Columbus Mckinnon Corporation · NASDAQ:CMCO
Columbus Mckinnon — Q2 FY2020 Earnings Presentation
24 slides from Columbus Mckinnon's earnings presentation, Nov 7, 2019
Slide 1: Q2 Fiscal Year 2020 Financial Results Conference Call
November 7, Q2 FISCAL YEAR 2020 2019 FINANCIAL RESULTS CONFERENCE CALL Mark D. Morelli President and 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: Execution of Strategy Drives Earnings
EXECUTION OF STRATEGY DRIVES EARNINGS Blueprint for Growth strategy continues to deliver strong financial results Revenue, adjusted for divestitures and FX, up 2%, despite macro headwinds 80/20 Process delivers stronger margin profile with $5.2 million contribution to operating income and funds grow
Slide 4: Blueprint Strategy Phase II Delivering Results
BLUEPRINT STRATEGY PHASE II DELIVERING RESULTS ($, in millions contribution to operating income) 80/20 Process: Expecting $18 million contribution to operating income in FY20 Customer simplification (strategic pricing) FY 2019 Actual $8.5 Priority customer account program (incremental volume from sh
Slide 5: Recent Examples of Innovation
RECENT EXAMPLES OF INNOVATION Intelligent Motion Solutions Integrated load sensing Scalable automation ProPath™ Automated in smart electric chain and control modules: Workstation Crane hoist offering “No-Fly Zone” Self-help strategy providing ability to invest in innovation © 2019 Columbus McKinnon
Slide 6: Net Sales
NET SALES ($ in millions) Q2 sales up 1.8% (adjusted for divestitures and FX) Q2 FY20 Sales Bridge U.S. sales up 0.8% from 80/20 strategic pricing, volume down in quarter Quarter Q2 FY19 Sales $ 217.1 Non-U.S. sales up 2.9% from 80/20 pricing and Divestitures (9.2) higher volumes (adjusted for dives
Slide 7: Gross Profit & Gross Margin
GROSS PROFIT & GROSS MARGIN ($ in millions) Quarter Gross Profit Bridge Quarter Q2 FY2019 Gross Profit $ 75.9 Divestitures (2.4) Q2 FY2019 Gross Profit adjusted for $75.9 $73.4 $76.0 $75.6 $73.5 divestitures $ 73.5 Pricing, net of material cost inflation 2.6 Productivity, net of other cost changes 0
Slide 8: RSG&A
RSG&A ($ in millions) RSG&A at 21.7% of sales, 10 bps improvement $47.3 $47.5 $49.0 $45.1 $45.0 Reduced by: $3.4 $3.1 $3.3 $2.8 $3.0 $0.9 million for divestitures $0.8 million for FX $19.7 $20.4 $21.7 $19.6 $19.2 Benefited by: $0.4 million warehouse closure Investing in growth: $24.5 $23.9 $24.0 $22
Slide 9: Operating Income & Adjusted OI Margin
OPERATING INCOME & ADJUSTED OI MARGIN ($ in millions) Q2 FY20 operating income increased $0.4 million, or 1.6% Divestitures reduced operating income $28.1 $1.5 million $25.5 $26.3 $24.9 $22.9 $27.0 $25.2 Adjusted operating income grew 3.4%, or $24.8 9.6% normalized for divestitures $24.5 $6.6 Adjust
Slide 10: Quarterly Earnings Per Share
QUARTERLY EARNINGS PER SHARE GAAP Diluted EPS Net income: $0.83 $0.78 $16.6 million, 4.3% increase Y/Y $0.67 $0.69 $0.69 per diluted share, up 3.0% Y/Y ($0.03) Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Adjusted net income: Adjusted EPS $17.8 million, 8.1% increase Y/Y $0.74 per diluted share, up 5.7%
Slide 11: Adjusted EBITDA & ROIC
ADJUSTED EBITDA & ROIC Adjusted EBITDA Margin Strong adjusted EBITDA margin 16.2% in Q2 FY20, expanded 80 bps Y/Y 16.2% 15.1% On track to achieve 19% goal in FY 2022 13.7% FY18 FY19 Q2 FY20 Return on Invested Capital Adjusted ROIC net of cash increased (ROIC)(1) 11.7% in Q2 FY20, expanded 180 bps Y/
Slide 12: Cash Flow
CASH FLOW ($ in millions) Free Cash Flow(1) Three Months Ended YTD 9/30/19 9/30/18 9/30/19 $90 - $95 $80 - $85 Net cash $70 - $75 provided by $67.2 operating $40.0 $19.5 $37.9 $55.1 activities $46.1 CapEx (3.0) (2.5) (4.8) Operating free cash flow $37.1 $17.0 $33.0 Note: Components may not add to to
