Columbus Mckinnon Corporation · NASDAQ:CMCO
Columbus Mckinnon — Craig-Hallum 16th Annual Institutional Investor Conference 2019
30 slides from Columbus Mckinnon's conference presentation, May 29, 2019
Slide 1: Craig-Hallum 16th Annual Institutional Investor Conference
May 29, CRAIG-HALLUM 16TH ANNUAL 2019 INSTITUTIONAL INVESTOR CONFERENCE 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, 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 revenue and earnings, involve known
Slide 3: World's 2nd largest hoist company with leading share in U.S.
NASDAQ: CMCO Leading global designer, manufacturer and marketer of motion control products, technologies and services for material handling Founded: 1875 Leader in highly engineered lifting solutions and explosion-protected hoists Premium, well respected brands World’s 2nd largest hoist company with
Slide 4: Highly Relevant to Customers
HIGHLY RELEVANT TO CUSTOMERS Professional grade solutions for complex applications © 2019 Columbus McKinnon Corporation 4
Slide 5: Three Distinct Product Categories
THREE DISTINCT PRODUCT CATEGORIES Customer Driven Solutions Linear & Mechanical Actuators Lifting Tables Rail & Road Engineered Actuation Systems Products ~10% Industrial Products ~45% Manual Chain Hoist Crane Electric Chain Hoist ~45% Rigging / Clamps Solutions Industrial Winches
Slide 6: Defined Channels to Market
DEFINED CHANNELS TO MARKET Specialty Distributors Pfaff International Direct ~10% US General Line Distributors ~5% ~29% OEM/Government ~10% Crane ~11% Builders ~12% ~23% International General EPC Line Distributors $876.3 Million FY2019 Revenue Market channels provide access to end users © 2019 Colum
Slide 7: Market Drives Structure
MARKET DRIVES STRUCTURE Reorganized November 2017 Channel Partners: Product Categories: General Distribution/Rental Lifting Specialists (Direct Sales) Industrial Products Rigging Specialists Industrial Crane Builders End Users Crane Solutions & Kits EPC OEM Engineered Products Motion Technology Dist
Slide 8: End Market and Geographic Diversification
END MARKET AND GEOGRAPHIC DIVERSIFICATION Mining Entertainment Government / Others ~3%~3% APAC ~3% Elevators Latin America ~3% 6% Heavy OEM General Canada 4% Pulp ~5% ~25% Industrial 4% Paper/Chemical/ Pharma ~5% Construction ~5% 54% U.S. Metals Rail / Aerospace / ~10% ~10% Processing / Transport St
Slide 9: Key Vertical Markets
KEY VERTICAL MARKETS CONSTRUCTION MINING ENTERTAINMENT OIL & GAS POWER / UTILITIES TRANSPORTATION AUTOMOTIVE HEAVY EQUIPMENT MANUFACTURING © 2019 Columbus McKinnon Corporation 9
Slide 10: Strategy: Evolution of Columbus McKinnon
STRATEGY: EVOLUTION OF COLUMBUS MCKINNON Phase II underway Growth oriented Phase III Industrial Evolve business Technology model Further pivot: • Portfolio optimization Phase II • M&A Simplify and drive profitable growth Simplify through 80/20 process Operational excellence Ramp growth engine: Phase
Slide 11: Blueprint Phase I Accomplishments
BLUEPRINT PHASE I ACCOMPLISHMENTS STAHL value creation Achieved ~$18 million of synergies through FY19; $0.17 accretive in first full year Leveraged Magnetek technology Launched three variable-speed drive platforms to address the industrial automation trend Strengthened the core Improved product ava
Slide 12: Tracking Blueprint Phase II Progress
TRACKING BLUEPRINT PHASE II PROGRESS Simplify the Business 80/20 Process driving results • Contributed $8.5 million to operating income in FY19, well ahead of plan • Sharpened customer focus delivered significant growth Divested three non-core businesses Operational Excellence Operational effectiven
Slide 13: Operating System Deployment Continues
OPERATING SYSTEM DEPLOYMENT CONTINUES E-PAS™: Earnings Power Acceleration System 80/20 process: Centerpiece of operating system Eliminates bleeders - Sharpens focus on growth © 2019 Columbus McKinnon Corporation 13
Slide 14: Phase II: Simplify Through 80/20
PHASE II: SIMPLIFY THROUGH 80/20 • Product Line Simplification 80 / 20 • Customer Focus Process • Targeted Selling • Core Business Segmentation • Sharper business focus • Indirect cost reduction Savings • Expected to accelerate • Realize a full year’s impact of actions in FY2020 Roll-out • 50% of CM
Slide 15: Phase II: Simplify Through 80/20
PHASE II: SIMPLIFY THROUGH 80/20 Product Line Simplification Wire Rope Hoist Platform Basic Standard Industrial High Performance Rationalize global platforms while maintaining brands © 2019 Columbus McKinnon Corporation 15
Slide 16: Phase II: Smart Hoist Vision
PHASE II: SMART HOIST VISION Megatrend movement to industrial automation 80 Projected full-time jobs automated in the U.S. millions 0 2017 2035 Source: University of Oxford, ARK Original Research Opportunity to capitalize on automation megatrend © 2019 Columbus McKinnon Corporation 16
