Columbus McKinnon Reports Financial Results for First Quarter Fiscal Year 2021

BUFFALO, N.Y.–(BUSINESS WIRE)–Columbus McKinnon Corporation (Nasdaq: CMCO), a leading designer, manufacturer and marketer of motion control products, technologies and services for material handling, today announced financial results for its fiscal year 2021 first quarter, which ended June 30, 2020.

First Quarter Highlights (compared with prior-year period)

  • Achieved positive operating income and cash generation despite 35% decline in revenue
  • Delivered $1.8 million in operating income in quarter even as end markets were severely challenged due to COVID-19 pandemic; Adjusted operating income* was $5.0 million
  • Generated $9.5 million in cash from operations and $8.4 million in free cash flow*
  • Significant liquidity and low net debt leverage position Columbus McKinnon for Phase III of strategy as markets improve

David Wilson, President and CEO of Columbus McKinnon, commented, “I have been pleased with the performance of our leadership team and the effectiveness of the Blueprint for Growth strategy during these extraordinary times resulting from the global pandemic. The rapid actions taken to preserve liquidity, protect the enterprise and continue to make select investments in growth enabled respectable financial results despite the dramatic drop in demand. Even as volume measurably declined, we achieved gross margin of 32% given strategic pricing initiatives, footprint consolidations and overhead cost reductions. We were encouraged to see markets improve monthly from the trough in April through June and now into July, as order activity has increased.”

He added, “In this challenging environment, there are factors that we can control. We will continue to drive cost performance and improve our competitive positioning by advancing Phases II and III of the Blueprint for Growth strategy. We are prioritizing our efforts on a select set of initiatives to deliver organic growth and strategic development while advancing our 80/20 Process and operational excellence plans. In fact, even with the downturn in the first quarter, we realized $1.9 million in contribution to operating income from the 80/20 Process.”

*Adjusted operating income and free cash flow are non-GAAP measures. See accompanying discussion and reconciliation tables in this release regarding adjusted operating income. Free cash flow is defined as cash from operations minus capital expenditures.

First Quarter Fiscal 2021 Sales

($ in millions)

Q1 FY 21

Q1 FY 20

Change

% Change

Net sales

$

139.1

$

212.7

$

(73.6)

(34.6)

%

U.S. sales

$

74.7

$

116.7

$

(42.0)

(36.0)

%

% of total

54

%

55

%

Non-U.S. sales

$

64.4

$

96.0

$

(31.6)

(32.9)

%

% of total

46

%

45

%

The decline in sales for the quarter was the result of lower volume due to the global economic impact of the COVID-19 pandemic which more than offset a 1.1% price improvement. U.S. sales volume declines more than offset a 1.2% price improvement. Sales outside the U.S. were down on volume and a $2.0 million, or 2.0%, negative impact from foreign currency translation, which offset a 1.1% price improvement.

First Quarter Fiscal 2021 Operating Results

($ in millions)

Q1 FY 21

Q1 FY 20

Change

% Change

Gross profit

$

44.8

$

75.6

$

(30.8

)

(40.8

)%

Gross margin

32.2

%

35.5

%

(330) bps

Income from operations

$

1.8

$

27.0

$

(25.3

)

(93.4

)%

Operating margin

1.3

%

12.7

%

(1,140) bps

Net income (loss)

$

(3.0

)

$

18.6

$

(21.5

)

NM

Diluted EPS

$

(0.12

)

$

0.78

$

(0.90

)

NM

Adjusted EBITDA*

$

12.1

$

35.5

$

(23.4

)

(65.9

)%

Adjusted EBITDA margin

8.7

%

16.7

%

(800) bps

*A non-GAAP measure, Adjusted EBITDA is defined as adjusted operating income plus depreciation and amortization. Please see the attached tables for a reconciliation of adjusted EBITDA to GAAP net income (loss).

