Columbus Mckinnon Corporation · NASDAQ:CMCO
Columbus Mckinnon — Barrington Research Spring Investment Conference 2021
37 slides from Columbus Mckinnon's conference presentation, May 27, 2021
Slide 1: Barrington Research Spring Investment Conference
Barrington Research Spring Investment Conference May 27, 2021 1 David J. Wilson President and Chief Executive Officer Gregory P. Rustowicz Vice President – Finance & Chief Financial Officer
Slide 2: Safe Harbor Statement
2 Safe Harbor Statement These slides, and the accompanying oral discussion, 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 future sales and earnings, involve known
Slide 3: Who We Are: Columbus McKinnon
3 Seasoned leader with extensive history of safely, efficiently and ergonomically moving materials Who We Are: Columbus McKinnon • Headquartered in Buffalo, New York, USA • World’s second largest hoist company; #1 provider of hoists in U.S. • Manufactures hoists, crane components, precision conveyin
Slide 4: Blueprint for Growth 2.0: Pivot toward growth, organic and inorganic
4 Strategy to deliver growth, financial performance and shareholder value Blueprint for Growth 2.0 Pivot Columbus McKinnon toward growth: Organic and Inorganic
Slide 5: Columbus McKinnon Business System creates a harmonized base to scale
5 A connected Columbus McKinnon Business System (CMBS) creates a harmonized base to scale Columbus McKinnon Business System 8. Operations 9. Finance 10. Data & Systems 6. Commercial / Selling 7. Product Development 1. People & Values 2. Strategic Planning 3. Marketing 4. Product Management 5. M&A St
Slide 6: Our Growth Framework
6 Our Growth Framework Providing a clear path to organic and strategic growth initiatives Rethink current addressable markets and target further strategic expansion through innovative approaches Improve vertical market, channel and geographic access Take greater marker share through product localiza
Slide 7: Business Model Evolution into an intelligent motion enterprise
7 Strategy evolving Columbus McKinnon into a high value, intelligent motion enterprise Business Model Evolution Growth Strategy Substantially Advances Underlying Portfolio Revenue Growth Rate EBITDA Multiple Organic CMCO Pro forma with Dorner Crane Solutions 46% Industrial Products 42% Engineered Pr
Slide 8: Lifting Solutions: largest installed base of hoists in North America
8 Largest installed base of hoists in North America Lifting Solutions Crane Solutions, Industrial Products and Engineered Products Lifting capacity from 1/8 ton to ~140 tons Standard Products: #1 U.S. market position in hoists Most advanced, high quality products Engineered Solutions: Large tonnage
Slide 9: Conveying Solutions: specialty conveying platform for growth
Specialty conveying platform for growth… New: Conveying Solutions ✓ $5B TAM growing at 6% to 8% CAGR ✓ Strong secular growth drivers • Supply chain automation • Acceleration of e-commerce adoption ✓ Fragmented market provides target rich acquisition environment ✓ Complementary adjacencies including
Slide 10: Global organization with production facilities in Americas, EMEA, APAC
10 Global organization with production facilities in the Americas, EMEA, and APAC Global Enterprise Kunzelsau, DE Hoist Milwaukee, WI Power Control Conveyor Systems Wadesboro, NC Hoist Damascus, VA Hoist Charlotte, NC Actuator Mexico Hoists Conveyor systems Lexington, TN Chain Chattanooga, TN Forgin
Slide 11: Dorner: high-precision conveyor automation platform for growth
11 Leading high-precision conveyor automation platform for growth Acquired Dorner Manufacturing Corporation High-Precision Conveying Systems • Headquartered in Hartland, WI with approximately 400 global employees • 85% of revenue generated in North America • Differentiated solutions enhance producti
Slide 12: Acquisition advances Intelligent Motion strategy
New product development Replace- ment cycle High- growth end markets Platform for further M&A Growing installed base Acquisition Advances Intelligent Motion Strategy Innovation and Differentiated Technology Provides Competitive Advantages Enhances CMCO’s intelligent motion and new product developmen
