Columbus Mckinnon Corporation · NASDAQ:CMCO
Columbus Mckinnon — Craig-Hallum Institutional Investor Conference 2020
26 slides from Columbus Mckinnon's conference presentation, May 27, 2020
Slide 1: Craig-Hallum Institutional Investor Conference
May 27, CRAIG-HALLUM INSTITUTIONAL 2020 INVESTOR CONFERENCE 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: NASDAQ: CMCO
NASDAQ: CMCO Leading global designer, manufacturer and marketer of motion control products, technologies and services for material handling Founded: 1875 Leader in highly-engineered, professional grade, intelligent motion lifting solutions and explosion-protected products Premium, well-respected glo
Slide 4: Value Proposition
VALUE PROPOSITION Highly relevant, professional-grade solutions for solving customers’ critical problems in safety & productivity © 2020 Columbus McKinnon Corporation 4
Slide 5: Three Distinct Product Categories
THREE DISTINCT PRODUCT CATEGORIES Customer Driven Solutions Linear & Mechanical Actuators Lifting Tables Rail Systems Engineered Actuation Systems Products 10% Industrial Products Manual Chain Hoist 46% 44% Electric Chain Hoist Crane Rigging / Clamps Solutions Industrial Winches Cr
Slide 6: End Market and Geographic Diversification
END MARKET AND GEOGRAPHIC DIVERSIFICATION Mining Entertainment Government / Others ~3%~3% APAC ~3% Latin America Elevators ~3% Heavy OEM General Canada 6% Pulp ~5% ~25% Industrial 4% 4% Paper/Chemical/ Pharma ~5% Construction ~5% 55% U.S. 31% Metals Rail / Aerospace / ~10% ~10% Processing / Europe,
Slide 7: Priorities Driven by Values and Vision
PRIORITIES DRIVEN BY VALUES AND VISION Health and Safety Business Continuity Financial Strength Implemented remote work Focusing on cash Liquidity of nearly force quickly generation $200 million at 3/31/2020 Eliminated all travel Flexing workforce to align Generated $36.5 million in with demand cash
Slide 8: Balance: Near-Term and Long-Term Objectives
BALANCE: NEAR-TERM AND LONG-TERM OBJECTIVES Near-term • Cost reductions, 80/20 Process and Objectives: Operational Excellence Generate Cash & • Working capital management Positive • Minimize cash outflows: capex, pension and debt service Operating Income • Maintain dividend •Advance investments in t
Slide 9: Blueprint for Growth Strategy
BLUEPRINT FOR GROWTH STRATEGY Growth-oriented Industrial Technology Phase III Evolve business model • Portfolio optimization • Mergers & acquisitions Phase II Simplify the business Today Drive profitable growth • 80/20 Process • Operational Excellence Phase I • Ramp the Growth Engine Get control Ach
Slide 10: Evolution of the Business Model
EVOLUTION OF THE BUSINESS MODEL Business Composition Evolves with the Strategy FY2015 Acquired: Now Engineered Products Aftermarket Industrial 6% Aftermarket 13% Aftermarket 4% Engineered Technology Crane ~ 20% ~10% Solutions Products 10% 9% Industrial Products 38% Crane Solutions 40% ~ Industrial I
Slide 11: E-PAS: Earnings Power Acceleration System
E-PAS™: EARNINGS POWER ACCELERATION SYSTEM Business Operating System Key Performance Strategy Inspired to Indicators Deployment Lead™ (KPIs) Monthly Operating 80 / 20 M&A Reviews Process Process (MORs) Risk & Raising Lean Opportunity Expectations Tools (R&Os) Developed Under development Business ope
Slide 12: Strategy Drives Performance
STRATEGY DRIVES PERFORMANCE ($ in millions) Strategy creates stronger Continued progress towards Transformation more than earnings power… 19% EBITDA margin goal… doubles ROIC(1)… $2.74 $2.78 $2.50 15.7% 15.1% $2.01 13.7% 11.5% 11.2% 11.4% $1.47 $1.80 8.7% 5.6% $0.95 $0.43 FY17 FY18 FY19 FY20 FY17 FY
Slide 13: Phase II Simplify the Business: 80/20 Process
PHASE II SIMPLIFY THE BUSINESS: 80/20 PROCESS Customer simplification Strategic pricing Priority customer account program Incremental volume from Purchased Product sharpened customer focus parts SKUs Product simplification ~400,000 ~50,000 Indirect overhead reduction and material productivity 80 / 2
Slide 14: 80/20 Process Delivers Results