Slide 17: Phase II: Ramp the Growth Engine
PHASE II: RAMP THE GROWTH ENGINE Smart Hoists Capabilities Leveraging technology and experience to design “Smart Hoists” Precision lifting Load sensing Onboard diagnostics Preventative maintenance Remote monitoring Leads to improved safety and reduced down time Leveraging recent acquisitio
Slide 18: Phase III: Business Development
PHASE III: BUSINESS DEVELOPMENT Portfolio assessment Selective Invest / Grow Scale-Up Investment Portfolio Assessment Indust. Tech Business model Profitability Market position Fix / Exit Selective Invest / Grow Industry growth Investment Risk assessment EBITDA (to scale) Divest Fix / Exit
Slide 19: Financial Performance
FINANCIAL PERFORMANCE ($ in millions) Sales & Gross Margin Blueprint for Growth Strategy more effective in second year FY19 sales up 4.4% $876.3 $839.4 • Organic growth of 6% (adjusted for FX and divestitures) $637.1 Record gross margin of 34.8% in FY19 34.8% 34.0% 33.7% FY17 FY18 FY19 Total Sales G
Slide 20: Financial Performance
FINANCIAL PERFORMANCE ($ in millions) Adjusted Operating Income(1) Diluted EPS(1) $99.8 $2.74 $78.7 $2.01 $1.47 $47.2 11.4% 9.4% 7.4% $23.7 $68.3 $69.4 $0.43 $0.95 $1.80 FY17 FY18 FY19 FY17 FY18 FY19 Non-GAAP Adjustments Income from Operations Non-GAAP Adjustments GAAP Diluted EPS Adjusted OI Margin
Slide 21: De-Levering Balance Sheet
DE-LEVERING BALANCE SHEET CAPITALIZATION Debt reduction continues March 31, March 31, Paid down $15 million of debt in 4Q; 2019 2018 $65 million in FY19 Cash and cash equivalents $ 71.1 $ 63.0 Net Debt / Adjusted TTM EBITDA(1) Total debt 300.3 363.3 • Reduced to 1.7x and better than Total net debt 2
Slide 22: Significant Free Cash Flow Generation
SIGNIFICANT FREE CASH FLOW1 GENERATION ($ in millions) FY20E and Beyond, FCF After: ENABLES MEASURABLE • Annual CapEx of approximately $20 million* ANNUAL DEBT PAYMENT • Annual Pension contribution of ~$12 million Paid down $125 million of $90 - $80 - $95 debt in FY18 & FY19 $70 - $85 $75 $67.2 $55.
Slide 23: Creating Shareholder Value
CREATING SHAREHOLDER VALUE Adjusted EBITDA Margin(1) Return on Invested Capital (ROIC)(2) 15.1% 13.7% 11.4% 11.2% 8.7% 6.4% FY17 FY18 FY19 FY17 FY18 FY19 GOAL: Adjusted EBITDA Margin of 19% and Adjusted ROIC in mid-teens (1) Adjusted EBITDA is a non-GAAP financial measures. Please see supplemental s
Slide 24: Key Takeaways
KEY TAKEAWAYS Pivot from late stage industrial to higher growth, industrial technology company Raising expectations over next three years: >19% EBITDA margins and ROIC in mid-teens Cost savings through simplification and operational excellence Opportunity to capitalize on automation megatrend Drive
Slide 25: Supplemental Information
SUPPLEMENTAL INFORMATION © 2019 Columbus McKinnon Corporation 25
Slide 26: Adjusted Income from Operations Reconciliation
ADJUSTED INCOME FROM OPERATIONS RECONCILIATION ($ in thousands) Fiscal Year FY 2017 FY 2018 FY 2019 Income from operations $ 23,725 $ 68,331 $ 69,442 Add back: Net (gain) loss on sales of businesses — — 25,672 Acquisition deal, integration, and severance costs 8,815 8,763 1,906 Ohio plant closure —
Slide 27: Adjusted Net Income Reconciliation
ADJUSTED NET INCOME RECONCILIATION ($ in thousands, except per share data) Fiscal Year FY 2017 FY 2018 FY 2019 Net income $ 8,984 $ 22,065 $ 42,577 Add back: Net (gain) loss on sales of businesses — — 25,672 Acquisition deal, integration, and severance costs 8,815 8,763 1,906 Insurance recovery lega
Slide 28: Adjusted EBITDA Reconciliation
ADJUSTED EBITDA RECONCILIATION ($ in thousands) Fiscal Year FY 2017 FY 2018 FY 2019 Net income (loss) $ 8,984 $ 22,065 $ 42,577 Add back (deduct): Income tax expense/(benefit) 4,043 27,620 10,321 Interest and debt expense 10,966 19,733 17,144 Cost of debt refinancing 1,303 — — Cost of bond redemptio
Slide 29: Industrial Capacity Utilization
INDUSTRIAL CAPACITY UTILIZATION U.S. Capacity Utilization Eurozone Capacity Utilization Source: The Federal Reserve Board Source: European Commission 82% 85% 81% 76.4% (Manufacturing) & 84% 80% 78.8% (Total) - March 2019(1) 79% 83% 83.6% 78% March 2019 82% 77% 76% 81% 75% 80% 74% 73% 79% Manufacturi
Slide 30: Strategy: Partners in Motion Control
STRATEGY: PARTNERS IN MOTION CONTROL Become the leading Industrial Technology Company in safe & productive motion control Best in class safety & quality Strengthen the core Continuous improvement Ramp new product engine Optimize supply chain Create end-user pull & global footprint Beco
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