Columbus Mckinnon Corporation · NASDAQ:CMCO
Columbus Mckinnon — KeyBanc Industrials and Basic Materials 2018 Conference
30 slides from Columbus Mckinnon's conference presentation, May 31, 2018
Slide 1: KeyBanc Industrials and Basic Materials 2018 Conference
May 31 KEYBANC INDUSTRIALS AND BASIC MATERIALS 2018 CONFERENCE Mark D. Morelli President and Chief Executive Officer Gregory P. Rustowicz Vice President – Finance & Chief Financial Officer
Slide 2: Safe Harbor Statement
SAFE HARBOR STATEMENT These slides contain (and the accompanying oral discussion will contain) “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that could cause th
Slide 3: Leading global designer, manufacturer and marketer of motion control products
NASDAQ: CMCO Leading global designer, manufacturer and marketer of motion control products, technologies and services for material handling Founded: 1875 Leader in highly engineered lifting solutions and explosion-protected hoists Premium, well respected brands World’s 2nd largest hoist company with
Slide 4: Three Distinct Product Categories
THREE DISTINCT PRODUCT CATEGORIES Customer Driven Solutions Linear & Mechanical Actuators Lifting Tables Rail & Road Engineered Actuation Systems Products ~10% Industrial Products ~45% Crane Manual Chain Hoist Solutions ~45% Electric Chain Hoist Rigging / Clamps Industrial Winches
Slide 5: Highly Relevant to Customers
HIGHLY RELEVANT TO CUSTOMERS Professional grade solutions for complex applications © 2018 Columbus McKinnon Corporation 5
Slide 6: Extensive Market Channels & Int'l Diversification
EXTENSIVE MARKET CHANNELS & INT’L DIVERSIFICATION Specialty APAC Distributors Latin America Pfaff International Canada 6% Direct ~10% US General Line 4% Distributors 4% ~5% ~29% U.S. OEM/Government ~10% 53% Europe, Middle East & 33% ~11% Africa Crane Builders ~12% ~23% International General EPC Line
Slide 7: Diverse End Markets
DIVERSE END MARKETS Mining Government / Others Entertainment ~3% ~3% Elevators ~3% ~3% Heavy OEM General Industrial Pulp Paper/Chemical/ ~5% ~25% Pharma ~5% Construction ~5% ~10% ~10% Rail / Aerospace / Metals Processing Transport / Steel / Concrete ~10% ~10% ~10% Automotive Oil & Gas Energy/ Utilit
Slide 8: Key Vertical Markets
KEY VERTICAL MARKETS CONSTRUCTION MINING ENTERTAINMENT OIL & GAS POWER / UTILITIES TRANSPORTATION AUTOMOTIVE HEAVY EQUIPMENT MANUFACTURING © 2018 Columbus McKinnon Corporation 8
Slide 9: Strategy: Evolution of Columbus McKinnon
STRATEGY: EVOLUTION OF COLUMBUS MCKINNON Phase III Business development Industrial Technology Further Pivot: • Portfolio assessment GrowthOriented Phase II • M&A Operational excellence Profitable growth Simplify: • Business structure • Product platforms Operating improvements Phase I Increase R&D Ge
Slide 10: Blueprint 2021 Phase I Accomplishments
BLUEPRINT 2021 PHASE I ACCOMPLISHMENTS STAHL value creation • Achieved $6 million of synergies in the year, ahead of $5 million target • Expecting $15 million in total synergies Leveraged Magnetek technology • Set path for Smart Hoist: Launched Shopstar VS and Prostar VS • Recently launched full-fea
Slide 11: Advancing Blueprint 2021 Phase II
ADVANCING BLUEPRINT 2021 PHASE II Four Areas of Focus Simplify the • Three product-focused businesses Business • Product line and platform rationalization Improve • Achieve $15 million in synergies from STAHL acquisition Productivity • Increased goal from original $11 million Ramp the • Enhance digi
Slide 12: Phase II: Operational Excellence – Market Drives Structure
PHASE II: OPERATIONAL EXCELLENCE Market Drives Structure Channel Partners: Product Categories: General Distribution/Rental Lifting Specialists (Direct Sales) Industrial Products Rigging Specialists Industrial Crane Builders End Users Crane Solutions & Kits EPC OEM Engineered Products Motion Technolo
Slide 13: Phase II: Simplify Product Platforms
PHASE II: OPERATIONAL EXCELLENCE Simplify product platforms Wire Rope Hoist Platform Basic Standard Industrial High Performance Rationalize global platforms while maintaining brands © 2018 Columbus McKinnon Corporation 13
Slide 14: Phase II: Optimization of Supply Chain
PHASE II: OPERATIONAL EXCELLENCE Optimization of supply chain LEVER CHAIN Manual Chain Hoist Platform TOOL 1 BLOCK 1 PARTS ARE 100% SHARED “Everything between the side plates” COMMON LEVER PARTS CHAIN TOOL BLOCK PARTS ARE SHARED BETWEEN PRODUCT TYPE CHAIN “Everything between the side plates and BLOC
Slide 15: Phase II: Drive Cost Savings & Invest in Growth
PHASE II: DRIVE COST SAVINGS & INVEST IN GROWTH ($ in millions) CREATING CENTER OF EXCELLENCE IN FY2019 ~$27 Increase R&D spend by ~$11M: . $5M coming from STAHL $21 . Incremental $6M from SG&A savings . Warehouse consolidation $16 . NEO reductions Sustaining Engineering Investment (1) R&D . Streaml
