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Columbus McKinnon Reports Financial Results for First Quarter Fiscal Year 2022

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BUFFALO, N.Y., July 29, 2021--(BUSINESS WIRE)--Columbus McKinnon Corporation (Nasdaq: CMCO), a leading designer, manufacturer and marketer of intelligent motion solutions for material handling, today announced financial results for its fiscal year 2022 first quarter, which ended June 30, 2021. Results include the addition of Dorner Manufacturing Corporation, which was acquired on April 7, 2021.

First Quarter Highlights (compared with prior year period)

  • Revenue of $213.5 million up 53%, supported by organic growth of 24%

  • Gross margin expanded 250 bps to 34.7%; Achieved record adjusted gross margin of 36.3% with incremental 80 bps contribution from Dorner acquisition

  • Operating margin expanded 370 bps to 5.0%; Adjusted operating margin expanded
    750 bps to 11.1%

  • Advancing Blueprint for Growth 2.0 strategy and focusing on growth initiatives

David Wilson, President and CEO of Columbus McKinnon, commented, "We had a very good start to fiscal 2022 delivering strong growth, expanding margins and achieving record backlog. We are encouraged by increasing demand in all markets. Importantly, we are also having success with our new products and customer solutions, as we continue to advance our Blueprint for Growth 2.0 strategy. Dorner, our new conveying solutions platform, is seeing strong demand and is outpacing expectations. We are working across the enterprise to drive growth initiatives as we pursue the many opportunities in front of us."

First Quarter Fiscal 2022 Sales

($ in millions)

Q1 FY 22

Q1 FY 21

Change

% Change

Net sales

$

213.5

$

139.1

$

74.4

53.5

%

U.S. sales

$

124.5

$

74.7

$

49.8

66.7

%

% of total

58

%

54

%

Non-U.S. sales

$

89.0

$

64.4

$

24.6

38.2

%

% of total

42

%

46

%

For the quarter, sales increased $74.4 million, or 53.5%. The Dorner acquisition added $34.2 million in sales. In the U.S., volume improved $20.8 million, or 27.8%, and price improved $0.6 million, or 0.9%. U.S. sales related to the acquisition were $28.3 million. Outside the U.S., volume improved $10.5 million, or 16.4%, and price improved $1.3 million, or 2.0%. The Dorner acquisition added $5.9 million of sales outside the U.S. Foreign currency translation was favorable $6.9 million, or 5.0% of total sales.

First Quarter Fiscal 2022 Operating Results

($ in millions)

Q1 FY 22

Q1 FY 21

Change

% Change

Gross profit

$

74.1

$

44.8

$

29.3

65.3

%

Gross margin

34.7

%

32.2

%

250 bps

Income from operations

$

10.7

$

1.8

$

9.0

500.7

%

Operating margin

5.0

%

1.3

%

370 bps

Adjusted income from operations*

$

23.6

$

5.0

$

18.6

371.2

%

Adjusted operating margin*

11.1

%

3.6

%

750 bps

Net income (loss)

$

(7.3

)

$

(3.0

)

$

(4.3

)

NM

Net income (loss) margin

(3.4

)

%

(2.1

)

%

(130) bps

Diluted EPS

$

(0.27

)

$

(0.12

)

$

(0.15

)

NM

Adjusted EPS*

$

0.69

$

0.17

$

0.52

305.9

%

Adjusted EBITDA*

$

34.1

$

12.1

$

22.0

181.8

%

Adjusted EBITDA margin*

16.0

%

8.7

%

730 bps

*Adjusted operating income, adjusted operating margin, adjusted EPS, adjusted EBITDA, and adjusted EBITDA margin are non-GAAP measures. See accompanying discussion and reconciliation tables in this release regarding adjusted operating income, adjusted operating margin, adjusted EPS, and the reconciliation of GAAP net income (loss) to adjusted EBITDA.

Dorner contributed $5.1 million in operating income excluding inventory step up expense of $3.0 million and acquisition deal costs of $1.0 million. Adjusted earnings per diluted share was $0.69 in the fiscal 2022 first quarter compared with $0.17 in the prior year. Adjusted EPS excludes amortization of intangible assets related to acquisitions. The Company believes this better represents its inherent earnings power and cash generation capability.

Second Quarter Fiscal 2022 Outlook

The Company expects second quarter fiscal 2022 sales to be within a range of approximately $225 million to $230 million at current exchange rates.

