Columbus Mckinnon Corporation · NASDAQ:CMCO

Columbus Mckinnon — 31st Annual ROTH Conference (March 2019)

33 slides from Columbus Mckinnon's conference presentation, Mar 18, 2019

  1. Slide 1: 31st Annual ROTH Conference

    March 18, 2019 31ST ANNUAL ROTH CONFERENCE Gregory P. Rustowicz Vice President – Finance & Chief Financial Officer

  2. Slide 2: Safe Harbor Statement

    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 revenue and earnings, involve known

  3. Slide 3: World's 2nd largest hoist company with leading share in U.S.

    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

  4. Slide 4: Highly Relevant to Customers

    HIGHLY RELEVANT TO CUSTOMERS Professional grade solutions for complex applications © 2019 Columbus McKinnon Corporation 4

  5. Slide 5: 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%  Manual Chain Hoist Crane  Electric Chain Hoist ~45%  Rigging / Clamps Solutions  Industrial Winches 

  6. Slide 6: Defined Channels to Market

    DEFINED CHANNELS TO MARKET Specialty Distributors Pfaff International Direct ~10% US General Line Distributors ~5% ~29% OEM/Government ~10% Crane ~11% Builders ~12% ~23% International General EPC Line Distributors $873.7 Million 3Q FY19 TTM Revenue Market channels provide access to end users © 2019

  7. Slide 7: Market Drives Structure

    MARKET DRIVES STRUCTURE Reorganized November 2017 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 Technology Dist

  8. Slide 8: End Market and Geographic Diversification

    END MARKET AND GEOGRAPHIC DIVERSIFICATION Mining Entertainment Government / Others ~3%~3% APAC ~3% Elevators Latin America ~3% 6% Heavy OEM General Canada 4% Pulp ~5% ~25% Industrial 4% Paper/Chemical/ Pharma ~5% Construction ~5% 53% U.S. Metals Rail / Aerospace / ~10% ~10% Processing / Transport St

  9. Slide 9: Key Vertical Markets

    KEY VERTICAL MARKETS CONSTRUCTION MINING ENTERTAINMENT OIL & GAS POWER / UTILITIES TRANSPORTATION AUTOMOTIVE HEAVY EQUIPMENT MANUFACTURING © 2019 Columbus McKinnon Corporation 9

  10. Slide 10: Strategy: Evolution of Columbus McKinnon

    STRATEGY: EVOLUTION OF COLUMBUS MCKINNON Phase II underway Growth oriented Phase III Industrial Evolve business Technology model Further pivot: • Portfolio optimization Phase II • M&A Simplify and drive profitable growth Simplify through 80/20 process Operational excellence Ramp growth engine: Phase

  11. Slide 11: Blueprint Phase I Accomplishments

    BLUEPRINT PHASE I ACCOMPLISHMENTS STAHL value creation Achieved ~$11 million of synergies by Q2 FY19; $0.17 accretive in first full year Leveraged Magnetek technology Launched three variable-speed drive platforms to address the industrial automation trend Strengthened the core Improved product avail

  12. Slide 12: Tracking Blueprint Phase II Progress

    TRACKING BLUEPRINT PHASE II PROGRESS Simplify the Business 80/20 process driving results • Expect ~$7 million savings in FY2019; $4.1 million savings year-to-date Tire Shredder business sold in December Crane Equipment & Service, Inc. and Stahlhammer Bommern GmbH sold in February Improve Productivit

  13. Slide 13: Operating System Deployment Continues

    OPERATING SYSTEM DEPLOYMENT CONTINUES E-PAS™: Earnings Power Acceleration System Key Strategy Talent Performance Deployment Development Indicators Monthly Operating 80 / 20 M&A Reviews Process Process (MORs) Risk & Mission Lean Opportunity Vision Tools (R&Os) Values 80/20 process: Centerpiece of ope

  14. Slide 14: Phase II: Simplify Through 80/20

    PHASE II: SIMPLIFY THROUGH 80/20 • Product Line Simplification 80 / 20 • Customer Focus Process • Targeted Selling • Core Business Segmentation • Purchasing leverage • Indirect cost reduction • Sharper business focus Savings • Expected to accelerate • Realize a full year’s impact of actions in FY202

  15. Slide 15: Phase II: Simplify Through 80/20

    PHASE II: SIMPLIFY THROUGH 80/20 Product Line Simplification Wire Rope Hoist Platform Basic Standard Industrial High Performance Rationalize global platforms while maintaining brands © 2019 Columbus McKinnon Corporation 15

  16. Slide 16: Phase II: Operational Excellence

    PHASE II: OPERATIONAL EXCELLENCE Common Component Utilization Manual Chain Hoist Platform LEVER CHAIN TOOL 1 BLOCK 1 PARTS ARE 100% SHARED “Everything between the side plates” COMMON LEVER PARTS CHAIN TOOL BLOCK PARTS ARE SHARED BETWEEN CHAIN PRODUCT TYPE BLOCK 2 LEVER TOOL “Everything between the s

  17. Slide 17: Phase II: Ramp the Growth Engine

    PHASE II: RAMP THE GROWTH ENGINE ($ in millions) OPENING CENTER OF EXCELLENCE IN APRIL Increase R&D spend by ~$11M: ~$27  $5M coming from STAHL  Incremental $6M from FY17 baseline $21 $16 Sustaining Engineering Investment (1) R&D ~$21M Engineered to Order R&D 75% ~$14M Research R&D 67% ~$10M Produ