Slide 13: Strong Balance Sheet
STRONG BALANCE SHEET ($ in millions) CAPITALIZATION Debt leverage ratio(1) of 1.5x Sept. 30, March 31, Paid down $20 million of debt in 2019 2019 Q2 FY20 Cash and cash equivalents $ 72.0 $ 71.1 YTD debt reduced by $30 million Total debt 271.4 300.3 Net debt to net total capital 30.1% Total net debt
Slide 14: Capital Deployment Priorities
CAPITAL DEPLOYMENT PRIORITIES Organic Growth New product development Investing in growth initiatives and CapEx De-lever the balance sheet Decreasing Priority Achieved net leverage target In-organic Growth M&A Fund M&A Return of Capital Regular dividend Adhere to dividend policy Share repurchase Cons
Slide 15: Outlook
OUTLOOK Q3 FY20 Outlook: Macroeconomic and other headwinds expected to continue into 2H FY20 • 80/20 Process expected to offset headwinds and fund continued investments for growth Expect Q3 FY20 sales to be down ~2% from Q3 FY19, which was ~$205 million* • Rail project timing will negatively impact
Slide 16: Blueprint for Growth Strategy
BLUEPRINT FOR GROWTH STRATEGY Growth Phase III Oriented Evolve business model Industrial • Portfolio optimization Technology • Mergers & acquisitions Phase II Simplify the business Drive profitable growth • 80/20 Process • Operational Excellence • Ramp the Growth Engine Phase I Get control Achieve r
Slide 17: Supplemental Information
Supplemental Information © 2019 Columbus McKinnon Corporation 17
Slide 18: Businesses Sold
BUSINESSES SOLD Q1 Q2 Q3 Q4 ($ in thousands) FY19 FY19 FY19 FY19 FY19 Sales 11,104 9,233 8,983 4,875 34,195 Income from operations 665 1,461 1,007 532 3,665 1. The Tire Shredder business was divested December 28, 2018. 2. Crane Equipment & Service, Inc. was divested February 28, 2019. 3. Stahlhammer
Slide 19: Adjusted Income from Operations Reconciliation
ADJUSTED INCOME FROM OPERATIONS RECONCILIATION ($ in thousands) Quarter Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Income from operations $ 24,825 $ 6,646 $ 24,468 $ 27,043 $ 25,231 Add back (deduct): Factory closures — 200 1,273 1,027 470 Business realignment costs — — — — 413 Insurance recovery legal
Slide 20: Adjusted Net Income Reconciliation
ADJUSTED NET INCOME RECONCILIATION ($ in thousands, except per share data) Quarter Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Net income (loss) $ 15,912 $ (782) $ 19,741 $ 18,579 $ 16,599 Add back (deduct): Factory closures — 200 1,273 1,027 470 Business realignment costs — — — — 413 Insurance recovery
Slide 21: Adjusted EBITDA Reconciliation
ADJUSTED EBITDA RECONCILIATION ($ in thousands) Quarter Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Net income (loss) $ 15,912 $ (782) $ 19,741 $ 18,579 $ 16,599 Add back (deduct): Income tax expense 4,576 3,111 860 5,162 5,141 Interest and debt expense 4,248 4,330 3,959 3,852 3,759 Investment (income)
Slide 22: Industrial Capacity Utilization
INDUSTRIAL CAPACITY UTILIZATION U.S. Capacity Utilization Eurozone Capacity Utilization Source: The Federal Reserve Board Source: European Commission 82% 85% 75.3% (Manufacturing) & 81% 77.5% (Total) September 2019(1) 84% 80% 79% 83% 78% 82% 77% 82.2% September 2019 76% 81% 75% 80% 74% 73% 79% Manuf
Slide 23: Conference Call Playback Info
CONFERENCE CALL PLAYBACK INFO Replay Number: 412-317-6671 passcode: 13694761 Telephone replay available through November 14, 2019 Webcast / PowerPoint / Replay available at www.cmworks.com/investors Transcript, when available, at www.cmworks.com/investors © 2019 Columbus McKinnon Corporation 23
Slide 24: Q2 Fiscal Year 2020 Financial Results Conference Call
November 7, Q2 FISCAL YEAR 2020 2019 FINANCIAL RESULTS CONFERENCE CALL PARTNERS IN MOTION CONTROL