Mr. Wilson concluded, "We are excited about the progress we are making and are increasingly encouraged by our potential over the longer term. With record backlog and increasing order trends, we expect to deliver a solid year of recovery even as we navigate the dynamic landscape of supply chain and staffing challenges. More importantly, we are making the investments necessary to execute on our strategy and implement the Columbus McKinnon Business System ("CMBS") to drive further growth, enable scalability, improve our earnings power and achieve our goal of 19% adjusted EBITDA margin in fiscal 2023."

Teleconference/webcast

Columbus McKinnon will host a conference call and live webcast today at 10:00 AM Eastern Time, at which management will review the Company’s financial results and strategy. The review will be accompanied by a slide presentation, which will be available on Columbus McKinnon’s website at investors.columbusmckinnon.com. A question and answer session will follow the formal discussion.

The conference call can be accessed by dialing 412-317-6026. The listen-only audio webcast can be monitored at investors.columbusmckinnon.com. To listen to the archived call, dial 412-317-6671 and enter the passcode 10158268. The telephonic replay will be available from 1:00 PM Eastern Time on the day of the call through Thursday, August 5, 2021. Alternatively, an archived webcast of the call can be found on the Company’s website. In addition, a transcript of the call will be posted to the website once available.

About Columbus McKinnon

Columbus McKinnon is a leading worldwide designer, manufacturer and marketer of intelligent motion solutions that efficiently and ergonomically move, lift, position and secure materials. Key products include hoists, crane components, precision conveyor systems, rigging tools, light rail workstations and digital power and motion control systems. The Company is focused on commercial and industrial applications that require the safety and quality provided by its superior design and engineering know-how. Comprehensive information on Columbus McKinnon is available at www.columbusmckinnon.com.

Safe Harbor Statement

This news release contains "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 and unknown risks, uncertainties and other factors that could cause the actual results of the Company to differ materially from the results expressed or implied by such statements, including the ability of the Company to integrate Dorner, the impact of supply chain and staffing challenges, the ability of the Company to achieve its Blueprint for Growth 2.0 strategy and execute CMBS; and the amount of integration costs and the Company’s efforts to reduce costs, maintain liquidity and generate cash, the Company’s ability to grow market share, the ability to achieve revenue expectations, global economic and business conditions, conditions affecting the industries served by the Company and its subsidiaries, the Company's customers and suppliers, competitor responses to the Company's products and services, the overall market acceptance of such products and services, the ability to expand into new markets and geographic regions, and other factors disclosed in the Company's periodic reports filed with the Securities and Exchange Commission. The Company assumes no obligation to update the forward-looking information contained in this release.

Financial tables follow.

COLUMBUS McKINNON CORPORATION

Condensed Consolidated Income Statements - UNAUDITED

(In thousands, except per share and percentage data)

Three Months Ended

June 30, 2021

June 30, 2020

Change

Net sales

$

213,464

$

139,070

53.5

%

Cost of products sold

139,401

94,273

47.9

%

Gross profit

74,063

44,797

65.3

%

Gross profit margin

34.7

%

32.2

%

Selling expenses

23,482

18,695

25.6

%

% of net sales

11.0

%

13.4

%

General and administrative expenses

30,143

18,429

63.6

%

% of net sales

14.1

%

13.3

%

Research and development expenses

3,583

2,769

29.4

%

% of net sales

1.7

%

2.0

%

Amortization of intangibles

6,109

3,115

96.1

%

Income from operations

10,746

1,789

500.7

%

Operating margin

5.0

%

1.3

%

Interest and debt expense

5,812

3,188

82.3

%

Cost of debt refinancing

14,803

NM

Investment (income) loss

(433

)

(577

)

(25.0

)

%

Foreign currency exchange (gain) loss

94

84

11.9

%

Other (income) expense, net

250

3,026

(91.7

)

%

Income (loss) before income tax expense (benefit)

(9,780

)

(3,932

)

NM

Income tax expense (benefit)

(2,517

)

(963

)

NM

Net income (loss)

$

(7,263

)

$

(2,969

)

NM

Average basic shares outstanding

26,762

23,802

12.4

%

Basic income (loss) per share

$

(0.27

)

$

(0.12

)

NM

Average diluted shares outstanding

26,762

23,802

12.4

%

Diluted income (loss) per share

$

(0.27

)

$

(0.12

)

