Columbus Mckinnon Corporation · NASDAQ:CMCO
Columbus Mckinnon — Investor Day (June 2019)
108 slides from Columbus Mckinnon's investor day presentation, Jun 13, 2019
Slide 1: Investor & Analyst Briefing
Investor & Analyst Briefing PARTNERS IN MOTION CONTROL June 13, 2019 New York, NY
Slide 2: 2019 Investor & Analyst Day Agenda
2019 Investor & Analyst Day Agenda Thursday, June 13, 2019 Convene, 810 Seventh Avenue, New York, NY Registration & 8:00 Beekman Lounge Buffet Breakfast 8:30 SESSIONS Beekman Hub Driving Change: Mark Morelli - President and Chief Executive Officer Blueprint for Growth Operational Excellence Bert Bra
Slide 3: Investor & Analyst Day 2019
Investor & Analyst Day 2019 June 13, 2019 New York, NY PARTNERS IN MOTION CONTROL
Slide 4: Important Information
IMPORTANT INFORMATION 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 e
Slide 5: Executive Committee
EXECUTIVE COMMITTEE Mark Morelli Bert Brant Appal Chintapalli Alan Korman Presaident & Vice President, Vice President, Vice President, Chief Executive Officer Global Manufacturing Engineered Products Corporate Development, General Counsel & CHRO Pete McCormick Mark Paradowski Mario Ramos Greg Rustow
Slide 6: Driving Change Through Blueprint for Growth Strategy
Driving Change Through Blueprint for Growth Strategy Mark Morelli President & Chief Executive Officer PARTNERS IN MOTION CONTROL
Slide 7: Changing Columbus McKinnon
CHANGING COLUMBUS MCKINNON Highly relevant, professional-grade solutions for solving customers’ critical problems in safety & productivity © 2019 Columbus McKinnon Corporation 5
Slide 8: Strategy: Evolution of Columbus McKinnon
STRATEGY: EVOLUTION OF COLUMBUS MCKINNON Growth Phase III oriented Evolve business model industrial • Portfolio optimization technology technology • Mergers & acquisitions Phase II Simplify the business Drive profitable growth • 80/20 Process • Operational Excellence • Ramp the Growth Engine Phase I
Slide 9: E-PAS: Earnings Power Acceleration System
E-PAS™: EARNINGS POWER ACCELERATION SYSTEM Business Operating System Key Performance Strategy Talent Indicators Deployment Development (KPIs) Monthly Operating 80 / 20 M&A Reviews Process Process (MORs) Risk & Mission Lean Opportunity Vision Tools (R&Os) Values Developed Under development Business o
Slide 10: Financial Performance
FINANCIAL PERFORMANCE ($ in millions) Growth outpacing Transformation doubles Strategy creates stronger industry… adjusted operating income (1) … earnings power… $99.8 $2.74 $876.3 $78.7 $839.4 $2.01 $68.3 $69.4 $637.1 $47.2 $1.47 $1.80 $0.95 34.0% 33.7% 34.8% 7.4% $23.7 9.4% 11.4% $0.43 FY17 FY18 F
Slide 11: Phase II Proven Effective in FY2019
PHASE II PROVEN EFFECTIVE IN FY2019 • $8.5 million of operating income from 80/20 Process Simplify the • Sharpened customer focus Business • Divested 3 non-core operations • Record productivity drove $8.5 million in savings Operational • Consolidated Ohio operations for $2 million in savings Excelle
Slide 12: Simplify the Business: 80/20 Process
SIMPLIFY THE BUSINESS: 80/20 PROCESS Improve profitability • Reduce overhead • Strategic pricing Purchased Product parts SKUs Profitable revenue growth ~400,000 ~50,000 80 / 20 ROIC improvement Process • Inventory reduction • Footprint reduction Simplify the Business: Eliminate bleeders… focus on ar
Slide 13: 80/20 Process Implementation
80/20 PROCESS IMPLEMENTATION In progress Initiating FY19 FY20 FY21 FY22 Industrial Products North America Europe Crane Solutions Magnetek brand Stahl brand North America Engineered Products Duff Norton brand Pfaff brand About 1/3 of 80/20 process complete in organization © 2019 Columbus McKinnon Cor
Slide 14: Operational Excellence
OPERATIONAL EXCELLENCE Path to Top Tier Performance Redefine Customer Improve Cost Optimize Working Experience Structure Capital Performance Configuration Testing Core processes: Assembly Invest Highly engineered, Strategic Strategic Pack & Ship low volume Heat Gear Painting Treating Machining Non-C
