Columbus Mckinnon Corporation · NASDAQ:CMCO
Columbus Mckinnon — Q3 2024 Earnings Presentation
27 slides from Columbus Mckinnon's earnings presentation, Jan 31, 2024
Slide 1: Q3 Fiscal Year 2024 Financial Results Conference Call
Q3 Fiscal Year 2024 Financial Results Conference Call David J. Wilson President & Chief Executive Officer Gregory P. Rustowicz Executive Vice President Finance & Chief Financial Officer Kristine Moser Vice President, Investor Relations & Treasurer January 31, 2024
Slide 2: Safe Harbor Statement
Safe Harbor Statement These slides, and the accompanying oral discussion (together, this “presentation”), contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are generally identified by the use of forward-l
Slide 3: Third Quarter FY24 Key Takeaways
Third Quarter FY24 Key Takeaways • Achieved over $1.0 billion net sales over the last year, including a 10% increase in net sales in Q3 driven by strength across all product platforms led by precision conveyance • Continued progress on gross margin expansion, up 130 bps and 160 bps on an adjusted ba
Slide 4: Orders and Backlog
Orders and Backlog ($ in millions) Continued Orders Growth and Encouraging Pipeline Operational Improvements Enabled Backlog Conversion • Orders up 8% Y/Y with solid demand across all geographies and • Past due backlog reduced by 26% from Q2; in line with particular strength in EMEA & Latin America
Slide 5: Continued Progress on Footprint Simplification
Continued Progress on Footprint Simplification State-of-the-Art Facility to Support Growth: • Strategically located in Monterrey, MX • North American Manufacturing Center of Excellence • Supports sales growth plan • Aligned with strategy and 80/20 process; supports margin expansion plan • Integratin
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 © 2023 COLUMBUS MCKINNON CORPORATION
Slide 7: Net Sales
Net Sales ($ in millions) Q3 sales increased 10.3% Y/Y or 8.5% excluding FX Quarter Sales Bridge • Sales outside of the U.S. increased 30% o montratec contributed 17% growth Quarter o Price and volume contributed 8% growth ($ in millions) $ Change % Change • Partially offset by U.S. decrease of 2% d
Slide 8: Gross Profit & Margin
Gross Profit & Margin ($ in millions) Gross Profit Bridge $100.0 $93.9 ($ in millions) Quarter $91.2 $86.6 Fiscal 2023 Gross Profit $ 82.0 $82.0 38.7% Acquisition 6.7 37.2% Price, net of mfg cost changes (incl. inflation) 4.6 36.9% Product liability 0.9 35.6% 35.9% Current year business realignment
Slide 9: RSG&A
RSG&A ($ in millions) RSG&A as RSG&A increased $4.1 million Y/Y to $59.5 million 24.1% 22.5% 24.8% 22.9% 23.4% % of sales: • $3.4 million from montratec • $1.4 million of higher R&D, excluding FX and montratec, as we $58.3 $59.1 $59.5 advance our product innovation and product line simplification $5
Slide 10: Operating Income
Operating Income ($ in millions) Operating Income & Margin Operating income of $26.9 million, up 33% Y/Y $33.4 $27.5 $26.9 • Operating income grew $6.7 million $20.2 $21.4 • Operating margin of 10.6% expanded 180 bps 8.8% 10.8% 9.1% 12.9% 10.6% Adjusted Operating Income1 of $29.7 million, Q3 FY23 Q4
Slide 11: Earnings Per Share
Earnings Per Share GAAP Diluted EPS $0.55 Net income of $9.7 million in the quarter $0.48 $0.42 • $6.7 million increase in operating income $0.32 $0.34 • Offset by: o $4.6 million non-cash pension settlement expense o $2.6 million higher interest expense Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 Q3 FY24 o $2.