Slide 13: Conveying Systems Expand Reach in Industrial Automation
13 Conveying Systems Expand Reach in Industrial Automation Precision conveying systems interface with nearly every facet of industrial automation Creates Multiple Pathways for Future Growth Overhead Lifting Controls Actuators Servo Drive / Motor Vision Systems Sensors Robotics RFID/ Scanners Auto. S
Slide 14: Enhanced Scale and Margins
14 New platform accelerates achievement of 19% Adjusted EBITDA margin goal Enhanced Scale and Margins TTM 3/31 REVENUE AND ADJUSTED EBITDA Adjusted EBITDA margin % Additional platform of precision conveying solutions to drive greater scale Provides higher margin profile $5 million of annualized cost
Slide 15: Leading Participation in Secular Growth Markets
15 LIFE SCIENCES 17% OF SALES* E-COMMERCE 11% OF SALES*FOOD PROCESSING 20% OF SALES* Leading Participation in Secular Growth Markets Strong performance and market share gains within attractive verticals Single piece picking, robotics integration to automate picking and sorting functions Custom desig
Slide 16: Delivering Innovation
16 Improved customer experience, safety and productivity at the core of new product development Delivering Innovation Driving organic growth with new products • Safety brake prevents unexpected load release • Two patent applications on the YaleErgo 360 • Unique, beltless zone control for pallet and
Slide 17: Intelli-Crane Solutions: pre-engineered automation
17 Creating competitive advantages with pre-engineered automation solutions Intelli-Crane™ Solutions • Visible and audible warnings when off-center pick is detected • Auto-correction mode • Provides critical crane and hoist status information • Reduces plan maintenance and ultimately increases uptim
Slide 18: Strong Track Record of Creating Value Through M&A
January 2017 Acquisition of STAHL CraneSystems from Konecranes for ~$218M strengthens leading global position in lifting solutions Leadership team with proven ability to integrate acquisitions to enhance scale and diversification 18 Strong Track Record of Creating Value Through M&A Programmatic M&A
Slide 19: Solid Margins on Lower Volume
19 80/20 Process and operational excellence initiatives drove margin performance Solid Margins on Lower Volume NET SALES $601.1 $801.1 $842.1 $809.2 $649.6 $637.1 $839.4 $876.3 $809.2 $649.6 FY17 FY18 FY19 FY20 FY21 Sales Divestitures OPERATING INCOME & MARGIN 9.1%9.4% 11.4% 12.1% $23.7 $68.3 $69.4
Slide 20: Continue to Drive Margin Expansion
Created $40 million of incremental OI beginning in FY191… Substantial opportunities still exist Continue to Drive Margin Expansion 80/20 Critical Business Tool Product SKUs Down to ~40,000 from ~50,000 in 2019 Purchased parts ~400,000 Simplify the Business: Eliminate bleeders… focus on areas of grow
Slide 21: EPS and Adjusted EBITDA
21 Strong confidence in strategy evolution to drive profitable growth and realize long-term objectives EPS and Adjusted EBITDA ADJUSTED EBITDA MARGIN Solid adjusted EBITDA margin during challenging environment 11.4% 13.7% 15.1% 15.7% 11.9% FY17 FY18 FY19 FY20 FY21 • Q4 FY2021 Adjusted EBITDA margin
Slide 22: Cash Flow
22 Strong free cash flow throughout business cycles Cash Flow Strong cash generation $55.1 $67.2 $97.4 $86.6 FY18 FY19 FY20 FY21 • Dorner adds to CMCO’s strong cash flow profile • Expected to enable rapid de-levering of the balance sheet • FY22 expected CapEx: $20 to $25 million (1) Note: Components
Slide 23: Capital Structure
23 Significant financial strength and liquidity supports pivot to growth Capital Structure ($ in millions) (1)Net debt leverage ratio is defined as Net Debt / TTM Adjusted EBITDA Successfully financed acquisition with equity and debt • Initial bridge loan of $650 million to fund acquisition • Issued
Slide 24: Orders and Backlog