Slide 16: Phase II: Smart Hoist Vision
PHASE II: SMART HOIST VISION Megatrend movement to industrial automation 80 Projected full-time jobs automated in the U.S. millions 0 2017 2035 Source: University of Oxford, ARK Original Research Opportunity to capitalize on automation megatrend © 2018 Columbus McKinnon Corporation 16
Slide 17: Phase II: Investing for Growth – Smart Hoists
PHASE II: INVESTING FOR GROWTH Smart Hoists Capabilities Leveraging technology and experience to design “Smart Hoists” Onboard diagnostics Remote monitoring Precision lifting Load sensing Preventative maintenance Leads to improved safety and reduced down time Leveraging recent acquisitions
Slide 18: Phase III: Business Development
PHASE III: BUSINESS DEVELOPMENT Portfolio assessment Selective Invest / Grow Scale-Up Investment Portfolio Assessment Indust. Tech . Business model . Profitability . Market position . Fix / Exit Selective Invest / Grow Industry growth Investment . Risk assessment EBITDA (to scale) Divest Fix / Exit
Slide 19: Financial Performance
FINANCIAL PERFORMANCE ($ in millions) Sales Adjusted Operating Income(1) $839.4 $80.5 $637.1 $10.4 $579.6 $597.1 $57.0 $53.6 $49.5 $2.4 $13.0 $70.1 $23.5 $54.6 $40.6 $26.0 9.8%* 9.0%* 7.8%* 9.6%* FY15 FY16 FY17 FY18 FY15 FY16 FY17 FY18 Income from Operations Non-GAAP Adjustments(1) Adjusted Gross Pr
Slide 20: Rapidly De-Levering Balance Sheet
RAPIDLY DE-LEVERING BALANCE SHEET Debt reduction in FY 2018 CAPITALIZATION . Achieved increased target pay down of March 31, March 31, $60 million in FY18 2018 2017 . Surpassed target of <3x Net Debt/ Adjusted Cash and cash equivalents $ 63.0 $ 77.6 EBITDA(1) Total debt 363.3 421.3 • Currently at 2.
Slide 21: Significant Free Cash Flow Generation
SIGNIFICANT FREE CASH FLOW1 GENERATION ($ in millions) FY2018 CapEx: $14.5 million FY19E and Beyond, FCF After: ENABLES MEASURABLE • Annual CapEx of $15 to $20 million $65 ANNUAL DEBT PAYMENT • Annual Pension contribution of ~$12 million $60 - $70 $55 - - $65 $60 • ~$60 million in FY19 $55.1 • ROIC
Slide 22: Key Takeaways
KEY TAKEAWAYS Pivot from late stage industrial to growth oriented industrial technology company Blueprint 2021 expected to achieve >15% EBITDA margins and >10% ROIC Driving earnings power through simplification: business structure & product platform Opportunity to capitalize on automation megatrend
Slide 23: Supplemental Information
SUPPLEMENTAL INFORMATION © 2018 Columbus McKinnon Corporation 23
Slide 24: Adjusted Gross Profit Reconciliation
ADJUSTED GROSS PROFIT RECONCILIATION ($ in thousands) Fiscal Year FY 2015 FY 2016 FY 2017 FY 2018 Gross profit $181,607 $187,263 $192,932 $ 284,574 Add back: Product liability costs for legal settlement — 1,100 — — Building held for sale impairment charge — 429 — — Acquisition inventory step-up expe
Slide 25: Adjusted Income from Operations Reconciliation
ADJUSTED INCOME FROM OPERATIONS RECONCILIATION ($ in thousands) Fiscal Year FY 2015 FY 2016 FY 2017 FY 2018 Income (loss) from operations $54,648 $40,570 $25,973 $70,099 Add back: Acquisition inventory step-up expense and real estate transfer taxes 659 1,446 8,852 — Acquisition deal, integration, an
Slide 26: Adjusted Diluted EPS Reconciliation
ADJUSTED DILUTED EPS RECONCILIATION ($ in thousands, except per share data) Fiscal Year FY 2015 FY 2016 FY 2017 FY 2018 Net income (loss) $27,190 $19,579 $8,984 $22,065 Add back: Acquisition inventory step-up expense and real estate transfer taxes 659 1,446 8,852 — Acquisition deal, integration, and
Slide 27: Adjusted EBITDA Reconciliation
ADJUSTED EBITDA RECONCILIATION ($ in thousands) Quarter Fiscal Year Q4 FY17 Q4 FY18 FY 2017 FY 2018 Net income (loss) $ (4,738) $ 8,466 $ 8,984 $ 22,065 Add back (deduct): Income tax expense/benefit (3,688) 2,598 4,043 27,620 Interest and debt expense 3,568 4,661 10,966 19,733 Cost of debt refinanci
Slide 28: Industrial Capacity Utilization
INDUSTRIAL CAPACITY UTILIZATION U.S. Capacity Utilization Eurozone Capacity Utilization Source: The Federal Reserve Board Source: European Commission 80% 85% 75.8% (Manufacturing) 84.4% & 78.0% (Total) June 2018E 79% 84% April 2018(1) 78% 83% 77% 82% 76% 81% 75% 80% 74% 79% Manufacturing Total (1) A
Slide 29: Strategy: Partners in Motion Control
STRATEGY: PARTNERS IN MOTION CONTROL Become the leading Industrial Technology Company in safe & productive motion control Best in class safety & quality Strengthen the core Continuous improvement Ramp new product engine Optimize supply chain Create end-user pull Operational Profitable &
Slide 30: Global Presence
GLOBAL PRESENCE © 2018 Columbus McKinnon Corporation 30
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