Slide 15: Ramping the Growth Engine
RAMPING THE GROWTH ENGINE Path to Profitable Growth Strengthen Lifting Smart the Core Specialist Movement Solving customers’ high value problems to improve safety & productivity © 2019 Columbus McKinnon Corporation 13
Slide 16: Value Creation Versus Peers
VALUE CREATION VERSUS PEERS CMCO FY22 Target FY17 TTM EBITDA % Trading Multiple TTM ROIC 1st ~18.9 ~27% 1st 1st ~18% x 19.0% Mid- Mid 2nd ~13.5 teens teens ~16% 2nd 2nd ~14% x 3rd ~13% 3rd ~9.8x 3rd ~11% 11.7% 4th 4th 7.5x 7.5x ~10% ~7.3x 4th ~9% 6.4% Phase I-II execution resulting in improved earni
Slide 17: 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
Slide 18: Target Markets
TARGET MARKETS ALTERNATIVE AEROSPACE & ENTERTAINMENT OIL & GAS/ ENERGY DEFENSE PETROCHEMICAL WASTEWATER INFRASTRUCTURE AUTOMATION METALS TREATMENT PROCESSING Targeting market segments with better than GDP growth © 2019 Columbus McKinnon Corporation 16
Slide 19: Mission, Vision, Values
MISSION, VISION, VALUES . © 2019 Columbus McKinnon Corporation 17
Slide 20: Operational Excellence
Operational Excellence Bert Brant Vice President, Global Manufacturing PARTNERS IN MOTION CONTROL
Slide 21: Operational Excellence Strategy
OPERATIONAL EXCELLENCE STRATEGY Path to Top Tier Operational Performance Initial Focus Redefine Customer Improve Cost Optimize Working FY2019 Experience Structure Capital Operational KPI focus Strategic assessment of factory operations Top grading talent Raise customer expectations and drive factory
Slide 22: Initial Focus in FY2019
INITIAL FOCUS IN FY2019 • Recast operational metrics Refined KPI’s • Developed root cause, countermeasure culture • Benchmarked best-in-class performance • Identified strategic core processes Strategic • Developed tiered factory assessment Assessment • Initiated operational excellence strategy Team
Slide 23: Strategic Assessment
STRATEGIC ASSESSMENT North America Footprint Europe Footprint APAC Footprint Chester, UK Hoist, Plate Clamps Menomonee Falls, WI Brighton, MI Power Control Hangzhou, CN Workstations Wuppertal, DE Cedar Rapids, IL Hamm, DE Hoist Salem, OH Hoist Lisbon, OH Hoist Kunzelsau, DE Hoist Damascus, VA Kissin
Slide 24: Strategic Assessment: Core Versus Non-Core Processes
STRATEGIC ASSESSMENT Core Versus Non-Core Processes Performance Configuration Testing Core processes: Invest Assembly Highly engineered, Pack & Ship Strategic Strategic low volume Heat Gear Painting Non-Core processes: Treating Machining Outsource Welding Stamping Turning Casting Competency Invest a
Slide 25: Redefine Customer Experience
REDEFINE CUSTOMER EXPERIENCE On-Time Delivery Progression Today On Time Delivery to On Time Delivery to On Time Delivery to Top 80% Customer’s Our Promise Customer’s Request Request Measurement NOT aligned with Customers Measurement NOT aligned with 80/20 Measurement aligned with top Customers Metri
Slide 26: Improve Cost Structure
IMPROVE COST STRUCTURE Cost of Goods Sold (FY20E) Overhead Focus on simplifying footprint and reducing non value add labor cost: Overhead Direct Improve direct to indirect ratio ~30% Labor ~15% Reduce/consolidate factory labor cost Material Cost Material Manage a project funnel focused on net ~55% m
Slide 27: Improve Cost Structure: Lower Overhead
IMPROVE COST STRUCTURE Lower Overhead Objective is to reduce overhead… by addressing top 70% of opportunities ~40% ~52% ~48% ~48% ~20% Other Indirect Indirect Overhead Labor ~10% Material Maintenance Supervision Movement / Labor Purchasing / Planning, etc. Indirect labor represents the largest oppor
Slide 28: Improve Cost Structure: Footprint Optimization
IMPROVE COST STRUCTURE Footprint Optimization Investing in core processes… leads to improved revenue per square foot 100% 90% 25% 80% 25% Non-Core 45% 70% 60% 50% 40% 75% 30% 55% Core 20% 10% 0% FY19 Future FY19 Future Footprint optimization driving improved cost structure © 2019 Columbus McKinnon C