Adjusted for the impacts of factory closures and business realignment costs, income from operations was $5.0 million, or 3.6% of sales. Decremental adjusted operating income leverage was just 31%, improved over historic decremental leverage during dramatic recessionary environments. (See the reconciliation of GAAP income from operations to adjusted income from operations on page 10 of this release.) Net loss for the quarter was $3.0 million which included a $2.7 million non-cash pension settlement charge related to the termination of a U.S. pension plan.

Adjusted EBITDA margin was 8.7% for the quarter reflecting the benefits of the Company’s self-help improvement efforts in austere market conditions. (See the reconciliation of GAAP net income to adjusted EBITDA on page 12 of this release.)

Second Quarter Fiscal 2021 Outlook

Mr. Wilson concluded, “We are executing efficiently as we ramp up to meet improving demand, notably in the U.S. and Europe, our largest geographic markets. While order rates have been growing, we are carefully monitoring our customer landscape and will take additional actions if necessary to achieve our objectives.”

Currently, Columbus McKinnon expects second quarter fiscal 2021 revenue to improve sequentially to a range of approximately $150 million to $160 million at current exchange rates and to continue to generate positive operating income and free cash flow.

Teleconference/webcast

Columbus McKinnon will host a conference call and live webcast Thursday, July 30, 2020 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 201-493-6780. The listen-only audio webcast can be monitored at https://investors.columbusmckinnon.com. To listen to the archived call, dial 412-317-6671 and enter the passcode 13705871. The telephonic replay will be available from 1:00 PM Eastern Time on the day of the call through Thursday, August 6, 2020. 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 motion control products, technologies, systems and services that efficiently and ergonomically move, lift, position and secure materials. Key products include hoists, actuators, rigging tools, light rail work stations 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 impact of Covid-19 and the Company’s efforts to reduce costs, maintain liquidity and generate cash in the current pandemic, the effectiveness of the Company’s 80/20 Process to simplify operations, the ability of the Company’s Operational Excellence initiatives to drive profitability, 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, conditions affecting 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, 2020

June 30, 2019

Change

Net sales

$

139,070

$

212,712

(34.6

)%

Cost of products sold

94,273

137,100

(31.2

)%

Gross profit

44,797

75,612

(40.8

)%

Gross profit margin

32.2

%

35.5

%

Selling expenses

18,695

22,755

(17.8

)%

% of net sales

13.4

%

10.7

%

General and administrative expenses

18,429

19,600

(6.0

)%

% of net sales

13.3

%

9.2

%

Research and development expenses

2,769

2,792

(0.8

)%

% of net sales

2.0

%

1.3

%

Loss on sales of businesses

169

NM

Amortization of intangibles

3,115

3,253

(4.2

)%

Income from operations

1,789

27,043

(93.4

)%

Operating margin

1.3

%

12.7

%

Interest and debt expense

3,188

3,852

(17.2

)%

Investment (income) loss

(577

)

(302

)

91.1

%

Foreign currency exchange (gain) loss

84

(410

)

NM

Other (income) expense, net

3,026

162

1,767.9

%

Income (loss) before income tax expense (benefit)

(3,932

)

23,741

NM

Income tax expense (benefit)

(963

)

5,162

NM

Net income (loss)

$

(2,969

)

$

18,579

NM

Average basic shares outstanding

23,802

23,431

1.6

%

Basic income (loss) per share

$

(0.12

)

$

0.79

NM

Average diluted shares outstanding

23,802

23,777

0.1

%

Diluted income (loss) per share

$

(0.12

)

$

0.78

NM

COLUMBUS McKINNON CORPORATION

Condensed Consolidated Balance Sheets

(In thousands)

June 30, 2020

March 31, 2020

(unaudited)

ASSETS

Current assets:

