Columbus Mckinnon Corporation · NASDAQ:CMCO
Columbus Mckinnon — Wells Fargo Industrials Conference 2023
35 slides from Columbus Mckinnon's conference presentation, Jun 13, 2023
Slide 1: Wells Fargo Industrial Conference
Wells Fargo Industrial Conference David J. Wilson President and Chief Executive Officer Gregory P. Rustowicz Executive Vice President – Finance & Chief Financial Officer June 13, 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 $1.15B Strategic priorities Revenue Market Cap. • Strengthe
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 © 2022 COLUMBUS MCKINNON CORPORATION
Slide 8: Business Model Transformation
Business Model Transformation Innovation drives strategy and portfolio transformation Revenue FUTURE Growth Rate Specialty FY23 Conveying Automation Linear Automation Motion 14% 10% Linear Specialty Motion Conveying 16% FY21 Lifting Solutions Linear Motion Lifting Solutions & Automation 60% Lifting
Slide 9: Unlocking Potential: Productivity & Engagement
Unlocking Potential: Productivity & Engagement Improving the Customer Experience E2E DIGITAL ENABLEMENT Initiative Status Comments CRM: Case Management and Sales, Leads, Marketing Implemented in Conveying (globally) and Lifting (US & Canada) Advanced Call Center Initiated for Conveying; integrating
Slide 10: Unlocking Potential: Simplification with 80/20
Unlocking Potential: Simplification with 80/20 Simplification: Lifting & Linear Motion Past Present Future SKU’s 50,000 22,000 15,000 Purchased 450,000 239,000 100,000 Components WRH 11 5 2 Platforms ECH 12 10 5 Platforms Brand By Product By Product By Brand Positioning Platform Platform Promise Bra
Slide 11: Unlocking Potential: Profitable Growth
Unlocking Potential: Profitable Growth Acquired montratec® on May 31, 2023 Revenue Profile 4% 11% 20% 20% 35% 60% 22% 20% 80% 28% Europe U.S. APAC Direct Systems Integrators Auto/EV Semi/Elec Life Sci Other Aero • Develops and manufactures logistics solutions connecting robots and workspaces with $2
Slide 12: Unlocking Potential: Operational Performance
Unlocking Potential: Operational Performance Continued progress with gross margin expansion ADJUSTED GROSS MARGIN PROGRESSION GROSS MARGIN LEVERS ~40% Annual Improvements • Operational Excellence 36.5% • Volume/scale/pricing 36.1% 35.4% • Product line simplification 35.0% 34.1% 33.7% Strategic Initi
Slide 13: 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 14: 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 15: Strong Track Record Creating Value Through M&A
Strong Track Record Creating Value Through M&A September 2015 January 2017 April 2021 December 2021 May 2023 Acquisition of STAHL Acquisition of Dorner for Acquisition of Magnetek, CraneSystems from $485M advances Intelligent Acquisition of Garvey for Acquisition of montratec® for Inc. for ~$182M ad
Slide 16: Secular Growth Markets Provide Tailwinds
Secular Growth Markets Provide Tailwinds Precision Conveying Platform Added Attractive Vertical Markets with Enduring Tailwinds Food, Custom designed sanitary and Beverage & easy to clean conveyors Consumer engineered to the strictest USDA ~8% of FY23 sales* Goods guidelines Customizable designs bui
Slide 17: FY2027 Financial Targets
FY2027 Financial Targets Key Assumptions Growing Sales by >10% CAGR • Organic growth of ~5% driven by go-to-market structure and strategic initiatives SALES • Inorganic growth of ~6% from programmatic M&A inclusive of market growth • No material changes to current market conditions Expanding Gross M
Slide 18: Financial Targets
Financial Targets ($ 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 $1,500 36.1% 36.5% 35.0% 35.4% 350 ~$315 18.0% $1,400 33.7% 34.1% 15.1% 15.7% 15.4% 15.8% $325 $1,200 34.0% 13.7% 11.9% $80 250 13.0% $1,0
Slide 19: Revenue Bridge
Revenue Bridge ($ in millions) REVENUE FY23 TO FY27E $30M+ of growth from M&A expected from montratec® over 4 ~$30M realized from years montratec® acquisition (May 2023) Strategy Expected to Deliver >10% Revenue Growth 19 © 2023 COLUMBUS MCKINNON CORPORATION
Slide 20: Adjusted EBITDA Margin Bridge
Adjusted EBITDA Margin Bridge ($ in millions) ADJUSTED EBITDA MARGIN FY23 to FY27E ~21% Actions Complete Expanding Adjusted EBITDA Margins ~550 bps Driven by Cost Actions & Scale 20 © 2023 COLUMBUS MCKINNON CORPORATION
Slide 21: 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 4.00 200 800% 2.8x 2.6x 3.00 $160 800.0 2.2x 2.0x 250% 1.7x 2.00 150 163% 147% 300% 1.1x $630 98% 600.0 0.6x 1.00 158% 121% 100 $97 0.00 $87 -200% $396 400.0 $7
Slide 22: CMCO Peer Group Comparison
CMCO Peer Group Comparison Industrial Peers vs. Motion Control Peers (Based on average TTM ending 3/31/2023) YOY SALES GROWTH ADJ. GROSS ADJ. EBITDA EBITDA TRADING MARGIN(1) MARGIN MULTIPLE(2) Motion Control 10.9% 33.5% 17.5% 12.5x Target: ~21% CMCO 3.3% 36.5% 15.8% 10.1x Legacy Industrial 10.8% 21.
