Columbus Mckinnon Corporation · NASDAQ:CMCO
Columbus Mckinnon — D.A. Davidson Diversified Industrials & Services Conference 2023
37 slides from Columbus Mckinnon's conference presentation, Sep 21, 2023
Slide 1: D.A. Davidson Diversified Industrials & Services Conference
D.A.Davidson Diversified Industrials & Services Conference David J. Wilson President and Chief Executive Officer Gregory P. Rustowicz Executive Vice President – Finance & Chief Financial Officer September 21, 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 $1.02B 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 ✓ Roadmap 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
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: Advancing Along our Transformation Path
Advancing Along our Transformation Path Targeting $1.5 Billion In Revenue and ~21% EBITDA Margin in FY2027 FUTURE REVENUE GROWTH RATE FY23 Pro-forma1 Specialty Conveying Linear Motion Linear Automation Motion 13% 9% FY21 Specialty Automation Conveying 19% Lifting Linear Motion Solutions & Automation
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 Americas, EMEA implementation in-progress Advanced Call Center Implemented Conveying; Automation in-progress
Slide 10: Unlocking Potential: Simplification with 80/20
Unlocking Potential: Simplification with 80/20 Simplification: Lifting, Conveyance, Automation & Linear Motion Standard SKU’s 9,600 Lifting Purchased 183,000 Components Standard SKU’s * 0 Conveyance Purchased 225,000 Components* Standard SKU’s 22,400 Automation Purchased 75,000 Components Standard S
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: Precision Conveyance Landscape
Precision Conveyance Landscape Asynchronous Asynchronous Linear Motor Pallet Monorail System Timing Belt Precision Belted Dorner Dorner Dorner montratec N/A Palletized, low speed, Low cost, compact Fixtured, high speed, Async, high speed, high Async, very high heavy load, low back *TCO: total cost o
Slide 13: Global Market for Assembly Conveyance
Global Market for Assembly Conveyance montratec Current Market Access OHT* Semiconductor $4,650 Linear Motor Technology $1,150 TAM: ~$3.5B Speed: 3-5 meter / sec Cleanroom Semiconductor Cleanroom: ISO2 – ISO3 TAM: ~$350M $800 Load: 8-20Kg Speed: 4.0+ meter / sec Traditional Pallet Cleanroom: Multipl
Slide 14: 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% 36.9% • Volume/scale/pricing 36.1% 35.4% • Product line simplification 35.0% 34.1% 33.7% Strategic
Slide 15: 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 16: 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 17: 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 ~$182M ad
Slide 18: Secular Growth Markets Provide Tailwinds
Secular Growth Markets Provide Tailwinds Precision Conveying Platform Added Attractive Vertical Markets with Enduring Tailwinds Food, Custom designed sanitary and Beverage & easy to clean conveyors Consumer engineered to the strictest USDA ~8% of FY23 sales* Goods guidelines Customizable designs bui
Slide 19: FY2027 Financial Targets
FY2027 Financial Targets Key Assumptions Growing Sales by >10% CAGR • Organic growth of ~5% driven by go-to-market structure and strategic initiatives SALES • Inorganic growth of ~6% from programmatic M&A inclusive of market growth • No material changes to current market conditions Expanding Gross M
Slide 20: Financial Targets
Financial Targets ($ 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% 36.1% 36.5% 36.4% $1,500 $1,600 35.0% 35.4% $1,400 34.1% $325 350 15.7% 15.4% 15.8% 15.7% ~$315 18.0% $1,200 34.0% 15.1% $1,000 11.9% $80 250 13.