Cash and cash equivalents

$

152,236

$

114,450

Trade accounts receivable

96,464

123,743

Inventories

124,572

127,373

Prepaid expenses and other

19,662

17,180

Total current assets

392,934

382,746

Property, plant, and equipment, net

76,662

79,473

Goodwill

322,914

319,679

Other intangibles, net

217,109

217,962

Marketable securities

7,510

7,322

Deferred taxes on income

26,044

26,281

Other assets

59,416

59,809

Total assets

$

1,102,589

$

1,093,272

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Trade accounts payable

$

38,940

$

57,289

Accrued liabilities

91,896

93,585

Current portion of long-term debt

29,450

4,450

Total current liabilities

160,286

155,324

Term loan and revolving credit facility

246,268

246,856

Other non-current liabilities

229,433

227,507

Total liabilities

635,987

629,687

Shareholders’ equity:

Common stock

239

238

Additional paid-in capital

288,583

287,256

Retained earnings

287,472

290,441

Accumulated other comprehensive loss

(109,692

)

(114,350

)

Total shareholders’ equity

466,602

463,585

Total liabilities and shareholders’ equity

$

1,102,589

$

1,093,272

COLUMBUS McKINNON CORPORATION

Condensed Consolidated Statements of Cash Flows – UNAUDITED

(In thousands)

Three Months Ended

June 30, 2020

June 30, 2019

Operating activities:

Net income (loss)

$

(2,969

)

$

18,579

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

Depreciation and amortization

7,081

7,403

Deferred income taxes and related valuation allowance

(1,500

)

415

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

(494

)

(268

)

Stock based compensation

2,071

1,556

Amortization of deferred financing costs

665

665

Loss on sales of businesses

169

Non-cash pension settlement expense

2,722

Non-cash lease expense

1,876

1,952

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

Trade accounts receivable

27,955

(5,827

)

Inventories

3,924

(3,879

)

Prepaid expenses and other

(2,766

)

(1,755

)

Other assets

(39

)

107

Trade accounts payable

(18,248

)

(6,800

)

Accrued liabilities

(7,926

)

(6,322

)

Non-current liabilities

(2,836

)

(8,155

)

Net cash provided by (used for) operating activities

9,516

(2,160

)

Investing activities:

Proceeds from sales of marketable securities

1,034

636

Purchases of marketable securities

(880

)

(1,039

)

Capital expenditures

(1,088

)

(1,854

)

Proceeds from pending sale of building

6,363

Proceeds from sale of equipment

51

Net (payments) proceeds from sales of businesses

(214

)

Net cash provided by (used for) investing activities

5,429

(2,420

)

Financing activities:

Proceeds from issuance of common stock

185

980

Borrowings (repayments) under line-of-credit agreements

25,000

Repayment of debt

(1,112

)

(10,000

)

Payment of dividends

(1,427

)

(1,404

)

Other

(927

)

(518

)

Net cash provided by (used for) financing activities

21,719

(10,942

)

Effect of exchange rate changes on cash

1,122

145

Net change in cash and cash equivalents

37,786

(15,377

)

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

114,700

71,343

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

$

152,486

$

55,966

COLUMBUS McKINNON CORPORATION

Q1 FY 2021 Sales Bridge

Quarter

($ in millions)

$ Change

% Change

Fiscal 2020 Sales

$

212.7

Volume

(74.0

)

(34.8

)%

Pricing

2.4

1.1

%

Foreign currency translation

(2.0

)

(0.9

)%

Total change

$

(73.6

)

(34.6

)%

Fiscal 2021 Sales

$

139.1

COLUMBUS McKINNON CORPORATION

Q1 FY 2021 Gross Profit Bridge

($ in millions)

Quarter

Fiscal 2020 Gross Profit

$

75.6

Pricing, net of material cost inflation

2.4

Tariffs

0.7

Insurance settlement

(0.3

)

Business realignment costs

(0.3

)

Foreign currency translation

(0.6

)

Factory closures

(1.4

)

Productivity, net of other cost changes

(4.3

)

Sales volume and mix

(27.0

)

Total change adjusted for divestitures

$

(30.8

)

Fiscal 2021 Gross Profit

$

44.8

COLUMBUS McKINNON CORPORATION

Additional Data – UNAUDITED

June 30, 2020

March 31, 2020

June 30, 2019

($ in millions)