Slide 29: Supplier and SKU Rationalization
IMPROVE COST STRUCTURE Supplier and SKU Rationalization Key Initiatives: Streamline supply chain with fewer, stronger suppliers Simplify and leverage spend with reduced SKU count Partner on new product development # of Suppliers # of SKUs Purchased ~ 377,000 ~10,000 25% 25% ~ 7,500 ~ 285,000 FY19 Fu
Slide 30: Operational Excellence Strategy
OPERATIONAL EXCELLENCE STRATEGY Path to Top Tier Operational Performance Initial Focus Redefine Customer Improve Cost Optimize FY2019 Experience Structure Working Capital Operational KPI focus On-time customer Factory overhead Days payable delivery reduction outstanding Strategic assessment of facto
Slide 31: Ramp the Growth Engine
Ramp the Growth Engine Mario Ramos Vice President, Global Product Development PARTNERS IN MOTION CONTROL
Slide 32: Ramp the Growth Engine Strategy
RAMP THE GROWTH ENGINE STRATEGY Path to Profitable Growth Initial Focus Strengthen Lifting Smart FY19 the Core Specialist Movement Eliminated low value projects Redeployed resources New processes & skills Solving high value problems improving safety & productivity © 2019 Columbus McKinnon Corporatio
Slide 33: Initial Focus in FY2019
INITIAL FOCUS IN FY2019 Enhanced Product Development Pipeline Past Future Low return projects Solve high value problems Strong value engineering Limited value engineering pipeline Skills/talent gaps New skills & processes Enhanced Project Pipeline Past Future Eliminate tail to fund new opportunities
Slide 34: Strengthen the Core
STRENGTHEN THE CORE Product Development Focus Demonstrating Organic Growth (Y/Y % revenue growth) DC motor drives New Product Development ~60% Radio controls Variable speed platform Auto-dispatch Automation ~25% No-fly zone Remote monitoring and control Engineered to Quote lead time improvement Orde
Slide 35: Strengthen the Core: Product Development ROI
STRENGTHEN THE CORE Product Development Return on Investment ($ in millions) Have increased R&D investment on steady spend… While improving returns* ~$29 Top 127% ~$22 ~$21 ~$22 Performers 114% 114% ~$16 Medium 94% 94% 87% Sustaining Performers Engineering R&D 80% 56% Engineered to R&D R&D Low 56% R
Slide 36: Powered Chain Hoist Product Line Simplification
STRENGTHEN THE CORE Powered Chain Hoist Product Line Simplification Standard - Basic Standard - Industrial High Capacity SKU optimization Platform Consolidation Leverage common components Opportunity North America capacity expansion Simplified portfolio improves costs and value proposition © 2019 Co
Slide 37: Lifting Specialist: Explosion Proof Expansion
LIFTING SPECIALIST Explosion Proof Expansion Business Opportunity Wire Rope Hoist Explosion proof equipment CAGR ~6% Certification of Stahl explosion proof Power Chain Power Chain Hoist Hoist portfolio in new regions Electrification Develop cost effective explosion proof Hazardous Hazardous componen
Slide 38: Smart Movement Framework
SMART MOVEMENT FRAMEWORK Wire Rope Hoist Powered Chain Electromechanical Hoist Actuator Features Variable speed Precision movement Remote monitoring Future Future Displace competitor’s controls In process Future Future Productize & advance technology In process Future Future Diagnostic
Slide 39: Smart Movement
SMART MOVEMENT Starts with Identifying Customers “High-Value” Problems Total Addressable Lifting Automation Market ~$500 Million Current Market Expanded Market Opportunity ~$300 Million Significant growth opportunity at +40% gross margins © 2019 Columbus McKinnon Corporation 9
Slide 40: Ramp the Growth Engine Strategy
RAMP THE GROWTH ENGINE STRATEGY Path to Profitable Growth Initial Focus Strengthen Lifting Smart FY19 the Core Specialist Movement Product line Leverage expertise Standardize Eliminated low simplification in solving high value automation solutions value projects problems Redeployed Platforming to Ex