24 Strong orders and backlog growth sets up FY22 Orders and Backlog Outstanding orders of $208.8 million Backlog of $171.7 million, up 31% • 24% sequential and 6% year-over-year increases • Up 32% in project business and 16% short cycle, sequentially • Year-over-year increase of total backlog driven
Slide 25: ESG Priorities
25 Advancing priorities and issuing initial corporate social responsibility report in early FY2022 ESG Priorities Aligning stakeholder priorities and what’s critical to CMCO E N V IR O N M E N T A L S T E W A R D S H IP • CLIMATE CHANGE AND ENERGY MANAGEMENT • WASTE MANAGEMENT & RECYCLING S O C IA L
Slide 26: Outlook and Perspective
26 2.0 Strategy defines growth framework and enables scalability Outlook and Perspective Q1 FY2022 outlook • Expect Q1 FY22 net sales in range of $212 million to $217 million with Dorner Dorner entering fiscal 2022 with strong backlog • Strong bookings trend in e-warehousing, life sciences and food
Slide 27: Key Takeaways
27 Key Takeaways Expanding and Reimagining our Core Growth strategy is underpinned by CMBS enabling scalability and operational excellence EVOLVED STRATEGY BLUEPRINT FOR GROWTH 2.0 DEFINES GROWTH FRAMEWORK COLUMBUS MCKINNON BUSINESS SYSTEM – CMBS – ENABLES SCALABILITY CONVEYING SOLUTIONS ADDS GROWTH
Slide 28: Barrington Research Spring Investment Conference
Barrington Research Spring Investment Conference May 27, 2021 28
Slide 29: Supplemental Information
Supplemental Information 29
Slide 30: Capacity Utilization
30 U.S. Capacity Utilization Eurozone Capacity Utilization Industrial Capacity Utilization Source: The Federal Reserve Board Source: European Commission 60% 65% 70% 75% 80% Manufacturing Total 74.1% (Manufacturing) & 74.9% (Total) April 2021(1) 65% 67% 69% 71% 73% 75% 77% 79% 81% 83% 85% 82.5% Q2 20
Slide 31: ISM Production Index
31 ISM Production Index Source: Institute of Supply Chain Management 25% 30% 35% 40% 45% 50% 55% 60% 65% 70% 62.5% April 2021
Slide 32: Adjusted Income from Operations Reconciliation
32 Adjusted Income from Operations Reconciliation ($ in thousands) Fiscal Year FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 GAAP income from operations $ 23,725 $ 68,331 $ 69,442 $ 89,824 $ 42,255 Add back (deduct): Factory closures — — 1,473 4,709 3,778 Business realignment costs — — 1,906 2,831 1,470 I
Slide 33: Adjusted Net Income Reconciliation
33 Adjusted Net Income Reconciliation (1) Applies normalized tax rate of 22% to GAAP pre-tax income and non-GAAP adjustments above, which are each pre-tax. Adjusted net income and diluted EPS are defined as net income and diluted EPS as reported, adjusted for certain items and at a normalized tax ra
Slide 34: Adjusted EBITDA Reconciliation
34 Adjusted EBITDA Reconciliation Adjusted EBITDA is defined as net income before interest expense, income taxes, depreciation, amortization, and other adjustments. Adjusted EBITDA is not a measure determined in accordance with generally accepted accounting principles in the United States, commonly
Slide 35: Pro-Forma Adjusted EBITDA Reconciliation
35 Pro-Forma Adjusted EBITDA Reconciliation ($ in thousands) Trailing twelve months ended 3/31/21 Dorner CMCO Pro-forma GAAP net income (loss) $ 1,139 $ 9,106 $ 10,245 Add back (deduct): Income tax expense (benefit) 405 970 1,375 Interest and debt expense 5,650 12,081 17,731 Investment (income) loss
Slide 36: Transaction Overview
36 Transaction Overview PURCHASE PRICE $485 million plus cash minus debt with working capital adjustment TRANSACTION COSTS Approximately $11 million excluding financing fees (majority at close) COST SYNERGIES Approximately $5 million in annual cost synergies by end of FY 2023 ONE-TIME COSTS Approxim
Slide 37: Attractive and Diverse End Markets
37 Enduring tailwinds gained with new markets for conveying solutions Attractive and Diverse End Markets ~22% ~17% ~17% ~17% ~6% ~5% ~5% ~3% ~3% ~2% ~2% In d u s tr ia l M o b il e I n d u s tr ie s E n e rg y /U ti li ti e s P ro c e s s I n d u s tr ie s O th e r In d u s tr ia l A u to m a ti o n
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