Columbus Mckinnon Corporation · NASDAQ:CMCO
Columbus Mckinnon — Q3 FY2020 Earnings Presentation
24 slides from Columbus Mckinnon's earnings presentation, Feb 4, 2020
Slide 1: Q3 Fiscal Year 2020 Financial Results Conference Call
February 4, Q3 FISCAL YEAR 2020 2020 FINANCIAL RESULTS CONFERENCE CALL Richard H. Fleming Chairman & Interim Chief Executive Officer Gregory P. Rustowicz Vice President – Finance & Chief Financial Officer PARTNERS IN MOTION CONTROL
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 sales and earnings, involve known a
Slide 3: Execution of Strategy Drives Earnings
EXECUTION OF STRATEGY DRIVES EARNINGS Blueprint for Growth strategy drove margin expansion and earnings growth Gross margin increased 20 basis points to 34.0% on lower volume • Achieved 11th consecutive quarter of year-over year margin expansion Diluted earnings per share were $0.63; 80/20 Process c
Slide 4: Blueprint Strategy Phase II Delivering Results
BLUEPRINT STRATEGY PHASE II DELIVERING RESULTS ($, in millions contribution to operating income) 80/20 Process: ~$5.7 million contribution to operating income in Q3 FY20 Customer simplification (strategic pricing) FY 2019 Actual $8.5 Priority customer account program (incremental volume from sharpen
Slide 5: Ramping the Growth Engine
RAMPING THE GROWTH ENGINE Created Automation Division Center of Excellence Integrating Lifting Specialist with Smart Movement Intelli-Crane™ Systems improve safety & productivity Utility lever hoist detects accidental release of loads Innovation expands addressable markets © 2020 Columbus McKinnon C
Slide 6: Net Sales
NET SALES ($ in millions) Q3 sales down 8.3%, or $18.1 million; Q3 FY20 Sales Bridge Divestiture represented $9.0 million of decline Quarter U.S.: Pricing of 1.7% partially offset 4.2% volume decline Q3 FY19 Sales $ 217.4 Non-U.S: 6.5% decline. Pricing of 1.4% partially Divestitures (9.0) offset 6.2
Slide 7: Gross Profit & Gross Margin
GROSS PROFIT & GROSS MARGIN ($ in millions) Quarter Gross Profit Bridge Quarter 11th consecutive quarter of year/year Q3 FY2019 Gross Profit $ 73.4 gross margin Divestitures (2.0) expansion Q3 FY2019 Gross Profit adjusted for divestitures $ 71.4 Pricing, net of material cost inflation 2.8 $76.0 $75.
Slide 8: RSG&A
RSG&A ($ in millions) RSG&A at 21.9% of sales RSG&A as % of 21.9% 22.6% 21.2% 21.7% 21.9% Reduced by: sales $1.0 million for divestitures $0.4 million for FX $47.5 $49.0 $45.1 $45.0 $43.8 Benefited by: $3.3 $3.4 $2.8 $3.0 $2.6 $2.0 million reduction in stock compensation expense $20.4 $21.7 $19.6 $1
Slide 9: Operating Income & Adjusted OI Margin
OPERATING INCOME & ADJUSTED OI MARGIN ($ in millions) Q3 FY20 operating income of $20.9 million Prior year included $15.6 million net loss $28.1 related to divestitures $26.3 $24.9 $22.9 $23.1 Adjusted operating income grew 1.1%, $27.0 $25.2 $24.5 or 5.7% normalized for divestitures $20.9 Adjusted o
Slide 10: Quarterly Earnings Per Share
QUARTERLY EARNINGS PER SHARE GAAP Diluted EPS Net income: $0.83 $0.78 $15.3 million $0.69 $0.63 $0.63 per diluted share ($0.03) Adjusted net income: Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 $15.4 million, 6.2% increase Y/Y Adjusted EPS $0.64 per diluted share, up 4.9% Y/Y $0.69 $0.81 $0.74 $0.61 $0.6
Slide 11: Adjusted EBITDA & ROIC
ADJUSTED EBITDA & ROIC Adjusted EBITDA Margin Strong adjusted EBITDA margin 15.2% 15.2% in Q3 FY20, expanded 100 bps Y/Y 15.1% 13.7% YTD EBITDA margin of 16.1% On track to achieve 19% goal in FY 2022 FY18 FY19 Q3 FY20 Return on Invested Capital Adjusted ROIC net of cash increased (ROIC)(1) 11.9% in
Slide 12: Cash Flow
CASH FLOW ($ in millions) Free Cash Flow(1) Three Months Ended YTD 12/31/19 12/31/18 12/31/19 $90 - $95 $80 - $85 Net cash $75 - $80 provided by $67.2 operating $32.4 $26.2 $70.3 $55.1 activities $46.1 CapEx (1.9) (2.4) (6.8) Free cash flow (FCF) $30.5 $23.8 $63.5 Note: Components may not add to tot
Slide 13: Strong Balance Sheet
STRONG BALANCE SHEET ($ in millions) CAPITALIZATION Debt leverage ratio(1) of 1.3x Dec. 31, March 31, Paid down $20 million of debt in 2019 2019 Q3 FY20 Cash and cash equivalents $ 84.0 $ 71.1 YTD paid $50 million of debt Total debt 251.9 300.3 Net debt to net total capital 25.7% Total net debt 167.
