Columbus Mckinnon Corporation · NASDAQ:CMCO
Columbus Mckinnon — Q3 2023 Earnings Presentation
30 slides from Columbus Mckinnon's earnings presentation, Feb 1, 2023
Slide 1: Q3 Fiscal Year 2023 Financial Results Conference Call
Q3 Fiscal Year 2023 Financial Results Conference Call David J. Wilson President & Chief Executive Officer Gregory P. Rustowicz Executive VP – Finance & Chief Financial Officer February 1, 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: Executing Strategy: Strong Earnings Growth
Executing Strategy: Strong Earnings Growth Transformation driving growth, improving cost structure and leveraging market position Higher Sales Drove Operating Income Growth • Sales up 7% driven by improved volume and pricing; up 11% on a constant currency basis • Operating income increased 32% to $2
Slide 4: Unlocking Potential: Key Strategic Objectives Dashboard
Unlocking Potential Key Strategic Objectives Dashboard STRENGTHEN, GROW, EXPAND AND REIMAGINE CMCO Delivered 7% revenue growth (11% constant currency) under new leadership structure Introduced new precision conveying product line, hand chain hoist and pre-launched VFD controlled wire rope hoist NPD
Slide 5: Operational Performance
Operational Performance Continued progress with gross margin expansion through weakest quarter of year ADJUSTED GROSS MARGIN PROGRESSION GROSS MARGIN LEVERS ~40% • Operational Excellence • Product line simplification 36.8% 36.1% 36.3% 35.4% • Factory simplification 35.0% 33.7% 34.1% • Pricing • Volu
Slide 6: Business Model Transformation
Business Model Transformation Innovation drives strategy and portfolio transformation Revenue FUTURE Growth Rate Specialty FY23 YTD Conveying Linear Motion Linear Automation Motion 14% 9% Automation Specialty Conveying 17% FY21 Lifting Solutions Linear Motion Lifting Solutions & Automation 60% Lifti
Slide 7: Net Sales
Net Sales ($ in millions) Q3 sales up 11% on constant currency from prior-year Quarter Sales Bridge period driven primarily by pricing Quarter • U.S.: 5.8% pricing increase and 0.6% volume increase Q3 FY22 Sales $ 216.1 • Non-U.S.: 5.1% pricing and 5.9% volume increase Pricing 11.9 5.5% Volume 5.9 2
Slide 8: Gross Profit & Margin
Gross Profit & Margin ($ in millions) Quarter Gross Profit Bridge Quarter Q3 FY22 Gross Profit $ 75.1 $85.5 $86.3 Price, net of material cost inflation 5.9 $82.5 $82.0 $75.1 Prior year product liability settlement 2.9 37.5% Acquisition 1.9 37.2% 36.7% Prior year business realignment costs 0.7 35.6%
Slide 9: RSG&A
RSG&A ($ in millions) Q/Q Comparison: RSG&A as • Contingent consideration for acquisition of $1.2 million % of sales: 24.8% 21.6% 24.1% 22.7% 24.1% • Incremental business realignment and HQ relocation $55.4 costs of $0.5 million $53.5 $54.8 $53.2 $52.5 • Adjustment to annual incentive and stock comp
Slide 10: Operating Income
Operating Income ($ in millions) Operating Income & Margin Q3 FY23 operating income of $20.2 million up 32%; operating margin expanded 170 bps to $27.4 $24.1 8.8% $22.8 $20.2 $15.3 • Margin and profit improvement reflect pricing, acquisition performance, volume and mix 7.1% 9.5% 10.4% 11.8% 8.8% • M
Slide 11: Earnings Per Share
Earnings Per Share GAAP Diluted EPS Q3 FY23 GAAP net income grew 22% to $12.0 million, up $0.08 per diluted share $0.49 • Benefited from FX gain of $3.4 million and investment $0.41 $0.42 income of $0.6 million $0.34 $0.29 • More than offset $2.9 million increase in interest expense Adj. net income
Slide 12: Adjusted EBITDA & ROIC
Adjusted EBITDA & ROIC Adjusted EBITDA and Margin Return on Invested Capital (ROIC)(1) 7.5% $140.1 $147.3 6.6% 6.9% $77.2 11.9% 15.4% 15.7% FY21 FY22 Q3 FY23 TTM FY21 FY22 Q3 FY23 TTM Steady Progress Towards Our Long-term Targets 12 © 2023 COLUMBUS MCKINNON CORPORATION (1)ROIC is a non-GAAP measure
Slide 13: Cash Flow
Cash Flow ($ in millions) Free Cash Flow & Conversion(2) Three Months Ended YTD 12/31/22 12/31/21 12/31/22 $97.4 Net cash provided by $10.8 $5.8 $16.9 $86.6 operating activities CapEx (4.2) (2.8) (9.5) Free cash flow (FCF) $6.5 $3.0 $7.4 Note: Components may not add to totals due to rounding $35.8 $
Slide 14: Capital Structure
Capital Structure ($ in millions) CAPITALIZATION Net debt leverage ratio of ~2.7x December 31, September 30, • Net debt to net total capital improved 270 bps y/y to 2022 2022 33.0% Cash and cash equivalents $ 81.5 $ 88.9 • Expect to be under 2.5x by end of fiscal 2023 Total debt 481.5 491.4 Reduced
Slide 15: Orders and Backlog
