Columbus Mckinnon Corporation · NASDAQ:CMCO
Columbus Mckinnon — D.A. Davidson 19th Annual Diversified Industrials & Services Conference 2020
29 slides from Columbus Mckinnon's conference presentation, Sep 22, 2020
Slide 1: D.A. Davidson Diversified Industrials & Services Conference
Sept. 22, D.A. DAVIDSON DIVERSIFIED INDUSTRIALS & 2020 SERVICES CONFERENCE David J. Wilson President & 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 company overview
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 11% Industrial Products Manual Chain Hoist 46% 43% Electric Chain Hoist Crane Rigging / Clamps Solutions Industrial Winches Cr
Slide 6: Diversified Revenue Streams
DIVERSIFIED REVENUE STREAMS APAC Latin America Canada 4% 6% 4% Mining Entertainment Government / Others ~3%~3% ~3% Elevators ~3% 54% U.S. 32% Heavy OEM General Europe, Middle Industrial Pulp ~5% ~25% East & Africa Paper/Chemical/ Pharma ~5% Construction ~5% Pfaff International Direct Metals Rail / A
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 $210.5 million force quickly generation at 6/30/2020 Eliminated all travel Flexing workforce to align Generated $9.5 million in with demand cash from
Slide 8: Balancing Near-Term and Long-Term Objectives
BALANCING NEAR-TERM AND LONG-TERM OBJECTIVES Near-term • Cost reductions, 80/20 Process and Operational Objectives: Excellence Generate Cash & • Working capital management Positive • Minimize cash outflows: capex, pension and debt service Operating Income • Maintain dividend • Advance investments in
Slide 9: Blueprint for Growth Strategy
BLUEPRINT FOR GROWTH STRATEGY Growth-oriented Industrial Technology Phase III Evolve business model • Portfolio optimization • Mergers & acquisitions Phase II Simplify the business Today Drive profitable growth • 80/20 Process • Operational Excellence Phase I • Ramp the Growth Engine Get control Ach
Slide 10: Evolution of the Business Model
EVOLUTION OF THE BUSINESS MODEL Business with Blueprint for Growth Strategy FY2015 Since Acquired: Now Engineered Products Aftermarket Industrial 6% Aftermarket 13% Aftermarket 4% Engineered Technology Crane ~ 20% ~10% Solutions Products 10% 9% Industrial Products 38% Crane Solutions 40% ~ Industria
Slide 11: Business Operating System
BUSINESS OPERATING SYSTEM E-PAS™: Earnings Power Acceleration System Key Performance Strategy Inspired to Indicators Deployment Lead™ (KPIs) Monthly Operating 80 / 20 M&A Reviews Process Process (MORs) Risk & Raising Lean Opportunity Expectations Tools (R&Os) Developed Under development Business ope
Slide 12: Strategy Drives Performance
STRATEGY DRIVES PERFORMANCE ($ in millions) Strategy creates stronger Continued progress towards Transformation nearly earnings power… 19% EBITDA margin goal… doubles ROIC(1)… $2.74 $2.78 15.7% 11.2% 11.5% 15.1% $2.50 $2.03 14.1% $2.01 13.7% 11.4% 8.7% 8.9% $1.47 $1.80 $1.59 5.6% $0.95 $0.43 FY17 FY
Slide 13: Drive Improvement: Simplify the Business
DRIVE IMPROVEMENT: SIMPLIFY THE BUSINESS 80/20 Process and Operational Excellence Customer simplification Strategic pricing Priority customer account program Incremental volume from sharpened customer focus Purchased Product parts SKUs Product simplification ~400,000 ~50,000 Indirect overhead reduct
Slide 14: Blueprint Strategy Delivering Results
BLUEPRINT STRATEGY DELIVERING RESULTS Business operating system, E-PAS™, driving performance FY 21 Fiscal 2021 Savings Potential Annualized Savings 80/20 Process including footprint consolidations $6+ million Structural RSG&A and indirect overhead cost reductions $5 million TOTAL $11+ million E-PAS
Slide 15: Drive Growth: Ramp the Growth Engine
DRIVE GROWTH: RAMP THE GROWTH ENGINE Continued investment through COVID-19 recession Strategic Priority: New Product Development Automation Crane Kits Intelli-Protect ™with single zone and Expanded feature set multi-zone options (April 2020) Plug and Play capability Intelli-Lift™ (July 2020) Intelli
Slide 16: Strategic Priority: Digital Platform