Slide 41: Ramp the Growth Engine: Digital Platform
Ramp the Growth Engine: Digital Platform Mark Paradowski Vice President, Information Services PARTNERS IN MOTION CONTROL
Slide 42: Purposeful Digital Platform
PURPOSEFUL DIGITAL PLATFORM Configure Enable Inform Product Global Web Information Redesign Management Configure & quote Share product Enhance online information experience Advancing digital capabilities to “be easy to do business with” © 2019 Columbus McKinnon Corporation 2
Slide 43: Configure: Compass
CONFIGURE Compass™ • Enables complex product configurations • Expands functionality Enabling our Channel Partners to configure and quote © 2019 Columbus McKinnon Corporation 3
Slide 44: Compass Performance
CONFIGURE Compass™ Performance Monthly Quotes 545% 545% Adoption continues to grow Executing roadmap YK/SK WRH JLC YK/SK YK/SK Manual YK/SK Screw Super Actuator Linear Phase 1 ECH Brakes WRH 2.2 WRH 2.3 Hoists WRH 2.4 Jacks Cylinders System Actuators Lever YK/SK Lodestar Lodestar Tools WRH 2.1 Radio
Slide 45: Enable: Product Information Management
ENABLE Product Information Management (PIM) Channel Partner Channel Partner websites CMCO websites CMCO websites Printed materials Printed materials PIM driving toward data harmonization on a global digital platform © 2019 Columbus McKinnon Corporation 5
Slide 46: Inform: Global Website Redesign
INFORM Global Website Redesign Entertainment Manufacturing Channel Channel partner partner Oil & Gas Utility Automotive End user Construction Website drives digital engagement improving lead generation © 2018 2019 Columbus McKinnon Corporation 6
Slide 47: Purposeful Digital Platform
PURPOSEFUL DIGITAL PLATFORM Configure Enable Inform Product Global Web Information Redesign Management Empower customers Harmonize, Transform digital to efficiently consolidate & information into an configure & quote efficiently share engaging online product information experience Advancing digital
Slide 48: Industrial Products
Industrial Products Kurt Wozniak Vice President, Industrial Products PARTNERS IN MOTION CONTROL
Slide 49: Products & Brands
PRODUCTS & BRANDS Revenue $876 Million Industrial Products ~45% © 2019 Columbus McKinnon Corporation 2
Slide 50: Target Markets
TARGET MARKETS Infrastructure Oil & Gas Entertainment Power & Utilities Targeting a variety of growing industries © 2019 Columbus McKinnon Corporation 3
Slide 51: Simplify the Business: 80/20 Process
SIMPLIFY THE BUSINESS: 80/20 PROCESS Implementation North Latin America Europe America APAC Product Line Simplification Customer List Simplification Raving Fans Segmentation ~40% implemented…driving improved results © 2019 Columbus McKinnon Corporation 4
Slide 52: Product Line Simplification
PRODUCT LINE SIMPLIFICATION SKU Rationalization Hoist and Rigging Product SKUs Started: ~6,200 Electric Chain Hoists Eliminated: ~2,500 SKUs (40%), surpassed goal of 25% Remaining: ~3,700 SKUs Significant reduction in business complexity…more to come © 2019 Columbus McKinnon Corporation 5
Slide 53: Customer List Simplification
CUSTOMER LIST SIMPLIFICATION North American Industrial Products Started: ~1,900 Active Customers Targeted benefits: Overhead reduction Strategic pricing Eliminated: ~500 accounts (27%) Remaining: ~1,400 accounts (73%) ~500 eliminated accounts represent less than 1% of revenue © 2019 Columbus McKinno
Slide 54: Improving Availability and Responsiveness
IMPROVING AVAILABILITY AND RESPONSIVENESS Customer Focus Select Solve Create priority high value “Raving Fans” accounts problems “Be easy to do business with”…Transform priority accounts into “Raving Fans” © 2019 Columbus McKinnon Corporation 7
Slide 55: Growth Initiatives: Strategic Account Team