Backlog

$

130.7

$

131.0

$

148.2

Long-term backlog

Expected to ship beyond 3 months

$

52.8

$

49.1

$

53.9

Long-term backlog as % of total backlog

40.4

%

37.5

%

36.4

%

Trade accounts receivable

Days sales outstanding

63.1

days

59.4

days

58.0

days

Inventory turns per year

(based on cost of products sold)

3.0

turns

3.9

turns

3.6

turns

Days’ inventory

120.6

days

94.3

days

100.6

days

Trade accounts payable

Days payables outstanding

37.6

days

42.3

days

26.7

days

Working capital as a % of sales (1)

14.9

%

14.5

%

19.3

%

Debt to total capitalization percentage

37.1

%

35.2

%

39.1

%

Debt, net of cash, to net total capitalization

20.9

%

22.8

%

34.2

%

(1) June 30, 2019 figure excludes the Tire Shredder business, which was divested on December 28, 2018, and Crane Equipment & Service, Inc. (CES) and Stahlhammer Bommern GmbH (STB), each of which were divested on February 28, 2019.

U.S. Shipping Days by Quarter

Q1

Q2

Q3

Q4

Total

FY 21

63

64

61

63

251

FY 20

63

63

61

64

251

COLUMBUS McKINNON CORPORATION

Reconciliation of GAAP Gross Profit to

Non-GAAP Adjusted Gross Profit and Adjusted Gross Margin

($ in thousands, except per share data)

Three Months Ended

June 30,

2020

2019

Gross profit

$

44,797

$

75,612

Add back (deduct):

Factory closures

1,928

506

Business realignment costs

329

Insurance settlement

(290

)

Non-GAAP adjusted gross profit

$

47,054

$

75,828

Sales

$

139,070

$

212,712

Adjusted gross margin

33.8

%

35.6

%

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 and Adjusted Operating Margin

($ in thousands, except per share data)

Three Months Ended

June 30,

2020

2019

Income from operations

$

1,789

$

27,043

Add back (deduct):

Factory closures

2,256

1,027

Business realignment costs

821

Insurance recovery legal costs

141

139

Loss on sales of businesses

169

Insurance settlement

(290)

Non-GAAP adjusted income from operations

$

5,007

$

28,088

Sales

$

139,070

$

212,712

Adjusted operating margin

3.6

%

13.2

%

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,

2020

2019

Net income (loss)

$

(2,969)

$

18,579

Add back (deduct):

Non-cash pension settlement expense

2,722

Factory closures

2,256

1,027

Business realignment costs

821

Insurance recovery legal costs

141

139

Loss on sales of businesses

169

Insurance settlement

(290)

Normalize tax rate to 22% (1)

(1,405)

(291)

Non-GAAP adjusted net income

$

1,566

$

19,333

Average diluted shares outstanding

23,922

23,777

Diluted income per share – GAAP

$

(0.12)

$

0.78

Diluted income per share – Non-GAAP

$

0.07

$

0.81

(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 and at 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 to the measures as 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.

COLUMBUS McKINNON CORPORATION

Reconciliation of GAAP Net Income to Non-GAAP Adjusted EBITDA

($ in thousands)

Three Months Ended

June 30,

2020

2019

Net income (loss)

$

(2,969

)

$

18,579

Add back (deduct):

Income tax expense (benefit)

(963

)

5,162

Interest and debt expense

3,188

3,852

Investment (income) loss

(577

)

(302

)

Foreign currency exchange (gain) loss

84

(410

)

Other (income) expense, net

3,026

162

Depreciation and amortization expense

7,081

7,403

Factory closures

2,256

1,027

Business realignment costs

821

Insurance recovery legal costs

141

139

Loss on sales of businesses

169

Insurance settlement

(290

)

Non-GAAP adjusted EBITDA

$

12,088

$

35,491

Sales

$

139,070

$

212,712

Adjusted EBITDA margin

8.7

%

16.7

%

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.

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

Spread the word

Discuss

This site uses Akismet to reduce spam. Learn how your comment data is processed.