Slide 21: Revenue Bridge
Revenue Bridge ($ in millions) REVENUE FY23 TO FY27E $30M+ of growth from M&A expected from montratec® over 4 ~$30M realized from years montratec® acquisition (May 2023) Strategy Expected to Deliver >10% Revenue Growth 21 © 2023 COLUMBUS MCKINNON CORPORATION
Slide 22: Adjusted EBITDA Margin Bridge
Adjusted EBITDA Margin Bridge ($ in millions) ADJUSTED EBITDA MARGIN FY23 to FY27E ~21% Actions Complete Expanding Adjusted EBITDA Margins ~550 bps Driven by Cost Actions & Scale 22 © 2023 COLUMBUS MCKINNON CORPORATION
Slide 23: 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% 1000.0 200 4.00 800% 2.8x 2.9x 3.00 $160 800.0 2.2x 2.0x 150 163% 147% 127% 300% 1.7x 2.00 98% 1.1x $630 158% 121% 600.0 0.6x 1.00 $97 100 $87 -200% $473 0.00 $67 $71
Slide 24: CMCO Peer Group Comparison
CMCO Peer Group Comparison Industrial Peers vs. Motion Control Peers (Based on average TTM ending 6/30/2023) YOY SALES GROWTH ADJ. GROSS ADJ. EBITDA EBITDA TRADING MARGIN(1) MARGIN MULTIPLE(2) Motion Control 9.8% 33.6% 17.8% 13.0x Target: CMCO 4.2% 36.4% 15.7% ~21% 10.1x Legacy Industrial 14.6% 22.0
Slide 25: 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 26: 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 27: D.A. Davidson Diversified Industrials & Services Conference
D.A.Davidson Diversified Industrials & Services Conference September 21, 2023
Slide 28: Supplemental Information
OW Supplemental Information INTELLIGENT MOTION PURPOSE IN MOTION
Slide 29: 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 30: 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 31: Industrial Capacity Utilization
Industrial Capacity Utilization U.S. Capacity Utilization Eurozone Capacity Utilization Source: The Federal Reserve Board Source: European Commission 85% 80% 77.8% (Manufacturing) 79.3% (Total) 83% July 2023(1) 81% 81.2% Q2 2023 75% 79% 77% 70% 75% 73% 71% 65% 69% 67% 60% 65% Manufacturing Total (1)
Slide 32: ISM Production Index
ISM Production Index Source: Institute for Supply Chain Management 70% 65% 60% 55% 50.0% 50% August 2023 45% 40% 35% 30% 25% 32 © 2023 COLUMBUS MCKINNON CORPORATION
Slide 33: Capital Structure
Capital Structure ($ in millions) CAPITALIZATION Net debt leverage ratio of ~2.9x(1) June 30, March 31, • Plan to continue to pay down debt and grow EBITDA 2023 2023 • Expect net leverage of <2.5x by end of fiscal year Cash and cash equivalents $ 107.0 $ 133.2 Paid down $10 million in debt in Q1 FY2
Slide 34: Adjusted Gross Profit Reconciliation
Adjusted Gross Profit Reconciliation ($ in thousands) Fiscal Year TTM 2019 2020 2021 2022 2023 Q1 FY24 GAAP gross profit $ 304,997 $ 283,186 $ 220,225 $ 315,730 $ 342,099 $ 346,221 Add back (deduct): Product liability settlement — — — 2,850 — — Acquisition amortization of backlog — — — 2,100 — — Acq
Slide 35: Adjusted Net Income Reconciliation
Adjusted Net Income Reconciliation ($ in thousands, except per share data) Quarter Fiscal Year Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 FY 2022 FY 2023 GAAP net income (loss) $ 8,391 $ 14,114 $ 12,029 $ 13,895 $ 9,275 $ 29,660 $ 48,429 Add back (deduct): Amortization of intangibles 6,535 6,447 6,459
Slide 36: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation ($ in thousands) Quarter Fiscal Year TTM Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 2022 2023 Q1 FY24 GAAP net income (loss) $ 8,391 $ 14,114 $ 12,029 $ 13,895 $ 9,275 $ 29,660 $ 48,429 $ 49,313 Add back (deduct): Income tax expense (benefit) 8,893 4,953 4,701 7,499 3,394
Slide 37: Free Cash Flow (FCF) & FCF Conversion Reconciliation
Free Cash Flow (FCF) & FCF Conversion Reconciliation ($ in thousands) Fiscal Year TTM 2022 2023 Q1 FY24 Cash from operations $ 48,881 $ 83,636 $ 77,566 Capital expenditures (13,104) (12,632) (14,952) Free cash flow (FCF) $ 35,777 $ 71,004 $ 62,614 GAAP net income $ 29,660 $ 48,429 $ 49,313 Free cash
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