GROWTH INITIATIVES: STRATEGIC ACCOUNT TEAM Dedicated commercial team Target key accounts and end-users Gain share through existing relationships Grow sales of core industrial products Expanded coverage in national and international markets © 2019 Columbus McKinnon Corporation 8
Slide 56: Growth Initiatives: Global Entertainment
GROWTH INITIATIVES: GLOBAL ENTERTAINMENT World-wide growth initiative Enhance Lodestar with automation features to participate in high value industry trends Expand into adjacent space to replace winches with hoists Expanding market share in entertainment by solving high value problems © 2019 Columbu
Slide 57: Growth Initiatives: Channel Enrichment
GROWTH INITIATIVES: CHANNEL ENRICHMENT Consolidated North America channel services team Enhanced channel coverage and customer service performance Transforming priority accounts into “Raving Fans” Strengthening relationships with key channel partners © 2019 Columbus McKinnon Corporation 10
Slide 58: Industrial Products Priorities
INDUSTRIAL PRODUCTS PRIORITIES Simplify the • 80/20 Process Business • Digital marketing Improve • Material productivity / sourcing initiatives Productivity • Overhead reduction & plant productivity Ramp the • Priority Accounts / Raving Fans / Strategic Accounts Growth Engine • Automation-ready hois
Slide 59: Crane Solutions
Crane Solutions Pete McCormick Vice President, Crane Solutions Group PARTNERS IN MOTION CONTROL
Slide 60: Products & Brands
PRODUCTS & BRANDS Revenue $876 Million Crane Solutions ~45% © 2019 Columbus McKinnon Corporation 2
Slide 61: Target Markets
TARGET MARKETS Power & Metals Aerospace Oil & Gas / Utilities Processing & Defense Petrochemicals Targeting a variety of growing industries © 2019 Columbus McKinnon Corporation 3
Slide 62: Crane Solutions Priorities
CRANE SOLUTIONS PRIORITIES • 80/20 Process continues Simplify the • Digital tools Business • Legacy CMCO APAC rolled up under business unit • Wire rope hoist centers of excellence Improve • Customer responsiveness: quotes, lead time Productivity • Operational effectiveness (overhead, material produc
Slide 63: Simplify the Business: 80/20 Process
SIMPLIFY THE BUSINESS: 80/20 PROCESS Implementation North Latin America Europe America APAC Product Line Simplification Customer List Simplification Raving Fans Segmentation Early in the 80/20 Process to capture significant opportunity © 2019 Columbus McKinnon Corporation 5
Slide 64: Wire Rope Hoist Product Simplification
SIMPLIFY THE BUSINESS Wire Rope Hoist Product Simplification Platform Strategy Brand Strategy STANDARD HIGH PERFORMANCE Simplified the product platform to leverage key brands in the market place © 2019 Columbus McKinnon Corporation 6
Slide 65: New Wire Rope Hoists
SIMPLIFY THE BUSINESS New Wire Rope Hoists Platform Advantages More than doubled lifting capacity to 135 tons Added explosion proof feature New platform offers higher quality, more features, lower cost © 2019 Columbus McKinnon Corporation 7
Slide 66: Improve Productivity
IMPROVE PRODUCTIVITY Focus on Operational Excellence Optimize footprint Exited Salem, Ohio facility Created “Center of Excellence” for wire rope hoist Consolidated workstation cranes into one showcase facility Deliver 1.5% net material cost out Strategic sourcing building funnel Reduce engineering l
Slide 67: Penetrating Mid-Tier Segment with Kit Cranes
RAMP THE GROWTH ENGINE Penetrating Mid-Tier Segment with Kit Cranes Mid-Tier Market ~$750 Million New addressable market opportunity ~$300 Million Leverage new platform and crane kits to penetrate mid-tier segment © 2019 Columbus McKinnon Corporation 9
Slide 68: Adding Automation to Overhead Cranes
RAMP THE GROWTH ENGINE Adding Automation to Overhead Cranes Increased Productivity Maximized Performance Labor Optimization Energy Efficiency Improved Quality Safety & Health Benefits Providing high-value solutions © 2019 Columbus McKinnon Corporation 10
Slide 69: Focus on Availability and Responsiveness
