Columbus Mckinnon Corporation · NASDAQ:CMCO
Columbus Mckinnon — Q4 FY2020 Earnings Presentation
28 slides from Columbus Mckinnon's earnings presentation, May 27, 2020
Slide 1: Q4 Fiscal Year 2020 Financial Results Conference Call
May 27, Q4 FISCAL YEAR 2020 2020 FINANCIAL RESULTS CONFERENCE CALL Richard H. Fleming Chairman & Interim Chief Executive Officer David J. Wilson President and Chief Executive Officer - Elect 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: 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 nearly force quickly generation $200 million at 3/31/2020 Eliminated all travel Flexing workforce to align Generated $36.5 million in with demand cash
Slide 4: Balance: Near-Term and Long-Term Objectives
BALANCE: NEAR-TERM AND LONG-TERM OBJECTIVES Near-term • Cost reductions, 80/20 Process and Objectives: Operational Excellence Generate Cash & • Working capital management Positive • Minimize cash outflows: capex, pension and debt service Operating Income • Maintain dividend •Advance investments in t
Slide 5: Strategy Delivers in Downturn
STRATEGY DELIVERS IN DOWNTURN Blueprint for Growth strategy drove margin expansion despite declining sales Gross margin of 34.9% in Q4 FY20 and 35.0% for FY20 • Record adjusted gross margin of 36.1% in Q4 FY20 Diluted earnings per share: $0.39 in Q4 FY20 and $2.50 for FY20 Adjusted EBITDA margin exp
Slide 6: Strong Cash Generation
STRONG CASH GENERATION Record cash from operations and free cash flow in FY20 Cash from operations • Q4 FY20: 36.5 million • FY20: $106.8 million Free cash flow • Q4 FY20: $33.9 million • FY20: $97.4 million Structural changes to working capital as a % of sales in Q4 FY20 resulted in 200 bps sequent
Slide 7: Blueprint Strategy Phase II Delivering Results
BLUEPRINT STRATEGY PHASE II DELIVERING RESULTS ($, in millions contribution to operating income) 80/20 Process contributions to operating income: Q4 FY20: $5.5 million Customer simplification (strategic pricing) FY20: $20.4 million Priority customer account program (incremental volume from sharpened
Slide 8: Net Sales
NET SALES ($ in millions) $216.7 $212.7 Q4 sales down 9.5%, or $20.1 million $207.6 $199.4 (adjusted for divestitures and FX) $4.8 $189.5 Quarter Sales Bridge Quarter $211.9 $212.7 $207.6 $199.4 $189.5 Q4 FY19 Sales $ 216.7 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Divestitures (4.8) Sales Divestiture
Slide 9: Gross Profit & Margin
GROSS PROFIT & MARGIN ($ in millions) $76.0 $75.6 Quarter Gross Profit Bridge $73.5 $67.9 $66.2 Quarter Q4 FY2019 Gross Profit $ 76.0 Divestitures (0.9) Q4 FY2019 Gross Profit adjusted for divestitures $ 75.1 Pricing, net of material cost inflation 2.5 35.1% 35.5% 35.4% 34.0% 34.9% Tariffs 0.4 Q4 FY
Slide 10: RSG&A
RSG&A ($ in millions) $49.0 Q4 RSG&A at 24.4% of sales $45.1 $45.0 $43.8 $46.3 $3.4 Q4 Y/Y reduced by: $2.8 $3.0 $2.9 $2.6 $0.4 million for divestitures $21.7 $19.6 $19.2 $18.0 $21.2 $0.6 million for FX $3.9 million cost reductions Increased by: $24.0 $22.8 $22.9 $23.2 $22.3 $2.2 million for CEO sea
Slide 11: Operating Income & Adjusted OI Margin
OPERATING INCOME & ADJUSTED OI MARGIN ($ in millions) $28.1 Q4 FY20 operating income of $26.3 $24.9 $16.7 million $27.0 $23.1 $25.2 $20.2 $24.5 $20.9 Adjusted operating margin of 10.7% $16.7 Began rapid cost reduction efforts in March 11.5% 13.2% 12.7% 11.6% 10.7% Objective to reduce impact of sales
Slide 12: Earnings Per Share
EARNINGS PER SHARE ($ in millions) $0.69 Q4 FY20 net income: $0.81 $0.74 $9.2 million, $0.39 per diluted share $0.83 $0.78 $0.64 $0.69 $0.58 $0.63 Q4 FY20 adjusted net income: $13.8 million, $0.58 per diluted share $0.39 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 FY20 net income: $59.7 million, up 40.2
Slide 13: Adjusted EBITDA & ROIC
ADJUSTED EBITDA & ROIC Adjusted EBITDA Margin Strong adjusted EBITDA margin 15.7% FY20 EBITDA margin of 15.7%, 15.1% up 60 bps Y/Y 13.7% FY18 FY19 FY20 Return on Invested Capital Adjusted ROIC net of cash increased (ROIC)(1) 30 bps expansion to 11.5% in FY20 11.2% 11.5% 8.7% FY18 FY19 FY20 Execution
Slide 14: Cash Flow
CASH FLOW ($ in millions) Three Months Ended FY2020 Free Cash Flow(1) 3/31/20 3/31/19 3/31/20 $97.4 Net cash provided by operating $36.5 $25.7 $106.8 activities CapEx (2.7) (5.1) (9.4) $67.2 Free cash flow $55.1 (FCF) $33.9 $20.7 $97.4 $46.1 Note: Components may not add to totals due to rounding FY2
Slide 15: Strong Balance Sheet
STRONG BALANCE SHEET ($ in millions) CAPITALIZATION Debt leverage ratio(1) of 1.1x March 31, March 31, Paid down $51 million of debt in FY20 2020 2019 Paid minimum requirement of $1.1 million Cash and cash equivalents $ 114.5 $ 71.1 in Q4 FY20 Total debt 251.3 300.3 Net debt to net total capital 22.