Slide 14: Capital Deployment Priorities
CAPITAL DEPLOYMENT PRIORITIES Organic Growth New product development Investing in growth initiatives and CapEx De-lever the balance sheet Decreasing Priority Achieved net leverage target In-organic Growth M&A Fund M&A Return of Capital Regular dividend Adhere to dividend policy Share repurchase Cons
Slide 15: Outlook
OUTLOOK Q4 FY20 outlook: Slowing macroeconomic and other headwinds expected to continue in Q4 FY20 Expect Q4 FY20 sales to be down 5% to 7% from Q4 FY19, which was ~$210 million* Team working to offset headwinds, both top and bottom lines Blueprint for Growth progress: Completed closure of China fac
Slide 16: Supplemental Information
Supplemental Information © 2020 Columbus McKinnon Corporation 16
Slide 17: Blueprint for Growth Strategy
BLUEPRINT FOR GROWTH STRATEGY Growth Phase III Oriented Evolve business model Industrial • Portfolio optimization Technology • Mergers & acquisitions Phase II Simplify the business Drive profitable growth • 80/20 Process • Operational Excellence • Ramp the Growth Engine Phase I Get control Achieve r
Slide 18: Businesses Sold
BUSINESSES SOLD Q1 Q2 Q3 Q4 ($ in thousands) FY19 FY19 FY19 FY19 FY19 Sales 11,104 9,233 8,983 4,875 34,195 Income from operations 665 1,461 1,007 532 3,665 1. The Tire Shredder business was divested December 28, 2018. 2. Crane Equipment & Service, Inc. was divested February 28, 2019. 3. Stahlhammer
Slide 19: Adjusted Income from Operations Reconciliation
ADJUSTED INCOME FROM OPERATIONS RECONCILIATION ($ in thousands) Quarter Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Income from operations $ 6,646 $ 24,468 $ 27,043 $ 25,231 $ 20,886 Add back (deduct): Factory closures 200 1,273 1,027 470 1,592 Business realignment costs — — — 413 662 Insurance recovery
Slide 20: Adjusted Net Income Reconciliation
ADJUSTED NET INCOME RECONCILIATION ($ in thousands, except per share data) Quarter Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Net income (loss) $ (782) $ 19,741 $ 18,579 $ 16,599 $ 15,250 Add back (deduct): Factory closures 200 1,273 1,027 470 1,592 Business realignment costs — — — 413 662 Insurance re
Slide 21: Adjusted EBITDA Reconciliation
ADJUSTED EBITDA RECONCILIATION ($ in thousands) Quarter Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Net income (loss) $ (782) $ 19,741 $ 18,579 $ 16,599 $ 15,250 Add back (deduct): Income tax expense 3,111 860 5,162 5,141 2,234 Interest and debt expense 4,330 3,959 3,852 3,759 3,423 Investment (income)
Slide 22: Industrial Capacity Utilization
INDUSTRIAL CAPACITY UTILIZATION U.S. Capacity Utilization Eurozone Capacity Utilization Source: The Federal Reserve Board Source: European Commission 82% 85% 75.2% (Manufacturing) & 81% 77.0% (Total) December 2019(1) 84% 80% 79% 83% 78% 82% 77% 81.3% December 2019 76% 81% 75% 80% 74% 73% 79% Manufac
Slide 23: Conference Call Playback Info
CONFERENCE CALL PLAYBACK INFO Replay Number: 412-317-6671 passcode: 13697631 Telephone replay available through February 11, 2020 Webcast / PowerPoint / Replay available at www.cmworks.com/investors Transcript, when available, at www.cmworks.com/investors © 2020 Columbus McKinnon Corporation 23
Slide 24: Q3 Fiscal Year 2020 Financial Results Conference Call
February 4, Q3 FISCAL YEAR 2020 2020 FINANCIAL RESULTS CONFERENCE CALL PARTNERS IN MOTION CONTROL