FOCUS ON AVAILABILITY AND RESPONSIVENESS One-Stop Source Most Single Advanced, Supply High Partner Quality Products Engineered Team of & Tested to Experts Work Together “Be easy to do business with”…serving your high value motion control needs © 2019 Columbus McKinnon Corporation 11
Slide 70: Crane Solutions Priorities
CRANE SOLUTIONS PRIORITIES • 80/20 Process continues Simplify the • Digital tools Business • Legacy CMCO APAC rolled up under business unit • Wire rope hoist centers of excellence Improve • Customer responsiveness: quotes, lead time Productivity • Operational effectiveness (overhead, material produc
Slide 71: Engineered Products
Engineered Products Appal Chintapalli Vice President, Engineered Products PARTNERS IN MOTION CONTROL
Slide 72: Products & Brands
PRODUCTS & BRANDS Revenue $876 Million Engineered Products ~10% © 2019 Columbus McKinnon Corporation 2
Slide 73: Target Markets
TARGET MARKETS Metal Oil & Gas Infrastructure: Automation Processing Rail Targeting a variety of growing industries © 2019 Columbus McKinnon Corporation 3
Slide 74: Ramp the Growth Engine – Market Drivers
RAMP THE GROWTH ENGINE – MARKET DRIVERS Shift away from Automation for Rugged Maintainability pneumatic/hydraulic higher productivity environments A lower total cost of ownership for our customers Uniquely positioned to match actuation technology to the market drivers © 2019 Columbus McKinnon Corpor
Slide 75: Rail Projects
RAIL PROJECTS DB Freiburg, Germany Roof Working Platform $1.7M DB Freiburg, Germany Roof Working Platform Demonstrated leadership & differentiated offering $1.7M Strong pipeline of projects - record backlog Complete solution Advanced controls New roof working platforms Significant lifetime value of
Slide 76: Mobile Platforms
MOBILE PLATFORMS Advanced lifting mechanisms for Autonomous Guidance Vehicles (AGV) Large variety of end uses Automated “factories of the future” and “service robots” Working with several application- specific AGV suppliers Expanding competency from simple lifting components to fully integrated solu
Slide 77: Smart Parking
SMART PARKING Fully automated self-serve parking garages Gears, chain drives and actuators automatically deliver vehicle to rack storage Significant growth potential as cities combat parking issues Providing value added solution in growth segment © 2019 Columbus McKinnon Corporation 7
Slide 78: Automation Systems
AUTOMATION SYSTEMS Lift and lower platforms for aircraft maintenance User configurable actuation system includes smart microcontrollers and Magnetek variable frequency drives Applications in all segments of the transportation industry transportation industry Mobile platform for aircraft maintenance
Slide 79: Revenue Growth – Continue the Momentum
REVENUE GROWTH – CONTINUE THE MOMENTUM ($ in millions) Presence in New Geographies $75 $77 $83 $88 & New Verticals All Other Winch Rotary Union Rail Systems Differentiated Customer Value - Compass Electromechanical Mechanical FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 Actual Forecast Aligning
Slide 80: Simplifying the Business: 80/20 Process
SIMPLIFYING THE BUSINESS: 80/20 PROCESS Customer & Customer Strategic Pricing Product Line Product Service Levels Execution Simplification Characterization Implementation Product & customer Q1 profitability analysis Change prices to Q2 reflect cost-to-serve Trim product lines that Q3 don’t meet stra
Slide 81: Operational Excellence: Lead Time Improvement
OPERATIONAL EXCELLENCE Lead Time Improvement to be “Easy To Do Business With” Implementing Speedline Take order Engineered To To engineering Engineering from customer or Standard? Standard Independent assembly cells product = with kanban management Speedline Generated excellent results with plant an
Slide 82: Engineered Products Priorities
ENGINEERED PRODUCTS PRIORITIES Simplify the • 80/20 Process Business • Product simplification & customer focus Improve • Lead time reduction & factory reorganizations Productivity • Overhead cost reduction & strategic sourcing Ramp the • Targeted global markets Growth Engine • Product development &