Slide 16: Invest in Strategic Initiatives for Growth: Digital Platform
INVEST IN STRATEGIC INITIATIVES FOR GROWTH Strategic Priority: Digital Platform 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, str
Slide 17: Invest in Strategic Initiatives for Growth: New Product Development
INVEST IN STRATEGIC INITIATIVES FOR GROWTH 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™ (soon to be launched) Intelli-Connect™ (coming later in fisca
Slide 18: Near-Term Outlook
NEAR-TERM OUTLOOK Q1 FY21 outlook: • 37% drop in orders in April Y/Y; began to stabilize in May • Expect revenue in Q1 FY21 in range of $130 million to $140 million Short-term objectives: • Positive operating income • Positive cash flow Long-term capital allocation priorities remain unchanged: • Mai
Slide 19: Supplemental Information
Supplemental Information © 2020 Columbus McKinnon Corporation 19
Slide 20: Blueprint for Growth Strategy
BLUEPRINT FOR GROWTH STRATEGY Growth Phase III Oriented Evolve business model Industrial • Portfolio optimization Technology • Mergers & acquisitions Phase II Simplify the business Drive profitable growth • 80/20 Process • Operational Excellence • Ramp the Growth Engine Phase I Get control Achieve r
Slide 21: Adjusted Income from Operations Reconciliation
ADJUSTED INCOME FROM OPERATIONS RECONCILIATION ($ in thousands) Quarter Fiscal Year Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 2020 2019 Income from operations $ 24,468 $ 27,043 $ 25,231 $ 20,886 $ 16,664 $ 89,824 $ 69,442 Add back (deduct): Factory closures 1,273 1,027 470 1,592 1,621 4,709 1,473 Busi
Slide 22: Adjusted Net Income Reconciliation
ADJUSTED NET INCOME RECONCILIATION ($ in thousands, except per share data) Quarter Fiscal Year Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 2020 2019 Net income $ 19,741 $ 18,579 $ 16,599 $ 15,250 $ 9,244 $ 59,672 $ 42,577 Add back (deduct): Factory closures 1,273 1,027 470 1,592 1,621 4,709 1,473 Busine
Slide 23: Adjusted EBITDA Reconciliation
ADJUSTED EBITDA RECONCILIATION ($ in thousands) Quarter Fiscal Year Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 2020 2019 Net income $ 19,741 $ 18,579 $ 16,599 $ 15,250 $ 9,244 $ 59,672 $ 42,577 Add back (deduct): Income tax expense 860 5,162 5,141 2,234 4,947 17,484 10,321 Interest and debt expense 3,9
Slide 24: 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% 61.1% (Manufacturing) & 73% 64.9% (Total) April 2020(1) 71% 65% 69% 69.7% Q2 2020 67% 60% 65% Manufacturing Total
Slide 25: ISM Purchasing Managers Index
ISM PURCHASING MANAGERS INDEX Production Index Source: Institute of Supply Chain Management 70% 65% 60% 55% 50% 45% 40% 35% 27.5% April 2020 30% 25% © 2020 Columbus McKinnon Corporation 25
Slide 26: 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 27: Conference Call Playback Info
CONFERENCE CALL PLAYBACK INFO Replay Number: 412-317-6671 passcode: 13700704 Telephone replay available through June 3, 2020 Webcast / PowerPoint / Replay available at investors.columbusmckinnon.com Transcript, when available, at investors.columbusmckinnon.com © 2020 Columbus McKinnon Corporation 27
Slide 28: Q4 Fiscal Year 2020 Financial Results Conference Call
May 27, Q4 FISCAL YEAR 2020 2020 FINANCIAL RESULTS CONFERENCE CALL PARTNERS IN MOTION CONTROL