Columbus Mckinnon Corporation · NASDAQ:CMCO
Columbus Mckinnon — D.A. Davidson 20th Annual Diversified Industrials & Services Conference 2021
37 slides from Columbus Mckinnon's conference presentation, Sep 23, 2021
Slide 1: D.A. Davidson Diversified Industrials & Services Conference
D.A. Davidson Diversified Industrials & Services Conference September 23, 2021 David J. Wilson President and Chief Executive Officer Gregory P. Rustowicz Vice President – Finance & Chief Financial Officer 1
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: future sa
Slide 3: Who We Are: Columbus McKinnon
Who We Are: Columbus McKinnon LEADING WORLDWIDE SUPPLIER OF INTELLIGENT MOTION SOLUTIONS FOR MATERIAL HANDLING Market Capitalization $1.3 billion Average Volume (3 mo.) 124,500 Recent Price / 52-Week Range $44.62 / $31.63 - $57.06 Common Shares Outstanding 28.4 million • Intelligent motion solutions
Slide 4: Blueprint for Growth 2.0
Blueprint for Growth 2.0 Pivot Columbus McKinnon toward growth: Organic and Inorganic Strategy to deliver growth, financial performance and shareholder value 4
Slide 5: Columbus McKinnon Business System
Columbus McKinnon Business System Strategic Framework and Core Competencies 1. People & Values 6. Commercial / Selling 7. Product Development 2. Strategic Planning 8. Operations 3. Marketing 9. Finance 4. Product Management 10. Data & Systems 5. M&A A connected Columbus McKinnon Business System (CMB
Slide 6: CMBS Level 1 to Level 4 Tiers Example
CMBS Level 1 to Level 4 Tiers Example Playbook for Standard Work and Processes Level 1 Strategic Framework Level 2 Core Competencies Level 3 Key Processes • Commercial / Selling Level 4 • Product Development Business Tools • Channel Management • Selling Process • Aftermarket • Standard Work • Resour
Slide 7: Our Growth Framework
Our Growth Framework 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 localization, new product development and advancements in automation Strength
Slide 8: Business Model Evolution
Business Model Evolution Growth Strategy Substantially Advances Underlying Portfolio Revenue CMCO Growth Rate Q1 FY22 Lifting Solutions 62% CMCO FY21 Industrial Products 42% Conveying Solutions 16% Crane Solutions Automation 46% Linear Motion 13% 9% Engineered Products 12% EBITDA Margin Strategy evo
Slide 9: Columbus McKinnon Legacy Solutions
Columbus McKinnon Legacy Solutions Crane Solutions, Industrial Products and Engineered Products Lifting capacity from 1/8 ton to ~140 tons Standard Crane and Hoist Products: #1 U.S. market position in hoists Reliable, high-quality products Engineered Crane Solutions: Large tonnage projects Compass™
Slide 10: Conveying Solutions
Conveying Solutions Acquired High-Precision Conveying Systems for Attractive Growth Markets Specialty conveying provides growth platform: $5B TAM growing at 6% to 8% CAGR Strong secular growth drivers: Supply chain automation Acceleration of e-commerce adoption Fragmented market provides target rich
Slide 11: Conveying Solutions Provide Higher Growth and Stronger Margins
Conveying Solutions Provide Higher Growth and Stronger Margins Dorner acquired on April 7, 2021 DORNER Product & Customer Examples Additional platform of precision REVENUE ($M) Flexible Chain Low Profile conveying solutions to drive greater scale 114 Provides higher margin profile 70 $5 million of a
Slide 12: Dorner Acquisition Advances Intelligent Motion Strategy
Dorner Acquisition Advances Intelligent Motion Strategy Innovation and Differentiated Technology Provides Competitive Advantages Provides a platform to accelerate profitable growth… New product High-growth end Platform for further Growing installed Replacement cycle development markets M&A base ✓ Pr