NM

COLUMBUS McKINNON CORPORATION

Condensed Consolidated Balance Sheets

(In thousands)

June 30, 2021

March 31, 2021

(unaudited)

ASSETS

Current assets:

Cash and cash equivalents

$

88,654

$

202,127

Trade accounts receivable

123,168

105,464

Inventories

138,658

111,488

Prepaid expenses and other

31,696

22,763

Total current assets

382,176

441,842

Property, plant, and equipment, net

99,597

74,753

Goodwill

621,939

331,176

Other intangibles, net

401,859

213,362

Marketable securities

10,072

7,968

Deferred taxes on income

1,160

20,080

Other assets

63,827

61,251

Total assets

$

1,580,630

$

1,150,432

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Trade accounts payable

$

71,570

$

68,593

Accrued liabilities

113,143

110,816

Current portion of long-term debt and finance lease obligations

60,501

4,450

Total current liabilities

245,214

183,859

Term loan and finance lease obligations

398,795

244,504

Other non-current liabilities

212,168

191,920

Total liabilities

856,177

620,283

Shareholders’ equity:

Common stock

284

240

Additional paid-in capital

495,541

296,093

Retained earnings

286,539

293,802

Accumulated other comprehensive loss

(57,911

)

(59,986

)

Total shareholders’ equity

724,453

530,149

Total liabilities and shareholders’ equity

$

1,580,630

$

1,150,432

COLUMBUS McKINNON CORPORATION

Condensed Consolidated Statements of Cash Flows - UNAUDITED

(In thousands)

Three Months Ended

June 30, 2021

June 30, 2020

Operating activities:

Net income (loss)

$

(7,263

)

$

(2,969

)

Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:

Depreciation and amortization

10,467

7,081

Deferred income taxes and related valuation allowance

(245

)

(1,500

)

Net loss (gain) on sale of real estate, investments, and other

(391

)

(494

)

Stock based compensation

2,262

2,071

Amortization of deferred financing costs

471

665

Cost of debt refinancing

14,803

Non-cash pension settlement expense

2,722

Non-cash lease expense

1,989

1,876

Changes in operating assets and liabilities, net of effects of business acquisitions and divestitures:

Trade accounts receivable

2,043

27,955

Inventories

(10,802

)

3,924

Prepaid expenses and other

(5,714

)

(2,766

)

Other assets

35

(39

)

Trade accounts payable

(5,879

)

(18,248

)

Accrued liabilities

(5,945

)

(7,926

)

Non-current liabilities

(3,227

)

(2,836

)

Net cash provided by (used for) operating activities

(7,396

)

9,516

Investing activities:

Proceeds from sales of marketable securities

2,181

1,034

Purchases of marketable securities

(4,137

)

(880

)

Capital expenditures

(3,648

)

(1,088

)

Proceeds from sale of building, net of transaction costs

6,363

Proceeds from insurance reimbursement

482

Purchase of business, net of cash acquired

(475,311

)

Net cash provided by (used for) investing activities

(480,433

)

5,429

Financing activities:

Proceeds from issuance of common stock

290

185

Borrowings under line-of-credit agreements

25,000

Repayment of debt

(455,040

)

(1,112

)

Proceeds from issuance of long-term debt

650,000

Proceeds from equity offering

207,000

Fees related to debt and equity offering

(25,292

)

Payment of dividends

(1,439

)

(1,427

)

Other

(1,764

)

(927

)

Net cash provided by (used for) financing activities

373,755

21,719

Effect of exchange rate changes on cash

601

1,122

Net change in cash and cash equivalents

(113,473

)

37,786

Cash, cash equivalents, and restricted cash at beginning of year

202,377

114,700

Cash, cash equivalents, and restricted cash at end of period

$

88,904

$

152,486

COLUMBUS McKINNON CORPORATION

Q1 FY 2022 Sales Bridge

Quarter

($ in millions)

$ Change

% Change

Fiscal 2021 Sales

$

139.1

Acquisitions

34.2

24.6

%

Volume

31.3

22.5

%

Pricing

2.0

1.4

%

Foreign currency translation

6.9

5.0

%

Total change

$

74.4

53.5

%

Fiscal 2022 Sales

$

213.5

COLUMBUS McKINNON CORPORATION

Q1 FY 2022 Gross Profit Bridge

($ in millions)

