Columbus Mckinnon Corporation · NASDAQ:CMCO
Columbus Mckinnon — Barrington Research Virtual Fall Investment Conference 2022
36 slides from Columbus Mckinnon's conference presentation, Sep 8, 2022
Slide 1: Barrington Research Virtual Fall Investment Conference
Barrington Research Virtual Fall Investment Conference David J. Wilson President and Chief Executive Officer Gregory P. Rustowicz Executive Vice President – Finance and Chief Financial Officer September 8, 2022
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 $913M $0.9B Strategic priorities Revenue Market Cap. • Strengthen
Slide 4: Lifting, Linear Motion and Automation Solutions
Lifting, Linear Motion and Automation Solutions 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™ configure, price and quote tool Linear Motion Solutions: Specialt
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: 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 6 © 2022 COLUMBUS MCKINNON CORPORATION
Slide 7: Business Model Transformation
Business Model Transformation Growth Strategy Substantially Advances Underlying Portfolio FUTURE Revenue Growth Rate Specialty FY22 Conveying Linear Motion Linear Automation Motion 13% 10% Automation Specialty Conveying 16% FY21 Lifting Solutions Linear Motion Lifting & Automation Solutions 61% Lift
Slide 8: Beyond the Blueprint
Beyond the Blueprint 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 motion s
Slide 9: 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 40% to Down to
Slide 10: Secular Growth Markets Provide Strong Tailwinds
Secular Growth Markets Provide Strong Tailwinds New platform adds attractive vertical markets with enduring tailwinds Food, Custom designed sanitary and Beverage & easy to clean conveyors Consumer engineered to the strictest USDA ~6% of FY22 sales* Goods guidelines Customizable designs built for Lif
Slide 11: Growing Secular Market Presence
Growing Secular Market Presence Conveying Solutions Serves Less Cyclical Industries Entertainment 2% Forestry 3% General Industrial Life Sciences/Pharma 23% 3% E-Commerce 3% Elevator Transportation 3% 15% Aerospace & Government 5% Material Handling 11% Chemical & Paper Processing 5% Oil & Gas 5% Ene
Slide 12: Delivering Innovation
Driving Organic Growth with New Products • 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 • Ideal for accumulation and automation assembly applicati
Slide 13: 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 14: Strong Track Record Creating Value Through M&A
Strong Track Record Creating Value Through M&A September 2015 January 2017 April 2021 December 2021 Acquisition of STAHL Acquisition of Dorner for $485M Acquisition of Magnetek, Inc. CraneSystems from Konecranes advances Intelligent Motion Acquisition of Garvey for for ~$182M added for ~$218M streng
Slide 15: FY2027 Financial Targets
FY2027 Financial Targets Key Assumptions Growing Sales by >10% CAGR • Organic growth of ~5% driven by go-to-market structure and strategic initiatives SALES • Inorganic growth of ~6% from programmatic M&A inclusive of market growth • No material changes to current market conditions Expanding Gross M
Slide 16: Financial Targets
Financial Targets ($ in millions) SALES & ADJUSTED EBITDA & ADJUSTED GROSS MARGIN ADJUSTED EBITDA MARGIN $2,000 $1,800 ~40% 550 28.0% 39.0% $1,600 $1,500 36.1% 35.0% 35.4% 450 ~21% 23.0% $1,400 33.7% 34.1% $325 34.0% $1,200 350 15.7% 15.4% ~$315 18.0% 15.1% $1,000 13.7% 11.9% $80 29.0% 250 13.0% $80
Slide 17: Revenue Bridge
Revenue Bridge ($ in millions) REVENUE FY22 TO FY27E Strategy Expected to Deliver >10% Revenue Growth 17 © 2022 COLUMBUS MCKINNON CORPORATION
Slide 18: Adjusted EBITDA Margin Bridge
Adjusted EBITDA Margin Bridge ($ in millions) ADJUSTED EBITDA MARGIN FY22 to FY27E ~21% ~19% Actions Pricing & In Process Freight $309M Recovery Backlog at 3/31/22 Expanding Adjusted EBITDA Margins ~550 bps Driven by Cost Actions & Scale 18 © 2022 COLUMBUS MCKINNON CORPORATION
Slide 19: Capital Allocation Priorities
Capital Allocation Priorities GROWTH New product development Invest in growth initiatives and CapEx Decreasing Priority Acquisitions Continue programmatic M&A BALANCE SHEET De-lever the balance sheet Manage capital structure responsibly Fund pension contributions above Terminate plans when feasible
Slide 20: Free Cash Flow and Net Leverage
Free Cash Flow and Net Leverage ($ in millions) FREE CASH FLOW GENERATION / NET DEBT / NET LEVERAGE(2) CONVERSION(1) 5.00 951% 1000.0 200 3.5x 4.00 800% 513% 2.6x 2.7x 3.00 160 800.0 2.0x 1.7x 2.00 150 163% 121% 300% 1.1x 630 250% 98% 600.0 0.6x 1.00 158% 100 97 0.00 87 -200% 396 400.0 344 67 300 -1
Slide 21: CMCO Peer Group Comparison
CMCO Peer Group Comparison Industrial Peers vs. Motion Control Peers (Based on average TTM ending 3/31/2022) YOY SALES GROWTH ADJ. GROSS ADJ. EBITDA EBITDA TRADING MARGIN(1) MARGIN MULTIPLE(2) Motion Control 22.4% 33.3% 18.8% 11.3x Target: ~21% CMCO 39.5% 36.1% 15.4% 19% 9.3x Legacy Industrial 16.3%