Orders and Backlog ($ in millions) Orders Reflect Demand Cycle Due to Price Action Solid Backlog at $329.1 million • Daily order rates improved 3% sequentially as macrotrends offset • Backlog stable and includes 28% decline in past due orders economic softness • Short term backlog represents 66% of
Slide 16: On Track to Deliver to Plan
On Track to Deliver to Plan Executing plan to deliver long-term growth objectives (1) • Expect Q4 FY23 net sales of approximately $240 million to $250 million • Plan strong cash generation and release of working capital in Q4 • Full year FY23 sales growth of approximately 6% on a constant currency b
Slide 17: Q3 Fiscal Year 2023 Financial Results Conference Call
Q3 Fiscal Year 2023 Financial Results Conference Call David J. Wilson President & Chief Executive Officer Gregory P. Rustowicz Executive VP – Finance & Chief Financial Officer February 1, 2023
Slide 18: Supplemental Information
ONO Supplemental Information INTELLIGENT MOTION PURPOSE IN MOTION
Slide 19: Conference Call Playback Info
Conference Call Playback Info Replay Number: 412-317-6671 passcode: 13735008 Telephone replay available through February 8, 2023 Webcast / PowerPoint / Replay available at investors.columbusmckinnon.com Transcript, when available, at investors.columbusmckinnon.com 19 © 2023 COLUMBUS MCKINNON CORPORA
Slide 20: Adjusted Gross Profit Reconciliation
Adjusted Gross Profit Reconciliation ($ in thousands) Quarter Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 GAAP gross profit $ 75,057 $ 85,475 $ 82,519 $ 86,310 $ 82,044 Add back (deduct): Acquisition inventory step-up expense 515 1,546 — — — Product liability settlement 2,850 — — — — Acquisition amortiz
Slide 21: Adjusted Gross Profit Reconciliation
Adjusted Gross Profit Reconciliation ($ in thousands) Fiscal Year TTM 2018 2019 2020 2021 2022 Q3 FY23 GAAP gross profit $ 285,061 $ 304,997 $ 283,186 $ 220,225 $ 315,730 $ 336,348 Add back (deduct): Product liability settlement — — — — 2,850 — Acquisition amortization of backlog — — — — 2,100 1,650
Slide 22: Adjusted Income from Operations Reconciliation
Adjusted Income from Operations Reconciliation ($ in thousands) Quarter Fiscal Year Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 2021 2022 GAAP income from operations $ 15,316 $ 24,059 $ 22,817 $ 27,372 $ 20,179 $ 42,255 $ 73,781 Add back (deduct): Acquisition deal and integration costs 370 229 86 19 338
Slide 23: Adjusted Net Income Reconciliation
Adjusted Net Income Reconciliation ($ in thousands, except per share data) Quarter Fiscal Year Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 FY 2021 FY 2022 GAAP net income (loss) $ 9,894 $ 11,826 $ 8,391 $ 14,114 $ 12,029 $ 9,106 $ 29,660 Add back (deduct): Amortization of intangibles 6,254 6,635 6,535 6
Slide 24: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation ($ in thousands) Quarter Fiscal Year TTM Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 2021 2022 Q3 FY23 GAAP net income (loss) $ 9,894 $ 11,826 $ 8,391 $ 14,114 $ 12,029 $ 9,106 $ 29,660 $ 46,360 Add back (deduct): Income tax expense (benefit) 1,066 6,154 8,893 4,953 4,701
Slide 25: Return on Invested Capital (ROIC) Reconciliation
Return on Invested Capital (ROIC) Reconciliation ($ in thousands) Fiscal Year TTM 2021 2022 Q3 FY23 GAAP income from operations 42,255 73,781 94,427 Add back (deduct): Acquisition deal and integration costs 3,951 10,473 672 Acquisition inventory step-up expense — 5,042 1,546 Product liability settle
Slide 26: Free Cash Flow & Free Cash Flow Conversion Reconciliation
Free Cash Flow & Free Cash Flow Conversion Reconciliation ($ in thousands) Fiscal Year TTM 2020 2021 2022 Q3 FY23 Cash from operations $ 106,795 $ 98,890 $ 48,881 $ 42,056 Capital expenditures (9,432) (12,300) (13,104) (13,109) Free cash flow (FCF) $ 97,363 $ 86,590 $ 35,777 $ 28,947 GAAP net income
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% 77.5% (Manufacturing) 81% 78.8% (Total) 81.4% 75% 79% Dec 2022(1) Q4 2022 77% 70% 75% 73% 71% 65% 69% 67% 60% 65% Manufacturing Total (1)
Slide 28: ISM Production Index
ISM Production Index Source: Institute for Supply Chain Management 70% 65% 60% 55% 50% 48.5% 45% December 2022 40% 35% 30% 25% 28 © 2023 COLUMBUS MCKINNON CORPORATION
Slide 29: 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 29 © 2023 COLUMBUS MCKINNON CORPORATION
Slide 30: Q3 Fiscal Year 2023 Financial Results Conference Call
Q3 Fiscal Year 2023 Financial Results Conference Call David J. Wilson President & Chief Executive Officer Gregory P. Rustowicz Executive VP – Finance & Chief Financial Officer February 1, 2023