Quarter

Fiscal 2021 Gross Profit

$

44.8

Acquisition

14.0

Sales volume and mix

11.6

Productivity, net of other cost changes

2.9

Foreign currency translation

2.4

Prior year factory closure costs

1.9

Pricing, net of material cost inflation

0.7

Prior year business realignment costs

0.3

Acquisition integration costs

(0.5

)

Tariffs

(1.0

)

Acquisition inventory step-up expense

(3.0

)

Total change

29.3

Fiscal 2022 Gross Profit

$

74.1

U.S. Shipping Days by Quarter

Q1

Q2

Q3

Q4

Total

FY 22

63

64

61

63

251

FY 21

63

64

61

63

251

COLUMBUS McKINNON CORPORATION

Additional Data - UNAUDITED

June 30, 2021

March 31, 2021

June 30, 2020

($ in millions)

Backlog

$

247.4

$

171.7

$

130.7

Long-term backlog

Expected to ship beyond 3 months

$

107.3

$

68.0

$

52.8

Long-term backlog as % of total backlog

43.4

%

39.6

%

40.4

%

Trade accounts receivable

Days sales outstanding

52.5

days

51.5

days

63.1

days

Inventory turns per year

(based on cost of products sold)

4.0

turns

4.4

turns

3.0

turns

Days' inventory

90.8

days

83.3

days

120.6

days

Trade accounts payable

Days payables outstanding

52.4

days

58.7

days

44.4

days

Working capital as a % of sales

12.5

%

9.3

%

14.9

%

Net cash provided by (used for) operating activities

$

(7.4

)

$

26.9

$

9.5

Capital expenditures

$

3.6

$

6.4

$

1.1

Free cash flow (1)

$

(11.0

)

$

20.5

$

8.4

Debt to total capitalization percentage

38.8

%

32.0

%

37.1

%

Debt, net of cash, to net total capitalization

33.8

%

8.1

%

20.9

%

(1)

Free cash flow is defined as cash from operations less capital expenditures. Free cash flow is not a measure determined in accordance with generally accepted accounting principles in the United States, commonly known as GAAP, and may not be comparable with the measures as used by other companies. Nevertheless, Columbus McKinnon believes that providing non-GAAP information, such as free cash flow, is important for investors and other readers of the Company’s financial statements.

Components may not add due to rounding.

COLUMBUS McKINNON CORPORATION

Reconciliation of GAAP Gross Profit to Non-GAAP Adjusted Gross Profit

($ in thousands, except per share data)

Three Months Ended
June 30,

2021

2020

GAAP gross profit

$

74,063

$

44,797

Add back (deduct):

Acquisition inventory step-up expense

2,981

Acquisition integration costs

521

Factory closures

1,928

Business realignment costs

329

Non-GAAP adjusted gross profit

$

77,565

$

47,054

Sales

$

213,464

$

139,070

Gross margin - GAAP

34.7

%

32.2

%

Adjusted gross margin - Non-GAAP

36.3

%

33.8

%

Adjusted gross profit is defined as gross profit as reported, adjusted for certain items. Adjusted gross profit is not a measure determined in accordance with generally accepted accounting principles in the United States, commonly known as GAAP, and may not be comparable with the measures as used by other companies. Nevertheless, Columbus McKinnon believes that providing non-GAAP information, such as adjusted gross profit, is important for investors and other readers of the Company’s financial statements and assists in understanding the comparison of the current quarter’s and current year's gross profit to the historical periods' gross profit, as well as facilitates a more meaningful comparison of the Company’s gross profit to that of other companies.

COLUMBUS McKINNON CORPORATION

Reconciliation of GAAP Income from Operations to Non-GAAP Adjusted Income from Operations

($ in thousands, except per share data)

Three Months Ended
June 30,

2021

2020

GAAP income from operations

$

10,746

$

1,789

Add back (deduct):

Acquisition deal and integration costs

9,242

Acquisition inventory step-up expense

2,981

Business realignment costs

623

821

Factory closures

2,256

Insurance recovery legal costs

141

Non-GAAP adjusted income from operations

$

23,592

$

5,007

Sales

$

213,464

$

139,070

Operating margin - GAAP

5.0

%

1.3

%

Adjusted operating margin - Non-GAAP

11.1

%

3.6

%

Adjusted income from operations is defined as income from operations as reported, adjusted for certain items. Adjusted income from operations is not a measure determined in accordance with generally accepted accounting principles in the United States, commonly known as GAAP, and may not be comparable with the measures as used by other companies. Nevertheless, Columbus McKinnon believes that providing non-GAAP information, such as adjusted income from operations, is important for investors and other readers of the Company’s financial statements and assists in understanding the comparison of the current quarter’s and current year's income from operations to the historical periods' income from operations, as well as facilitates a more meaningful comparison of the Company’s income from operations to that of other companies.