  18. Slide 18: 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 © 2019 Columbus McKinnon Corporation 18

  19. Slide 19: Phase II: New Product Development

    PHASE II: NEW PRODUCT DEVELOPMENT 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 acquisiti

  20. Slide 20: 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

  21. Slide 21: Financial Performance

    FINANCIAL PERFORMANCE ($ in millions) Sales & Gross Margin Growth in revenue driven by organic and acquired sales $839.4 $873.7 Gross margin improvement $637.1 driven by Blueprint for Growth $579.6 $597.1 34.7% 33.7% 31.3% 31.4% 30.3% FY15 FY16 FY17 FY18 TTM Q3 FY19 Total Sales Gross Margin Customer

  22. Slide 22: Financial Performance

    FINANCIAL PERFORMANCE ($ in millions) Adjusted Operating Income(1) Diluted EPS(1) $95.0 $2.56 $78.7 $2.01 $57.0 $1.72 $53.6 $1.53 $1.47 $49.5 10.9% 9.8% 9.0% 9.4% 7.8% $54.6 $40.6 $26.0 $68.3 $60.8 $1.34 $0.96 $0.43 $0.95 $1.32 FY15 FY16 FY17 FY18 TTM Q3 FY15 FY16 FY17 FY18 TTM Q3 FY19 FY19 Non-GAAP

  23. Slide 23: De-Levering Balance Sheet

    DE-LEVERING BALANCE SHEET CAPITALIZATION Debt reduction continues Dec 31, March 31, Paid down $25 million in debt in 2018 2018 quarter; $50 million year-to-date Cash and cash equivalents $ 58.1 $ 63.0 Net Debt / Adjusted TTM EBITDA(1) Total debt 314.8 363.3 • Reduced to 1.99x and achieved target Tot

  24. Slide 24: Significant Free Cash Flow Generation

    SIGNIFICANT FREE CASH FLOW1 GENERATION ($ in millions) FY19E and Beyond, FCF After: ENABLES MEASURABLE • Annual CapEx of approximately $15 million* ANNUAL DEBT PAYMENT • Annual Pension contribution of ~$12 million ~$60 million in FY19 $90 - $80 - $95 $70 - $85 $60 - $75 $65 $55.1 $46.1 $30.3 $21.0 F

  25. Slide 25: Creating Shareholder Value

    Creating Shareholder Value Adjusted EBITDA Margin(1) Return on Invested Capital (ROIC)(2) 14.8% 13.7% 12.4% 12.4% 11.7% 11.7% 10.5% 8.7% 8.7% 6.4% FY15 FY16 FY17 FY18 Q3 FY19 FY15 FY16 FY17 FY18 Q3 FY19 TTM TTM GOAL: Adjusted EBITDA Margin of 19% and Adjusted ROIC in mid-teens (1) Adjusted EBITDA is

  26. Slide 26: Key Takeaways

    KEY TAKEAWAYS Pivot from late stage industrial to higher growth, industrial technology company Raising expectations over next three years: >19% EBITDA margins and ROIC in mid-teens Cost savings through simplification and operational excellence Opportunity to capitalize on automation megatrend Drive

  27. Slide 27: Supplemental Information

    SUPPLEMENTAL INFORMATION © 2019 Columbus McKinnon Corporation 27

  28. Slide 28: Adjusted Income from Operations Reconciliation

    ADJUSTED INCOME FROM OPERATIONS RECONCILIATION ($ in thousands) Fiscal Year FY 2015 FY 2016 FY 2017 FY 2018 TTM Q3 FY19 Income from operations $ 54,648 $ 40,570 $ 25,973 $ 68,331 $ 60,781 Add back: Impairment on held for sale businesses — 429 — — 27,753 Gain on sale of business — — — — (1,103) Acqui

  29. Slide 29: Adjusted Net Income Reconciliation

    ADJUSTED NET INCOME RECONCILIATION ($ in thousands, except per share data) Fiscal Year FY 2015 FY 2016 FY 2017 FY 2018 TTM Q3 FY19 Net income $ 27,190 $ 19,579 $ 8,984 $ 22,065 $ 31,302 Add back: Acquisition inventory step-up expense and real estate transfer taxes 659 1,446 8,852 — — Acquisition dea

  30. Slide 30: Adjusted EBITDA Reconciliation

    ADJUSTED EBITDA RECONCILIATION ($ in thousands) Fiscal Year FY 2015 FY 2016 FY 2017 FY 2018 TTM Q3 FY19 Net income (loss) $ 27,190 $ 19,579 $ 8,984 $ 22,065 $ 31,302 Add back (deduct): Income tax expense/(benefit) 8,825 12,045 4,043 27,620 12,059 Interest and debt expense 12,390 7,904 10,966 19,733

  31. Slide 31: Industrial Capacity Utilization

    INDUSTRIAL CAPACITY UTILIZATION U.S. Capacity Utilization Eurozone Capacity Utilization Source: The Federal Reserve Board Source: European Commission 80% 85% 76.6% (Manufacturing) & 79% 78.7% (Total) December 2018 84% 83.9% December 2018 78% 83% 77% 82% 76% 81% 75% 80% 74% 79% Manufacturing Total ©

  32. Slide 32: 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 & global footprint  Beco

  33. Slide 33: Global Presence

    GLOBAL PRESENCE Ambacht, Netherlands Bedford, UK Hamm, Germany Chester, UK St. Petersburg, Russia Coleshill, UK Newtownabbey, N. Ireland Wuhan, China Wuppertal, Germany Brampton, Ontario Prenton, UK Plewiska, Poland Carlow, Ireland Künzelsau, Germany Shanghai, China Kissing, Germany Romeny-sur-Marne

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