Columbus Mckinnon Corporation · NASDAQ:CMCO
Columbus Mckinnon — Q2 FY2019 Earnings Presentation
20 slides from Columbus Mckinnon's earnings presentation, Oct 30, 2018
Slide 1: Q2 Fiscal Year 2019 Financial Results Conference Call
Q2 Fiscal Year 2019 OctoberSept 30, Investor Presentation 20182017 Financial Results Conference Call Mark D. Morelli President and Chief Executive Officer Gregory P. Rustowicz Vice President – Finance & Chief Financial Officer
Slide 2: Safe Harbor Statement
Safe Harbor Statement These slides contain (and the accompanying oral discussion will contain) “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that could cause th
Slide 3: Q2 FY19 Results Drive Raised Expectations
Q2 FY19 Results Drive Raised Expectations Blueprint strategy accomplishments ahead of schedule Sales grew 2%; organic sales up 3% (excludes FX) Gross margin of 35% expanded 150 basis points Operating margin expanded 240 basis points to 11.4% Diluted EPS was $0.67, up 24%, and adjusted EPS was $0.70,
Slide 4: Tracking Blueprint Phase II Progress
Tracking Blueprint Phase II Progress Further Simplify the Business Starting to see traction with 80/20 process, will drive margin improvement Expect ~$7 million savings in FY2019; $1.6 million savings year to date Divestitures on track for completion this fiscal year Improve Productivity Record prod
Slide 5: Operating System Deployment Continues
Operating System Deployment Continues E-PAS™: Earnings Power Acceleration System Key Performance Strategy Indicators Deployment Monthly Operating 80 / 20 Reviews Process (MORs) Risk & Mission Opportunity Vision (R&Os) Values 80/20 process: Centerpiece of operating system Eliminates bleeders - Sharpe
Slide 6: Net Sales
Net Sales ($ in millions) Strong growth in North America and Y/Y APAC, partially offset by slight decline in + 2% Europe 2% volume growth $225.0 Pricing increased 1% $217.1 $214.1 Sales Bridge $212.8 Q2 $208.7 Q2 FY18 net sales $ 212.8 Volume 4.4 2.0% Pricing 2.1 1.0% Foreign currency translation (2
Slide 7: Gross Profit & Gross Margin
(1) Gross Profit & Gross Margin ($ in millions) Six consecutive Quarter Gross Margin Bridge quarters of Y/Y margin Q2 expansion Q2 FY18 Gross Profit $ 71.3 Sales volume and mix 2.9 $79.6 $75.9 $74.2 $71.3 $68.7 Productivity, net of other cost changes 2.4 Pricing, net of material cost inflation 1.3 P
Slide 8: RSG&A
(1) RSG&A ($ in millions) RSG&A at 21.8% of sales, 80 bps improvement $54.4 $51.1 $51.1 $48.2 $47.3 $3.8 R&D $0.6 million lower, or 16.3% $3.3 $3.7 $3.7 $3.1 • Optimizing processes before $23.0 $19.5 $22.3 $21.8 $19.7 further ramping spend Selling expenses decreased $0.5 million, or 2.1% $25.0 $25.5
Slide 9: Operating Income & Non-GAAP Margin
(1)(2) Operating Income & Non-GAAP Margin ($ in millions) $26.5 $25.5 Q2 FY19 adjusted operating income $13.0 grew 28% Y/Y $0.7 $19.9 $20.1 $17.8 $4.3 Adjusted operating margin of 11.7% $0.7 $4.0 Phase I and II savings of $6.6 million $24.8 year to date $19.2 $15.8 $13.7 $13.5 STAHL synergies 9.3%*
Slide 10: Quarterly Earnings Per Share
Quarterly Earnings Per Share ($ in millions) GAAP Diluted EPS Net income: $15.9 million, or $0.67 per diluted share $0.54 $0.67 $0.36 $0.33 Non-GAAP adjusted net income(1): $16.5 million, 39% increase Y/Y ($0.46) $0.70 per diluted share, up 37% Y/Y Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 Non-GAAP Ad
Slide 11: Working Capital
Working Capital Working Capital Working capital as a % of sales as a Percent of Sales increased 120 bps from prior year 19.4% 19.7% period to 19.7% 18.5% 17.9% Accounts Receivable increased 140 bps due 17.4% to higher DSO’s for STAHL and U.S. promotion offering extended terms (1) (1) (1) 9/30/17 12/
Slide 12: Cash Flow
Cash Flow Three Months Ended Note: Components may not add to totals due to rounding September 30, 2018 2017 Net cash provided by operating activities $ 19.5 $ 20.3 Capital expenditures (CapEx) (2.5) (4.2) Operating free cash flow $ 17.0 $ 16.2 Generated $19.5 million in cash from operations Strong o
Slide 13: De-levering Balance Sheet
De-levering Balance Sheet CAPITALIZATION Debt reduction continues Sept 30, March 31, Paid down $15 million in debt 2018 2018 Net Debt/ Adjusted TTM EBITDA(1) Cash and cash equivalents $ 57.7 $ 63.0 • Further reduced to 2.25x Total debt 339.3 363.3 Expected to be at targeted leverage ratio of 2.0x by
Slide 14: Outlook
Outlook Near-Term Outlook: Blueprint strategy and E-PAS™ operating system demonstrating traction Expect 4% to 5% organic growth in Q3 FY19 FX expected to be a headwind of (1%) to (2%) Longer-Term Outlook: Cost savings through simplification and operational excellence Improve sales and margins by ram
Slide 15: Supplemental Information
Supplemental Information © 2018 Columbus McKinnon Corporation 15
Slide 16: Conference Call Playback Info
Conference Call Playback Info Replay Number: 412-317-6671 passcode: 13683795 Telephone replay available through November 6, 2018 Webcast / PowerPoint / Replay available at www.cmworks.com/investors Transcript, when available, at www.cmworks.com/investors © 2018 Columbus McKinnon Corporation 16
Slide 17: Adjusted Income from Operations Reconciliation
Adjusted Income from Operations Reconciliation ($ in thousands) Quarter Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 Income from operations $ 19,219 $ 13,710 $ 15,807 $ 13,503 $ 24,825 Add back (deduct): Acquisition deal, integration, and severance costs 669 3,006 3,917 1,906 — Insurance recovery legal c
Slide 18: Adjusted Net Income Reconciliation
Adjusted Net Income Reconciliation ($ in thousands, except per share data) Quarter Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 Net income (loss) $ 12,508 $ (10,565) $ 8,466 $ 7,706 $ 15,912 Add back (deduct): Acquisition deal, integration, and severance costs 669 3,006 3,917 1,906 — Insurance recovery l
Slide 19: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation ($ in thousands) Quarter Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 Net income $ 12,508 $ (10,565) $ 8,466 $ 7,706 $ 15,912 Add back (deduct): Income tax expense 2,050 19,877 2,598 1,774 4,576 Interest and debt expense 5,067 4,864 4,661 4,607 4,248 Investment (income) los
Slide 20: Industrial Capacity Utilization
Industrial Capacity Utilization U.S. Capacity Utilization Eurozone Capacity Utilization Source: The Federal Reserve Board Source: European Commission 80% 85% 75.9% (Manufacturing) & 79% 78.1% (Total) 84% September 2018(1) 78% 83% 84.1% September 2018 77% 82% 76% 81% 75% 80% 74% 79% Manufacturing Tot