COLUMBUS McKINNON CORPORATION

Reconciliation of GAAP Net Income and Diluted Earnings per Share to

Non-GAAP Adjusted Net Income and Diluted Earnings per Share

($ in thousands, except per share data)

Three Months Ended
June 30,

2021

2020

GAAP net income (loss)

$

(7,263

)

$

(2,969

)

Add back (deduct):

Amortization of intangibles

6,109

3,115

Cost of debt refinancing

14,803

Acquisition deal and integration costs

9,242

Acquisition inventory step-up expense

2,981

Business realignment costs

623

821

Non-cash pension settlement expense

2,722

Factory closures

2,256

Insurance recovery legal costs

141

Normalize tax rate to 22% (1)

(7,792

)

(2,090

)

Non-GAAP adjusted net income

$

18,703

$

3,996

Average diluted shares outstanding

27,159

23,922

Diluted income (loss) per share - GAAP

$

(0.27

)

$

(0.12

)

Diluted income per share - Non-GAAP

$

0.69

$

0.17

(1)

Applies a normalized tax rate of 22% to GAAP pre-tax income and non-GAAP adjustments above, which are each pre-tax.

Adjusted net income and diluted EPS are defined as net income and diluted EPS as reported, adjusted for certain items, including amortization of intangible assets, and also adjusted for a normalized tax rate. Adjusted net income and diluted EPS are not measures determined in accordance with generally accepted accounting principles in the United States, commonly known as GAAP, and may not be comparable with the measures used by other companies. Nevertheless, Columbus McKinnon believes that providing non-GAAP information, such as adjusted net income and diluted EPS, is important for investors and other readers of the Company’s financial statements and assists in understanding the comparison of the current quarter’s and current year's net income and diluted EPS to the historical periods' net income and diluted EPS, as well as facilitates a more meaningful comparison of the Company’s net income and diluted EPS to that of other companies. The Company believes that representing adjusted EPS provides a better understanding of its earnings power inclusive of adjusting for the non-cash amortization of intangible assets, reflecting the Company’s strategy to grow through acquisitions as well as organically.

COLUMBUS McKINNON CORPORATION

Reconciliation of GAAP Net Income to Non-GAAP Adjusted EBITDA

($ in thousands)

Three Months Ended
June 30,

2021

2020

GAAP net income (loss)

$

(7,263

)

$

(2,969

)

Add back (deduct):

Income tax expense (benefit)

(2,517

)

(963

)

Interest and debt expense

5,812

3,188

Investment (income) loss

(433

)

(577

)

Foreign currency exchange (gain) loss

94

84

Other (income) expense, net

250

3,026

Depreciation and amortization expense

10,467

7,081

Cost of debt refinancing

14,803

Acquisition deal and integration costs

9,242

Acquisition inventory step-up expense

2,981

Business realignment costs

623

821

Factory closures

2,256

Insurance recovery legal costs

141

Non-GAAP adjusted EBITDA

$

34,059

$

12,088

Sales

$

213,464

$

139,070

Net income (loss) margin - GAAP

(3.4

)

%

(2.1

)

%

Adjusted EBITDA margin - Non-GAAP

16.0

%

8.7

%

Adjusted EBITDA is defined as net income before interest expense, income taxes, depreciation, amortization, and other adjustments. Adjusted EBITDA is not a measure determined in accordance with generally accepted accounting principles in the United States, commonly known as GAAP, and may not be comparable with the measures as used by other companies. Nevertheless, Columbus McKinnon believes that providing non-GAAP information, such as adjusted EBITDA, is important for investors and other readers of the Company’s financial statements.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210729005105/en/

Contacts

Gregory P. Rustowicz
Vice President - Finance and Chief Financial Officer
Columbus McKinnon Corporation
716-689-5442
greg.rustowicz@cmworks.com

Investor Relations:
Deborah K. Pawlowski
Kei Advisors LLC
716-843-3908
dpawlowski@keiadvisors.com