STRATEGIC PRIORITY: DIGITAL PLATFORM Continued investment through COVID-19 recession Launched new website: www.columbusmckinnon.com • Single site for all global brands Compass™ configurator: • Online tool to configure product, price and quote • Continuously adding products and functionality • Modern
Slide 17: Drive Growth: M&A Strategy
Drive Growth: M&A Strategy Acquisitions to build on core competencies Lifting Specialist Smart Movement Leverage engineering & production Leverage installed base & “reason to be” knowhow Address customer high-value problems Leverage channels, valuable brand Software engineering focus Fra
Slide 18: Solid Margins on Lower Volume
SOLID MARGINS ON LOWER VOLUME ($ in millions) Net Sales Q1 FY21 sales and operating income $876.3 severely impacted by COVID-19 $839.4 $809.2 $735.5 Q1 FY21 sales volume down 35% Gross margin of 32% in Q1 FY21 Q1 FY21 gross margin higher than peak $801.1 $842.1 $809.2 $735.5 gross margin prior to Gr
Slide 19: Cash Flow
CASH FLOW ($ in millions) FY18 FY19 FY20 Q1 FY21 Free Cash Flow(1) TTM 3/31/18 3/31/19 3/31/20 6/30/20 Net cash provided $109.8 by operating $69.7 $79.5 $106.8 $118.5 activities $97.4 CapEx (14.5) (12.3) (9.4) (8.7) Free cash flow $55.1 $67.2 $97.4 $109.8 $67.2 (FCF) $55.1 Note: Components may not a
Slide 20: Capital Structure
CAPITAL STRUCTURE ($ in millions) CAPITALIZATION Net debt leverage ratio(1) of 1.2x June 30, March 31, Net debt to net total capital 20.9% 2020 2020 Cash and cash equivalents $ 152.2 $ 114.5 Maintaining financial flexibility in Total debt uncertain macroeconomic environment 275.7 251.3 Total net deb
Slide 21: Near-Term Outlook
NEAR-TERM OUTLOOK (Guidance provided as of July 30, 2020) Q2 FY21 outlook 31% drop in orders in Q1 FY21 Y/Y Expect revenue in Q2 FY21 in range of $150 million to $160 million Expect growth in operating income from Q1 FY21 and positive cash flow Prepared to respond to changes in demand Continuing to
Slide 22: Why Columbus McKinnon?
WHY COLUMBUS MCKINNON? Strategy and business operating system provide foundation to address unprecedented times Blueprint for Growth strategy continues to deliver Building stronger earnings power - creating value Strong management team executing well Lowering risk profile and expanding margins © 202
Slide 23: Supplemental Slides
SUPPLEMENTAL SLIDES PARTNERS IN MOTION CONTROL
Slide 24: Adjusted Income from Operations Reconciliation
ADJUSTED INCOME FROM OPERATIONS RECONCILIATION ($ in thousands) Fiscal Year Quarter TTM FY 2017 FY 2018 FY 2019 FY 2020 Q1 FY21 Q1 FY21 Income from operations $ 23,725 $ 68,331 $ 69,442 $ 89,824 $ 1,789 $ 64,570 Add back (deduct): Factory closures — — 1,473 4,709 2,256 5,938 Business realignment cos
Slide 25: Adjusted Net Income Reconciliation
ADJUSTED NET INCOME RECONCILIATION ($ in thousands, except per share data) Fiscal Year TTM FY 2017 FY 2018 FY 2019 FY 2020 Q1 FY21 Net income (loss) $ 8,984 $ 22,065 $ 42,577 $ 59,672 $ 38,124 Add back: Non-cash pension settlement expense — — — — 2,722 Factory closures — — 1,473 4,709 5,938 Business
Slide 26: Adjusted EBITDA Reconciliation
ADJUSTED EBITDA RECONCILIATION ($ in thousands) Fiscal Year TTM FY 2017 FY 2018 FY 2019 FY 2020 Q1 FY21 Net income $ 8,984 $ 22,065 $ 42,577 $ 59,672 $ 38,124 Add back (deduct): Income tax expense (benefit) 4,043 27,620 10,321 17,484 11,359 Interest and debt expense 10,966 19,733 17,144 14,234 13,57
Slide 27: Industrial Capacity Utilization
INDUSTRIAL CAPACITY UTILIZATION U.S. Capacity Utilization Eurozone Capacity Utilization Source: The Federal Reserve Board Source: European Commission 85% 80% 83% 81% 75% 79% 77% 75% 70% 69.2% (Manufacturing) & 73% 72.1% 70.6% (Total) 71% Q3 2020 July 2020(1) 65% 69% 67% 60% 65% Manufacturing Total (
Slide 28: ISM Production Index
ISM PRODUCTION INDEX Source: Institute of Supply Chain Management 70% 63.3% August 2020 65% 60% 55% 50% 45% 40% 35% 30% 25% © 2020 Columbus McKinnon Corporation 28
Slide 29: D.A. Davidson Diversified Industrials & Services Conference
Sept. 22, D.A. DAVIDSON DIVERSIFIED INDUSTRIALS & 2020 SERVICES CONFERENCE PARTNERS IN MOTION CONTROL