Slide 13: Conveying Solutions Expand Reach in Industrial Automation
Conveying Solutions Expand Reach in Industrial Automation Creates Multiple Pathways for Future Growth Servo Drive / Motor Overhead Lifting Auto. Storage & Retrieval Controls Robotics Actuators RFID/ Scanners Vision Systems Conveying Systems Sensors Precision conveying systems interface with nearly e
Slide 14: Secular Growth Markets Provide Strong Tailwinds
Secular Growth Markets Provide Strong Tailwinds New platform adds attractive vertical markets with enduring tailwinds FOOD PROCESSING 2.2% OF SALES* LIFE SCIENCES 2.2% OF SALES* E-COMMERCE 4.6% OF SALES* Custom designed sanitary and easy to Customizable designs built for precision, Single piece pick
Slide 15: Driving Organic Growth with New Products
Driving Organic Growth with New Products Delivering Innovation TANDEM HOIST UTILITY LEVER HOIST TECHNOLOGY CONVEYOR • Improved facility safety for large • Safety brake prevents unexpected • Unique, beltless zone control for pallet complex loads load release and tray handling • Available in Compass™
Slide 16: Driving Innovation Through Automation
Driving Innovation Through Automation Intelli-Crane™ Solutions INTELLI-GUIDE™ SYSTEM INTELLI-PROTECT™ SYSTEM INTELLI-LIFT™ AUTO DETECTION INTELLI-CONNECT™+ MOBILE APP • Maximized productivity through • Protection boundaries for • Visible and audible warnings • Provides critical crane and hoist autom
Slide 17: Strong Track Record of Creating Value Through M&A
Strong Track Record of Creating Value Through M&A September 2015 January 2017 April 2021 Acquisition of STAHL CraneSystems from Konecranes for ~$218M Acquisition of Dorner for $485M Acquisition of Magnetek, Inc. for strengthens leading global position in advances Intelligent Motion strategy and ~$18
Slide 18: Strong Demand Driving Recovery
Strong Demand Driving Recovery ($ in millions) NET SALES OPERATING INCOME & MARGIN $89 $80 .8 9.2 $213.5 $64 $186.2 $15.8 $166.5 $14.2 9.6 $157.8 $42 $139.1 $10.4 $10.7 .3 11. 6.5 $1.8 1% % 10.0% 6.3% 7.6% 5.0% 9.4% 11.4%1.3% 12.1% 9.1% FY20 FY21 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 FY20 FY21 Q1
Slide 19: 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 33% to Down to
Slide 20: Converting Revenue to Earnings
Converting Revenue to Earnings EARNINGS PER SHARE Solid adjusted EBITDA margin during challenging environment $3.20 $0.69 $0.44 $0.60 • 190 basis points contribution from Dorner in Q1 FY22 $0.17 $0.36 $1.57 • Continuing to target 19% Adjusted EBITDA margin $0.27 $0.39 $2.50 • Expect to achieve targe
Slide 21: Cash Flow
Cash Flow ($ in millions) Three Months Ended Free Cash Flow (2) 6/30/21 6/30/20 Net cash provided by $ (7.4) $ 9.5 $97.4 operating activities $86.6 CapEx (3.6) (1.1) Free cash flow (FCF) (2) $ (11.0) $ 8.4 $67.2 $67.1 Note: Components may not add to totals due to rounding • Q1 FY22 cash outflow of $
Slide 22: Capital Structure
Capital Structure ($ in millions) CAPITALIZATION Pro-forma net debt leverage ratio of ~3.0x (1) June 30, March 31, • Net debt to net total capital: 33.8% 2021 2021 Cash and cash equivalents $ 88.7 $ 202.1 ~$170 million of liquidity Total debt 459.3 249.0 Financed Dorner acquisition with equity and d
Slide 23: Orders and Backlog
Orders and Backlog ($ in millions) Record orders of $249.8 million Record backlog of $247.4 million • 20% sequential and 82% year-over-year increases • Up 23% in short-cycle business and 19% project, sequentially • Sequential increase driven by short cycle business and Dorner • Dorner added $40.5 mi
Slide 24: Q2 FY22 Outlook and Perspective
Q2 FY22 Outlook and Perspective Q2 FY2022 outlook • Expect Q2 FY22 net sales in range of $225 million to $230 million(1) Strong order and backlog levels drive growth • Positive trends across all industries with encouraging trends in heavy industry and offshore oil & gas • Entertainment coming back t