80/20 PROCESS DELIVERS RESULTS ($, in millions contribution to operating income) More than doubled 80/20 Process contributions to operating income in FY 20 FY 2019 $8.5 FY 2020 $20.4 ^ $12 million Original FY20 Goal 80/20 Process helping to offset impacts of challenging environment: Were on track to
Slide 15: Phase II: Ramp the Growth Engine
PHASE II: RAMP THE GROWTH ENGINE Continued investment through COVID-19 recession Strategic Priority: New Product Development Automation Crane Kits Intelli-Protect ™with single zone and Expanded feature set multi-zone options (April 2020) Plug and Play capability Intelli-Lift™ (soon to be launched) I
Slide 16: Strategic Priority: Digital Platform
STRATEGIC PRIORITY: DIGITAL PLATFORM Continued investment through COVID-19 recession Launched new website: www.columbusmckinnon.com • Single site for all global brands Compass™ configurator: • Online tool to configure product, price and quote • Continuously adding products and functionality • Modern
Slide 17: Phase III: Portfolio Optimization
Phase III: Portfolio Optimization Acquisitions to build on core competencies Lifting Specialist Smart Movement • Leverage engineering & production • Leverage installed base & “reason to be” knowhow • Address customer high-value problems • Leverage channels, valuable brand • Software engineering focu
Slide 18: Gross Margin Expands on Lower Volume
GROSS MARGIN EXPANDS ON LOWER VOLUME ($ in millions) Net Sales Gross Profit and Margin $876.3 $305.0 $839.4 $809.2 $285.1 $283.2 $637.1 $34.2 $192.9 $601.0 $801.1 $842.1 $809.2 FY 2017 FY 2018 FY 2019 FY 2020 FY 2017 FY 2018 FY 2019 FY 2020 Sales Divestitures Was on track to achieve previous revenue
Slide 19: Cash Flow
CASH FLOW ($ in millions) FY2017 FY2018 FY2019 FY2020 Free Cash Flow(1) 3/31/17 3/31/18 3/31/19 3/31/20 Net cash provided by $60.5 $69.7 $79.5 $106.8 operating activities $97.4 CapEx (14.4) (14.5) (12.3) (9.4) Free cash $67.2 $46.1 $55.1 $67.2 $97.4 flow (FCF) $55.1 Note: Components may not add to t
Slide 20: Near-Term Outlook
NEAR-TERM OUTLOOK Q1 FY21 outlook: • 37% drop in orders in April Y/Y; began to stabilize in May • Expect revenue in Q1 FY21 in range of $130 million to $140 million Short-term Objectives: • Positive operating income • Positive cash flow Long-term capital allocation priorities remain unchanged: • Mai
Slide 21: Why Columbus McKinnon?
WHY COLUMBUS MCKINNON? Strategy and E-PAS™ provide foundation to address unprecedented times Blueprint for Growth strategy continues to deliver Building stronger earnings power - creating value Strong management team executing well Lowering risk profile and expanding margins © 2020 Columbus McKinnon
Slide 22: Supplemental Slides
SUPPLEMENTAL SLIDES PARTNERS IN MOTION CONTROL
Slide 23: Adjusted Income from Operations Reconciliation
ADJUSTED INCOME FROM OPERATIONS RECONCILIATION ($ in thousands) Fiscal Year FY 2017 FY 2018 FY 2019 FY 2020 Income from operations $ 23,725 $ 68,331 $ 69,442 $ 89,824 Add back (deduct): Factory closures — — 1,473 4,709 Business realignment costs — — 1,906 2,831 Insurance recovery legal costs 1,359 2
Slide 24: Adjusted Net Income Reconciliation
ADJUSTED NET INCOME RECONCILIATION ($ in thousands, except per share data) Fiscal Year FY 2017 FY 2018 FY 2019 FY 2020 Net income $ 8,984 $ 22,065 $ 42,577 $ 59,672 Add back: Factory closures — — 1,473 4,709 Business realignment costs — — 1,906 2,831 Insurance recovery legal costs 1,359 2,948 1.282
Slide 25: Adjusted EBITDA Reconciliation
ADJUSTED EBITDA RECONCILIATION ($ in thousands) Fiscal Year FY 2017 FY 2018 FY 2019 FY 2020 Net income $ 8,984 $ 22,065 $ 42,577 $ 59,672 Add back (deduct): Income tax expense 4,043 27,620 10,321 17,484 Interest and debt expense 10,966 19,733 17,144 14,234 Cost of debt refinancing 1,303 — — — Invest
Slide 26: Craig-Hallum Institutional Investor Conference
May 27, CRAIG-HALLUM INSTITUTIONAL 2020 INVESTOR CONFERENCE PARTNERS IN MOTION CONTROL
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