Slide 23: 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 24: Key Takeaways
Key Takeaways Transforming to a Top-tier, Secular Growth, Intelligent Motion Solutions Enterprise EVOLVED STRATEGY “BEYOND BLUEPRINT” TO EXECUTION OF CORE GROWTH FRAMEWORK COLUMBUS MCKINNON BUSINESS SYSTEM – CMBS – ENABLES SCALABILITY CONVEYING SOLUTIONS ADDS GROWTH CATALYST IN ATTRACTIVE MARKETS OP
Slide 25: Wells Fargo Industrial Conference
Wells Fargo Industrial Conference June 13, 2023
Slide 26: Supplemental Information
OW Supplemental Information INTELLIGENT MOTION PURPOSE IN MOTION
Slide 27: Corporate Sustainability Report
Corporate Sustainability Report SOCIAL RESPONSIBILITY PRODUCT QUALITY & INNOVATION CUSTOMER INTIMACY EMPLOYEE HEALTH AND SAFETY DIVERSITY, EQUITY, AND INCLUSION TALENT MANAGEMENT COMMUNITY INVOLVEMENT GOVERNANCE & ETHICS ENTERPRISE RISK MANAGEMENT ETHICS & COMPLIANCE Strategic Initiatives BOARD GOVE
Slide 28: Growing Secular Market Presence
Growing Secular Market Presence Conveying Solutions Serves Less Cyclical Industries FY 2023 Construction Food, Beverage & Consumer Goods 6% 8% Energy & Utilities Oil & Gas 8% 5% Aerospace & Government 5% Transportation Chemical & Paper 13% Processing 4% Life Sciences/Pharma Material Handling 3% 17%
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% 78.3% (Manufacturing) 79.7% (Total) 83% Apr 2023(1) 81% 81.0% Q1 2023 75% 79% 77% 70% 75% 73% 71% 65% 69% 67% 60% 65% Manufacturing Total (1)
Slide 30: ISM Production Index
ISM Production Index Source: Institute for Supply Chain Management 70% 65% 60% 55% 51.1% 50% May 2023 45% 40% 35% 30% 25% 30 © 2023 COLUMBUS MCKINNON CORPORATION
Slide 31: Capital Structure
Capital Structure ($ in millions) CAPITALIZATION Net debt leverage ratio of ~2.2x(1) March 31, March 31, • Net debt to net total capital improved 500 bps y/y to 2023 2022 28.9% Cash and cash equivalents $ 133.2 $ 115.4 • Proforma leverage of 2.7x following montratec acquisition Total debt 471.6 511.
Slide 32: Adjusted Gross Profit Reconciliation
Adjusted Gross Profit Reconciliation ($ in thousands) Fiscal Year 2019 2020 2021 2022 2023 GAAP gross profit $ 304,997 $ 283,186 $ 220,225 $ 315,730 $ 342,009 Add back (deduct): Product liability settlement — — — 2,850 — Acquisition amortization of backlog — — — 2,100 — Acquisition inventory step-up
Slide 33: Adjusted Net Income Reconciliation
Adjusted Net Income Reconciliation ($ in thousands, except per share data) Quarter Fiscal Year Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 FY 2022 FY 2023 GAAP net income (loss) $ 11,826 $ 8,391 $ 14,114 $ 12,029 $ 13,895 $ 29,660 $ 48,429 Add back (deduct): Amortization of intangibles 6,635 6,535 6,447
Slide 34: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation ($ in thousands) Quarter Fiscal Year Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 2022 2023 GAAP net income (loss) $ 11,826 $ 8,391 $ 14,114 $ 12,029 $ 13,895 $ 29,660 $ 48,429 Add back (deduct): Income tax expense (benefit) 6,154 8,893 4,953 4,701 7,499 8,786 26,046 Intere
Slide 35: Free Cash Flow (FCF) & FCF Conversion Reconciliation
Free Cash Flow (FCF) & FCF Conversion Reconciliation ($ in thousands) Fiscal Year 2021 2022 2023 Cash from operations $ 98,890 $ 48,881 $ 83,636 Capital expenditures (12,300) (13,104) (12,632) Free cash flow (FCF) $ 86,590 $ 35,777 $ 71,004 GAAP net income $ 9,106 $ 29,660 $ 48,429 Free cash flow co
Columbus McKinnon — Wells Fargo Industrials Conference 2023 on 6ix