Slide 12: Adjusted EBITDA & ROIC
Adjusted EBITDA & ROIC Adjusted EBITDA1 and Margin1 Adjusted EBITDA Margin1 of 16.3% in quarter $163.4 • Targeting 21% Adjusted EBITDA Margin in FY27 $147.8 $140.1 • Expect 80/20 initiatives, factory simplification, and operating leverage on increased scale to drive margin expansion 15.4% 15.8% 16.3
Slide 13: Cash Flow
Cash Flow ($ in millions) 1 Three Months Ended Year-to-Date Free Cash Flow1 & Conversion 12/31/23 12/31/22 12/31/23 12/31/22 Net cash provided by (used for) operating $ 29.1 $ 10.8 $ 28.6 $ 16.9 $86.6 activities $75.9 $71.0 Capital Expenditures 6.0 4.2 16.3 9.5 Free Cash Flow (FCF)1 $ 23.1 $ 6.5 $ 1
Slide 14: Capital Structure
Capital Structure ($ in millions) Net Leverage Ratio1 of 2.6x CAPITALIZATION • $15 million debt reduction in the quarter December 31, March 31, 2023 2023 • Expect additional $15 million paydown in Q4 FY24 totaling Cash and cash equivalents $ 102.9 $ 133.2 $55 million paydown in FY24 Total debt 550.0
Slide 15: Q4 FY2024 Guidance
Q4 FY2024 Guidance Net Sales ($M) $260 million to $270 million +2% to +6% Y/Y RSG&A Expense ~$60 million Interest Expense ~$10 million Tax Rate 25% Diluted Average Shares 29.1 million Capital Expenditures $14 to $19 million FY24 FCF Conversion1 ~90% Net Leverage Ratio1 ~2.3x Expect Strong Growth and
Slide 16: Q3 Fiscal Year 2024 Financial Results Conference Call
Q3 Fiscal Year 2024 Financial Results Conference Call David J. Wilson President & Chief Executive Officer Gregory P. Rustowicz Executive Vice President Finance & Chief Financial Officer Kristine Moser Vice President, Investor Relations & Treasurer January 31, 2024
Slide 17: Supplemental Information
OW Supplemental Information INTELLIGENT MOTION PURPOSE IN MOTION
Slide 18: Conference Call Playback Info
Conference Call Playback Info Replay Number: 412-317-6671 passcode: 13743372 Telephone replay available through February 7, 2024 Webcast / PowerPoint / Replay available at investors.cmco.com Transcript, when available, at investors.cmco.com 18 © 2023 COLUMBUS MCKINNON CORPORATION
Slide 19: Adjusted Gross Margin Trajectory
Adjusted Gross Margin Trajectory ADJUSTED GROSS MARGIN1 GROSS MARGIN LEVERS PROGRESSION ~40% Operating Initiatives • Operational Excellence 37.6% • Volume/scale/pricing 36.5% 36.1% • Product line simplification 35.4% 35.0% 34.1% Strategic Initiatives 33.7% • Accretive acquisitions • Factory simplifi
Slide 20: Non-GAAP Measures
Non-GAAP Measures The following information provides definitions and reconciliations of the non-GAAP financial measures presented in this presentation to the most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles (GAAP). The C
Slide 21: Non-GAAP Measures: Adjusted Gross Profit and Adjusted Gross Margin
Non-GAAP Measures: Adjusted Gross Profit and Adjusted Gross Margin ($ in thousands) Quarter Nine Months Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 Q3 FY24 YTD FY24 GAAP gross profit $ 82,044 $ 91,218 $ 86,649 $ 99,976 $ 93,897 $ 280,523 Add back (deduct): Business realignment costs — — 196 — 150 346 Monterrey,
Slide 22: Non-GAAP Measures: Adjusted Operating Income and Adjusted Operating Margin
Non-GAAP Measures: Adjusted Operating Income and Adjusted Operating Margin ($ in thousands) Quarter Fiscal Year Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 Q3 FY24 2022 2023 Income from operations $ 20,179 $ 27,469 $ 21,448 $ 33,351 $ 26,912 $ 73,781 $ 97,841 Add back (deduct): Acquisition deal and integration
Slide 23: Non-GAAP Measures: Adjusted Net Income and Adjusted Diluted EPS
Non-GAAP Measures: Adjusted Net Income and Adjusted Diluted EPS ($ in thousands, except per share data) Quarter Fiscal Year Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 Q3 FY24 2022 2023 Net income $ 12,029 $ 13,895 $ 9,275 $ 15,813 $ 9,728 $ 29,660 $ 48,429 Add back (deduct): Amortization of intangibles 6,459 6
Slide 24: Non-GAAP Measures: Adjusted EBITDA and Adjusted EBITDA Margin
Non-GAAP Measures: Adjusted EBITDA and Adjusted EBITDA Margin ($ in thousands) Quarter Fiscal Year TTM Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 Q3 FY24 2022 2023 Q3 FY24 Net income $ 12,029 $ 13,895 $ 9,275 $ 15,813 $ 9,728 $ 29,660 $ 48,429 $ 48,711 Add back (deduct): Income tax expense (benefit) 4,701 7,49
Slide 25: Non-GAAP Measures: ROIC
Non-GAAP Measures: ROIC ($ in thousands) Fiscal Year TTM 2022 2023 Q3 FY24 Income from operations $ 73,781 $ 97,841 $ 109,180 Add back (deduct): Acquisition deal and integration costs 10,473 616 3,381 Business realignment costs 3,902 5,140 2,715 North American warehouse consolidation — — 199 Headqua
Slide 26: Non-GAAP Measures: Free Cash Flow (FCF) and FCF Conversion
Non-GAAP Measures: Free Cash Flow (FCF) and FCF Conversion ($ in thousands) Fiscal Year TTM 2021 2022 2023 Q3 FY24 Net cash provided by operating activities $ 98,890 $ 48,881 $ 83,636 $ 95,325 Capital expenditures (12,300) (13,104) (12,632) (19,455) Free Cash Flow (FCF) $ 86,590 $ 35,777 $ 71,004 $
Slide 27: Non-GAAP Measures: Net Debt and Net Leverage Ratio
Non-GAAP Measures: Net Debt and Net Leverage Ratio ($ in thousands) Trailing Twelve Month Credit Agreement Net Debt is defined in the credit agreement as total debt plus standby letters of credit, net of cash and cash equivalents. Net Q2 FY24 Q3 FY24 Leverage Ratio is defined as Credit Agreement Net