 15.4% 19% 9.3x Legacy Industrial 16.3%
Slide 22: Key Takeaways
Key Takeaways Transforming to a Top-tier, Secular Growth, Intelligent Motion Solutions Enterprise EVOLVED STRATEGY BLUEPRINT FOR GROWTH 2.0 DEFINES GROWTH FRAMEWORK COLUMBUS MCKINNON BUSINESS SYSTEM – CMBS – ENABLES SCALABILITY CONVEYING SOLUTIONS ADDS GROWTH CATALYST IN ATTRACTIVE MARKETS OPERATION
Slide 23: Sidoti Small Cap Conference
Sidoti Small Cap Conference March 22, 2023
Slide 24: Supplemental Information
OW Supplemental Information INTELLIGENT MOTION PURPOSE IN MOTION
Slide 25: Corporate Sustainability Report
Corporate Sustainability Report SOCIAL RESPONSIBILITY EMPLOYEE HEALTH & SAFETY HUMAN CAPITAL MANAGEMENT PRODUCT QUALITY & INNOVATION PURPOSE, MISSION, VISION, VALUES CUSTOMER SATISFACTION GOVERNANCE & ETHICS SUPPLY CHAIN MANAGEMENT CYBERSECURITY ETHICS & COMPLIANCE Strategic Initiatives ENTERPRISE R
Slide 26: Growing Secular Market Presence
Growing Secular Market Presence Conveying Solutions Serves Less Cyclical Industries FY 2022 Construction 7% Energy & Material Utilities Food, Beverage & Consumer Handling 9% Goods 11% 6% Oil & Gas 5% Chemical & Paper Transportation Processing 15% 5% Aerospace & Government 5% Elevator 3% General Indu
Slide 27: Industrial Capacity Utilization
Industrial Capacity Utilization U.S. Capacity Utilization Eurozone Capacity Utilization Source: The Federal Reserve Board Source: European Commission 85% 80% 83% 81% 75% 79% 80.9% 77.7% (Manufacturing) Q1 2023 78.3% (Total) 77% Jan 2023(1) 70% 75% 73% 71% 65% 69% 67% 60% 65% Manufacturing Total (1)
Slide 28: ISM Production Index
ISM Production Index Source: Institute for Supply Chain Management 70% 65% 60% 55% 50% 47.3% February 2023 45% 40% 35% 30% 25% 28 © 2023 COLUMBUS MCKINNON CORPORATION
Slide 29: Capital Structure
Capital Structure ($ in millions) CAPITALIZATION Net debt leverage ratio of ~2.7x December 31, September 30, • Net debt to net total capital improved 270 bps y/y to 2022 2022 33.0% Cash and cash equivalents $ 81.5 $ 88.9 • Expect to be under 2.5x by end of fiscal 2023 Total debt 481.5 491.4 Reduced
Slide 30: Adjusted Gross Profit Reconciliation
Adjusted Gross Profit Reconciliation ($ in thousands) Fiscal Year TTM 2018 2019 2020 2021 2022 Q3 FY23 GAAP gross profit $ 285,061 $ 304,997 $ 283,186 $ 220,225 $ 315,730 $ 336,348 Add back (deduct): Product liability settlement — — — — 2,850 — Acquisition amortization of backlog — — — — 2,100 1,650
Slide 31: Adjusted Net Income Reconciliation
Adjusted Net Income Reconciliation ($ in thousands, except per share data) Quarter Fiscal Year TTM Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 FY 2021 FY 2022 Q3 FY23 GAAP net income (loss) $ 9,894 $ 11,826 $ 8,391 $ 14,114 $ 12,029 $ 9,106 $ 29,660 $ 46,360 Add back (deduct): Amortization of intangible
Slide 32: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation ($ in thousands) Fiscal Year TTM 2018 2019 2020 2021 2022 Q3 FY23 GAAP net income (loss) $ 22,065 $ 42,577 $ 59,672 $ 9,106 $ 29,660 $ 46,360 Add back (deduct): Income tax expense (benefit) 27,620 10,321 17,484 970 8,786 24,701 Interest and debt expense 19,733 17,144 1
Slide 33: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation ($ in thousands) Fiscal Year TTM 2018 2019 2020 2021 2022 Q3 FY23 Cash (used in) provided by operations $ 69,661 $ 79,499 $ 106,795 $ 98,890 $ 48,881 $ 42,056 Capital expenditures (14,515) (12,288) (9,432) (12,300) (13,104) (13,109) Free cash flow (FCF) $ 55,146 $ 67,21
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