Slide 83: Driving Earnings Power
Driving Earnings Power Greg Rustowicz Vice President, Finance & Chief Financial Officer PARTNERS IN MOTION CONTROL
Slide 84: Sales and EBITDA Growth
SALES AND EBITDA GROWTH ($ in millions) Net Sales Adjusted EBITDA $876 1000 200 900 $839 180 24.0% 800 160 22.0% $637 $133 700 140 $115 19.0% 20.0% 600 120 18.0% 500 100 400 80 $72 15.1% 16.0% 300 60 13.7% 14.0% 200 40 11.4% 12.0% 100 20 0 0 10.0% FY17 FY18 FY19 FY22E FY17 FY18 FY19 FY22E Assumes GD
Slide 85: Roadmap to Achieving EBITDA Margin Target
ROADMAP TO ACHIEVING EBITDA MARGIN TARGET (+/- in basis points) 25.0% +50 -200 +240 20.0% +300 +140 +20 -180 +180 15.0% +210 10.0% 20.6% 18.2% 19.0% 19.0% 16.7% 15.3% 15.1% 15.1% 15.1% 13.5% 5.0% 11.4% 11.4% 0.0% FY17 Stahl 80/20 Divestitures Operational Inflation & FY19 80/20 Operational Ramp the I
Slide 86: Significant Free Cash Flow Generation
SIGNIFICANT FREE CASH FLOW (FCF) GENERATION ($ in millions) Free Cash Flow ^ De-levering Balance Sheet Paid down $125 million of debt $90 - $95 in FY2018 & FY2019 $80 - $85 Achieved net leverage of 1.7x $70 - $75 in FY2019 $67 $55 $46 FY2020E to FY2022E Assumptions: Annual CapEx of ~$20 million* Ann
Slide 87: Capital Deployment Priorities
CAPITAL DEPLOYMENT PRIORITIES Organic Growth De-lever the balance sheet Achieve net leverage target New product development, other strategic initiatives Invest in growth initiatives Decreasing Priority In-organic Growth M&A Fund M&A Return of Capital Regular dividend Adhere to dividend policy Share
Slide 88: Value Creation Versus Peers
CMCO VALUE CREATION VERSUS PEERS FY22 Target FY19 FY18 FY17 TTM EBITDA % Trading Multiple TTM ROIC 1st 27% 1st 18.9x 1st 18% 19.0% 19.0% 2nd 16% 2nd 13.5x 2nd 14% Mid-teens 15.1% 15.1% 3rd 13% 13.7% 13.7% 3rd 9.8x 3rd 11% 11.2% 8.6x 8.6x 8.2x 8.2x 11.4% 8.7% 8.7% 4th 10% 4th 7.3x 7.5x 7.5x 4th 9% 6.
Slide 89: Expected Relative Value Appreciation
EXPECTED RELATIVE VALUE APPRECIATION Industrial Technology*: Assumes current market environment 16.0x ~$105 S&P 500 Industrials: 11.9x ~$80 CMCO: 8.6x ~$60 $34.35^ FY19 FY20 FY21 FY22 Earnings power will drive relative value and presumably multiple expansion ^ CMCO $34.35 Stock Price as of 3/31/19 ©
Slide 90: Recession Preparedness
RECESSION PREPAREDNESS ($ millions) Different business today Blueprint for Growth Phase II Transformation 80 / 20 process • Raving Fans 43% • Product line simplification • Customer list simplification 100% Operational excellence • Overhead cost reduction 57% • Material productivity • Outsourcing • F
Slide 91: Creating Shareholder Value
CREATING SHAREHOLDER VALUE Adjusted EBITDA Margin(1) Return on Invested Capital (ROIC)(2) 19% Mid- 15.1% teens 13.7% 11.4% 11.2% 8.7% 6.4% FY17 FY18 FY19 FY22 FY17 FY18 FY19 FY22 GOAL: adjusted EBITDA margin of 19% and adjusted ROIC in mid-teens (1) Adjusted EBITDA is a non-GAAP financial measure. P
Slide 92: Further Pivot to High Performing Industrial Technology Company
Further Pivot to High Performing Industrial Technology Company Mark Morelli President & Chief Executive Officer PARTNERS IN MOTION CONTROL
Slide 93: Further Pivot
FURTHER PIVOT Phase III: Completing the transformation Growth Phase III oriented Evolve business model industrial • Portfolio optimization technology echnology • Mergers & acquisitions Phase II Simplify and drive profitable growth • 80/20 Process • Operational Excellence • Ramp the Growth Engine Pha
Slide 94: Megatrend Movement to Industrial Automation
MEGATREND MOVEMENT TO INDUSTRIAL AUTOMATION Projected U.S. full-time jobs 80 to be automated millions 0 2017 2035 Opportunity to capitalize on automation megatrend Source: University of Oxford, ARK Original Research © 2019 Columbus McKinnon Corporation 3
Slide 95: Phase III: Portfolio Optimization