Slide 22: Strong Demand Across Markets
Strong Demand Across Markets Continued strength throughout breadth of industries served ($ in millions) Continued Strength in Orders Record backlog of $351.6 million • Up 7%; 11% on constant currency basis with double-digit growth in • Up 9% in short term backlog and up 20% in long term backlog (1),
Slide 23: Record Backlog and Strong Pricing Drives Sales
Record Backlog and Strong Pricing Drives Sales ($ in millions) NET SALES ADJUSTED EARNINGS PER SHARE $253.4 $906.6 $913.4 $223.6 $220.3 $2.83 $2.83 $0.74 $0.79 $213.5 $216.1 $0.69 $0.60 $0.69 $649.6 $1.57 $0.53 $0.34 $0.41 $0.29 $1.57 $(0.27) $1.04 $0.38 FY21 FY22 Q1 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22
Slide 24: Capital Structure
Capital Structure ($ in millions) CAPITALIZATION Pro-forma net debt leverage ratio of ~2.9x(1) June 30, March 31, • Net debt to net total capital: 34.9% 2022 2022 Reduced debt $10 million in the quarter Cash and cash equivalents $ 85.7 $ 115.4 Total debt 501.3 511.2 Expect to pay down $40 million in
Slide 25: Outlook and Perspective
Outlook and Perspective Q2 FY2023 outlook • Expect Q2 FY23 net sales of approximately $230 million to $240 million,(1) up mid-to-high single digits sequentially • Executing plan and addressing supply chain bottlenecks Driving growth initiatives with Core Growth Framework • Near record orders in Q1 o
Slide 26: Key Takeaways
Key Takeaways Transforming to a Top-tier, Secular Growth, Intelligent Motion Solutions Enterprise EVOLVED STRATEGY BLUEPRINT FOR GROWTH 2.0 DEFINES GROWTH FRAMEWORK COLUMBUS MCKINNON BUSINESS SYSTEM – CMBS – ENABLES SCALABILITY CONVEYING SOLUTIONS ADDS GROWTH CATALYST IN ATTRACTIVE MARKETS OPERATION
Slide 27: Barrington Research Virtual Fall Investment Conference
Barrington Research Virtual Fall Investment Conference David J. Wilson President and Chief Executive Officer Gregory P. Rustowicz Executive Vice President – Finance and Chief Financial Officer September 8, 2022
Slide 28: Supplemental Information
OW Supplemental Information INTELLIGENT MOTION PURPOSE IN MOTION
Slide 29: Corporate Sustainability Report
Corporate Sustainability Report SOCIAL RESPONSIBILITY EMPLOYEE HEALTH & SAFETY HUMAN CAPITAL MANAGEMENT PRODUCT QUALITY & INNOVATION PURPOSE, MISSION, VISION, VALUES CUSTOMER SATISFACTION GOVERNANCE & ETHICS SUPPLY CHAIN MANAGEMENT CYBERSECURITY ETHICS & COMPLIANCE Strategic Initiatives ENTERPRISE R
Slide 30: Industrial Capacity Utilization
Industrial Capacity Utilization U.S. Capacity Utilization Eurozone Capacity Utilization Source: The Federal Reserve Board Source: European Commission 85% 80% 83% 79.8% (Manufacturing) 82.4% 81% 80.3% (Total) Q3 2022 75% July 2022(1) 79% 77% 70% 75% 73% 71% 65% 69% 67% 60% 65% Manufacturing Total (1)
Slide 31: ISM Production Index
ISM Production Index Source: Institute for Supply Chain Management 70% 65% 60% 55% 50% 50.4% August 2022 45% 40% 35% 30% 25% 31 © 2022 COLUMBUS MCKINNON CORPORATION
Slide 32: Adjusted Gross Profit Reconciliation
Adjusted Gross Profit Reconciliation ($ in thousands) Fiscal Year TTM 2018 2019 2020 2021 2022 Q1 FY23 GAAP gross profit $ 285,061 $ 304,997 $ 283,186 $ 220,225 $ 315,730 $ 324,186 Add back (deduct): Product liability settlement — — — — 2,850 2,850 Acquisition amortization of backlog — — — — 2,100 2
Slide 33: Adjusted Net Income Reconciliation
Adjusted Net Income Reconciliation ($ in thousands, except per share data) Quarter Fiscal Year TTM Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 FY 2021 FY 2022 Q1 FY23 GAAP net income (loss) $ (7,263) $ 15,203 $ 9,894 $ 11,826 $ 8,391 $ 9,106 $ 29,660 $ 45,314 Add back (deduct): Amortization of intangibl
Slide 34: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation ($ in thousands) Quarter Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 GAAP net income (loss) $ (7,263) $ 15,203 $ 9,894 $ 11,826 $ 8,391 Add back (deduct): Income tax expense (benefit) (2,517) 4,083 1,066 6,154 8,893 Interest and debt expense 5,812 4,587 4,375 5,352 6,203 I
Slide 35: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation ($ in thousands) Fiscal Year TTM 2018 2019 2020 2021 2022 Q1 FY23 GAAP net income (loss) $ 22,065 $ 42,577 $ 59,672 $ 9,106 $ 29,660 $ 45,314 Add back (deduct): Income tax expense (benefit) 27,620 10,321 17,484 970 8,786 20,196 Interest and debt expense 19,733 17,144 1
Slide 36: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation ($ in thousands) Quarter Fiscal Year TTM Q1 FY22 Q1 FY23 2017 2018 2019 2020 2021 2022 Q1 FY23 Cash (used in) provided by operations $ (7,396) $ (11,177) $ 60,450 $ 69,661 $ 79,499 $ 106,795 $ 98,890 $ 48,881 $ 45,100 Capital expenditures (3,648) (2,953) (14,368) (14,51
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