Slide 25: Key Takeaways
Key Takeaways Expanding and Reimagining our Core EVOLVED STRATEGY BLUEPRINT FOR GROWTH 2.0 DEFINES GROWTH FRAMEWORK COLUMBUS MCKINNON BUSINESS SYSTEM – CMBS – ENABLES SCALABILITY CONVEYING SOLUTIONS ADDS GROWTH CATALYST IN ATTRACTIVE MARKETS OPERATIONAL EXCELLENCE DRIVES STRONGER MARGIN PROFILE AS E
Slide 26: D.A. Davidson Diversified Industrials & Services Conference
D.A. Davidson Diversified Industrials & Services Conference September 23, 2021 26
Slide 27: Supplemental Information
Supplemental Information 27
Slide 28: Launched Inaugural CSR Report
Launched Inaugural CSR Report ENVIRONMENTAL STEWARDSHIP CLIMATE CHANGE & ENERGY MANAGEMENT WASTE MANAGEMENT & RECYCLING SOCIAL RESPONSIBILITY EMPLOYEE HEALTH & SAFETY TALENT MANAGEMENT DEI PRODUCT QUALITY & INNOVATION PURPOSE, MISSION, VISION, VALUES COMMUNITY INVOLVEMENT Strategic Initiatives CUSTO
Slide 29: Industrial Capacity Utilization
Industrial Capacity Utilization U.S. Capacity Utilization Eurozone Capacity Utilization Source: The Federal Reserve Board Source: European Commission 85% 80% 82.9% 83% Q3 2021 81% 75% 79% 77% 70% 75% 76.7% (Manufacturing) & 73% 76.4% (Total) August 2021(1) 71% 65% 69% 67% 60% 65% Manufacturing Total
Slide 30: ISM Production Index
ISM Production Index Source: Institute of Supply Chain Management 70% 65% 60% 55% 60.0% August 2021 50% 45% 40% 35% 30% 25% 30
Slide 31: Adjusted Income from Operations Reconciliation
Adjusted Income from Operations Reconciliation ($ in thousands) Year Quarter FY 2020 FY 2021 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 GAAP income from operations $ 89,824 $ 42,255 $ 1,789 $ 15,820 $ 10,447 $ 14,199 $ 10,746 Add back (deduct): Factory closures 4,709 3,778 2,256 747 469 306 — Business
Slide 32: Adjusted Net Income Reconciliation
Adjusted Net Income Reconciliation ($ in thousands, except per share data) Year Quarter FY 2020 FY 2021 TTM Q1FY22 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 Net income (loss) $ 59,672 $ 9,106 $ 4,812 $ (2,969) $ (4,104) $ 6,594 $ 9,585 $ (7,263) Add back: Amortization of intangibles 12,942 12,623 15,6
Slide 33: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation ($ in thousands) Year Quarter FY 2020 FY 2021 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 GAAP net income (loss) $ 59,672 $ 9,106 $ (2,969) $ (4,104) $ 6,594 $ 9,585 $ (7,263) Add back (deduct): Income tax expense (benefit) 17,484 970 (963) (45) 616 1,362 (2,517) Interest
Slide 34: Free Cash Flow & Free Cash Flow Conversion Reconciliation
Free Cash Flow & Free Cash Flow Conversion Reconciliation ($ in thousands, except per share data) Fiscal Year FY 2019 FY 2020 FY 2021 TTM Q1 FY 2022 Cash from operations $ 79,499 $ 106,795 $ 98,890 $ 81,978 Capital expenditures (12,288) (9,432) (12,300) (14,860) Free cash flow (FCF) $ 67,211 $ 97,36
Slide 35: Transaction Overview
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 Approximate
Slide 36: Attractive and Diverse End Markets
Attractive and Diverse End Markets Energy/Utilities Mobile Industries Construction Food Processing Other Life Sciences Consumer Packaged Goods Entertainment Process Industries Industrial Automation Industrial E-Commerce/Supply Chain ~22% ~17% ~17% ~17% ~6% ~5% ~5% ~3% ~3% ~2% ~2% ~1% Enduring tailwi
Slide 37: Global Enterprise
Global Enterprise AMERICAS EMEA APAC ~64% OF REVENUE ~30% OF REVENUE ~6% OF REVENUE Buffalo, NY Headquarters Milwaukee, WI Brighton, MI Chester, UK Power Control Workstations Hoist, Plate Clamps Conveyor Systems Hangzhou, CN Damascus, VA Wuppertal and Hoist Julich , DE Kunzelsau, DE Hoist Lexington,