Columbus Mckinnon Corporation · NASDAQ:CMCO
Columbus Mckinnon — Q2 2024 Earnings Presentation
29 slides from Columbus Mckinnon's earnings presentation, Nov 1, 2023
Slide 1: Q2 Fiscal Year 2024 Financial Results Conference Call
Q2 Fiscal Year 2024 Financial Results Conference Call David J. Wilson President & Chief Executive Officer Gregory P. Rustowicz Executive Vice President Finance & Chief Financial Officer November 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: Advancing Strategy: Delivered Record Results in Q2
Advancing Strategy: Delivered Record Results in Q2 Record Sales, Gross Margin, Operating Income and Adjusted EBITDA and Margin Record financial performance in Q2 FY24 • Record sales of $258.4 million increased 12% y/y including 5% organic growth • Sales grew $26.7 million included $9.5 million from
Slide 4: Operational Performance
Operational Performance Record 38.7% Gross Margin Demonstrates Effectiveness of Strategy ADJUSTED GROSS MARGIN PROGRESSION GROSS MARGIN LEVERS ~40% Operating Initiatives 38.7% • Operational Excellence 37.8% • Volume/scale/pricing 36.5% 36.1% • Product line simplification 35.4% 35.0% 34.1% Strategic
Slide 5: Net Sales
Net Sales ($ in millions) Q2 sales up 9.1% on constant currency from prior-year Quarter Sales Bridge • U.S.: up 4% with 3.5% price improvement and 0.1% volume • Non-U.S.: up 23% including 9.9% acquired sales, 6.1% Quarter pricing and 0.9% volume increase ($ in millions) $ Change % Change Fiscal 2023
Slide 6: Gross Profit & Margin
Gross Profit & Margin ($ in millions) Gross Profit Bridge $100.0 ($ in millions) Quarter $91.2 $86.3 $86.6 Fiscal 2023 Gross Profit $ 86.3 $82.0 38.7% Price, net of mfg cost changes (incl. inflation) 5.7 37.2% Acquisition 5.5 36.9% Sales volume and mix 0.6 35.9% 35.6% Foreign currency translation 1.
Slide 7: RSG&A
RSG&A ($ in millions) Q/Q Comparison: RSG&A as 22.7% 24.1% 22.5% 24.8% 22.9% • Additional $2.6 million from montratec acquisition % of sales: • Higher stock compensation costs of $1.3 million • Offset by combined $3.2 million in lower $57.2 $58.3 $59.1 acquisition/integration costs and HQ relocation
Slide 8: Operating Income
Operating Income ($ in millions) Operating Income & Margin Record operating income of $33.4 million, up 22% y/y • Operating income grew $6.0 million $33.4 $27.4 $27.5 • Operating margin of 12.9% expanded 110 bps $20.2 $21.4 Record adjusted operating income of $34.1 million, 11.8% 8.8% 10.8% 9.1% 12.
Slide 9: Earnings Per Share
Earnings Per Share GAAP Diluted EPS Y/Y GAAP net income increased 12%, or $0.49 $0.55 $1.7 million; EPS up 12%, or $0.06 y/y $0.48 $0.42 • $6 million increase in operating income partially offset by $0.32 higher interest expense and FX loss Adj. net income of $21.9 million in the quarter Add backs (
Slide 10: Adjusted EBITDA & ROIC
Adjusted EBITDA & ROIC Adjusted EBITDA and Margin Achieved record 17.7% adjusted EBITDA in quarter • Targeting 21% adjusted EBITDA margin in FY27 $156.1 $147.8 $140.1 • Expect 80/20 initiatives, factory simplification, and operating leverage on increased scale to drive margin expansion 15.4% 15.8% 1
Slide 11: Cash Flow
Cash Flow ($ in millions) (2) Three Months Ended Year-to-Date Free Cash Flow & Conversion 9/30/23 9/30/22 9/30/23 9/30/22 Net cash provided by (used for) operating $ 16.7 $ 17.3 $(0.6) $6.1 $86.6 activities $71.0 CapEx 5.0 2.3 10.3 5.3 $59.3 Free cash flow (FCF) $ 11.7 $ 15.0 $(10.9) $0.8 Note: Comp
Slide 12: Capital Structure
Capital Structure ($ in millions) CAPITALIZATION Net debt leverage ratio of ~2.7x(1) • Accelerating debt reduction and EBITDA growth September 30, March 31, 2023 2023 Paid down $15 million in debt in Q2 FY24 Cash and cash equivalents $ 99.1 $ 133.2 • Now planning to pay down $50 million in FY24 Tota
Slide 13: Orders and Backlog
Orders and Backlog ($ in millions) Orders and Backlog Support $1B Revenue Target Operational Improvements Enabled Backlog Conversion • Orders up 2% y/y with solid demand in Americas • Past due backlog reduced by 28% in Q2 • Precision Conveying up 11% and Lifting up 7% y/y • Backlog normalizing as le
Slide 14: Executing to Deliver Strategic Plan Growth Objectives
Executing to Deliver Strategic Plan Growth Objectives Outlook is encouraging (1) • Expect Q3 FY24 net sales of approximately $245 million to $255 million and FY24 to surpass $1 billion in revenue • Now expect gross margin to expand approximately 150 bps in FY24 • Gaining traction with customer exper