PHASE III: PORTFOLIO OPTIMIZATION Selective Invest / Grow Scale-Up Investment Indust. Portfolio Assessment Criteria: Tech Business model Profitability Fix / Exit Selective Invest / Grow Market position Investment Industry growth Risk assessment Exit Fix / Exit Selective Investment Size of
Slide 96: The Phase III Growth Narrative: Lifting Specialist
THE PHASE III GROWTH NARRATIVE Lifting Specialist Lifting Specialist Expands addressable market ~$400-$500M Leverages engineering and production capabilities Faster growth and less cyclical Enhances existing position to improve safety & productivity for customers © 2019 Columbus McKinnon Corporation
Slide 97: The Phase III Growth Narrative: Smart Movement
THE PHASE III GROWTH NARRATIVE Smart Movement Smart Movement Expands addressable market ~$350-$600M Expected to complement/ improve legacy offerings High growth Smart solutions to improve safety & productivity for customers © 2019 Columbus McKinnon Corporation 6
Slide 98: Q&A
Q&A PARTNERS IN MOTION CONTROL
Slide 99: Columbus McKinnon Is Changed
COLUMBUS MCKINNON IS CHANGED Blueprint for Growth strategy is driving change Building stronger earnings power - creating value Strong management team executing well Strategy expected to outperform in recession Delivering returns with lower risk profile © 2019 Columbus McKinnon Corporation 8
Slide 100: Investor & Analyst Day 2019
Investor & Analyst Day 2019 June 13, 2019 New York, NY PARTNERS IN MOTION CONTROL
Slide 101: Supplemental Information
Supplemental Information PARTNERS IN MOTION CONTROL
Slide 102: Adjusted Income from Operations Reconciliation
ADJUSTED INCOME FROM OPERATIONS RECONCILIATION ($ in thousands) Fiscal Year FY 2017 FY 2018 FY 2019 Income from operations $ 23,725 $ 68,331 $ 69,442 Add back: Net (gain) loss on sales of businesses — — 25,672 Acquisition deal, integration, and severance costs 8,815 8,763 1,906 Ohio plant closure —
Slide 103: Adjusted Net Income Reconciliation
ADJUSTED NET INCOME RECONCILIATION ($ in thousands, except per share data) Fiscal Year FY 2017 FY 2018 FY 2019 Net income $ 8,984 $ 22,065 $ 42,577 Add back: Net (gain) loss on sales of businesses — — 25,672 Acquisition deal, integration, and severance costs 8,815 8,763 1,906 Insurance recovery lega
Slide 104: Adjusted EBITDA Reconciliation
ADJUSTED EBITDA RECONCILIATION ($ in thousands) Fiscal Year FY 2017 FY 2018 FY 2019 Net income (loss) $ 8,984 $ 22,065 $ 42,577 Add back (deduct): Income tax expense/(benefit) 4,043 27,620 10,321 Interest and debt expense 10,966 19,733 17,144 Cost of debt refinancing 1,303 — — Cost of bond redemptio
Slide 105: Executive Bios
EXECUTIVE BIOS Mark D. Morelli President and Chief Executive Officer Mark Morelli joined Columbus McKinnon Corporation in 2017 as President and Chief Executive Officer. Prior to joining Columbus McKinnon, Mr. Morelli served as President and Chief Operating Officer with Brooks Automation from 2012 th
Slide 106: Executive Bios
EXECUTIVE BIOS Alan S. Korman Vice President, Corporate Development, General Counsel and Chief HR Officer Alan Korman joined Columbus McKinnon Corporation in 2011 as General Counsel and Assistant Secretary. Six months later, he was elected Vice President, General Counsel and Corporate Secretary. In
Slide 107: Executive Bios
EXECUTIVE BIOS Mario Y. Ramos Vice President, Global Product Development Mario Ramos joined Columbus McKinnon in June of 2018 as Vice President, Global Product Development. Previously, Mr. Ramos served 18 years with Schneider Electric, holding various management roles, most recently as Vice Presiden
Slide 108: Contact Information
CONTACT INFORMATION Corporate Headquarters 205 Crosspoint Parkway Buffalo, NY 14068 Phone: 716.689.5400 Investor Relations Gregory P. Rustowicz Vice President - Finance and Chief Financial Officer Columbus McKinnon Corporation 716.689.5442 greg.rustowicz@cmworks.com Deborah K. Pawlowski Kei Advisors