Slide 15: Q2 Fiscal Year 2024 Financial Results Conference Call
Q2 Fiscal Year 2024 Financial Results Conference Call David J. Wilson President & Chief Executive Officer Gregory P. Rustowicz Executive Vice President Finance & Chief Financial Officer November 1, 2023
Slide 16: Supplemental Information
OW Supplemental Information INTELLIGENT MOTION PURPOSE IN MOTION
Slide 17: Conference Call Playback Info
Conference Call Playback Info Replay Number: 412-317-6671 passcode: 13741338 Telephone replay available through November 8, 2023 Webcast / PowerPoint / Replay available at investors.cmco.com Transcript, when available, at investors.cmco.com 17 © 2023 COLUMBUS MCKINNON CORPORATION
Slide 18: Adjusted Gross Profit Reconciliation
Adjusted Gross Profit Reconciliation ($ in thousands) Quarter Six Months Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 H1 FY24 GAAP gross profit $ 86,310 $ 82,044 $ 91,218 $ 86,649 $ 99,976 $ 186,626 Add back (deduct): Business realignment costs — — — 196 — 196 Non-GAAP adjusted gross profit $ 86,310 $ 82
Slide 19: Adjusted Gross Profit Reconciliation
Adjusted Gross Profit Reconciliation ($ in thousands) Fiscal Year TTM 2019 2020 2021 2022 2023 Q2 FY24 GAAP gross profit $ 304,997 $ 283,186 $ 220,225 $ 315,730 $ 342,099 $ 359,887 Add back (deduct): Product liability settlement — — — 2,850 — — Acquisition amortization of backlog — — — 2,100 — — Acq
Slide 20: Adjusted Income from Operations Reconciliation
Adjusted Income from Operations Reconciliation ($ in thousands) Quarter Fiscal Year Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 2022 2023 GAAP income from operations $ 27,372 $ 20,179 $ 27,469 $ 21,448 $ 33,351 $ 73,781 $ 97,841 Add back (deduct): Acquisition deal and integration costs 19 338 173 2,587
Slide 21: Adjusted Net Income Reconciliation
Adjusted Net Income Reconciliation ($ in thousands, except per share data) Quarter Fiscal Year Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 2022 2023 GAAP net income $ 14,114 $ 12,029 $ 13,895 $ 9,275 $ 15,813 $ 29,660 $ 48,429 Add back (deduct): Amortization of intangibles 6,447 6,459 6,559 6,877 7,508
Slide 22: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation ($ in thousands) Quarter Fiscal Year TTM Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 2022 2023 Q2 FY24 GAAP net income $ 14,114 $ 12,029 $ 13,895 $ 9,275 $ 15,813 $ 29,660 $ 48,429 $ 51,012 Add back (deduct): Income tax expense (benefit) 4,953 4,701 7,499 3,394 5,100 8,786
Slide 23: Return on Invested Capital (ROIC) Reconciliation
Return on Invested Capital (ROIC) Reconciliation ($ in thousands) Fiscal Year TTM 2022 2023 Q2 FY24 GAAP income from operations $ 73,781 $ 97,841 $ 102,447 Add back (deduct): Acquisition deal and integration costs 10,473 616 3,606 Acquisition inventory step-up expense 5,042 — — Product liability set
Slide 24: Free Cash Flow (FCF) & FCF Conversion Reconciliation
Free Cash Flow (FCF) & FCF Conversion Reconciliation ($ in thousands) Fiscal Year TTM 2022 2023 Q2 FY24 Cash from operations $ 48,881 $ 83,636 $ 76,929 Capital expenditures (13,104) (12,632) (17,663) Free cash flow (FCF) $ 35,777 $ 71,004 $ 59,266 GAAP net income $ 29,660 $ 48,429 $ 51,012 Free cash
Slide 25: Industrial Capacity Utilization
Industrial Capacity Utilization U.S. Capacity Utilization Eurozone Capacity Utilization Source: The Federal Reserve Board Source: European Commission 85% 80% 77.8% (Manufacturing) 79.7% (Total) 83% September 2023(1) 81% 80.2% Q3 2023 75% 79% 77% 70% 75% 73% 71% 65% 69% 67% 60% 65% Manufacturing Tota
Slide 26: ISM Production Index
ISM Production Index Source: Institute for Supply Chain Management 70% 65% 60% 55% 52.5% September 2023 50% 45% 40% 35% 30% 25% 26 © 2023 COLUMBUS MCKINNON CORPORATION
Slide 27: Advancing Along our Transformation Path
Advancing Along our Transformation Path Targeting $1.5 Billion In Revenue and ~21% EBITDA Margin in FY2027 FUTURE REVENUE GROWTH RATE FY23 Pro-forma1 Specialty Conveying Linear Motion Linear Automation Motion 14% 9% FY21 Specialty Automation Conveying 18% Lifting Linear Motion Solutions & Automation
Slide 28: 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 28 © 2023 COLUMBUS MCKINNON CORPORATION
Slide 29: Q2 Fiscal Year 2024 Financial Results Conference Call
Q2 Fiscal Year 2024 Financial Results Conference Call David J. Wilson President & Chief Executive Officer Gregory P. Rustowicz Executive Vice President Finance & Chief Financial Officer November 1, 2023