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 2020 second quarter, which ended September 30, 2019.

Second Quarter Highlights (compared with prior-year period)

• Revenue up 1.8% adjusted for divestitures and changes in foreign currency exchange rates driven by impact of 80/20 Process and solid projects business
• Blueprint for Growth strategy delivered operating margin expansion of 80 basis points to 12.2%; Adjusted operating margin expanded 100 bps to 12.7%
• $5.2 million in operating income contributions realized from 80/20 process, including footprint rationalization, more than offset headwinds
• Net income was $16.6 million, up 4.3%; Adjusted net income increased 8.1%
• Generated strong operating cash flow of $40 million in the quarter

Mark Morelli, President and CEO of Columbus McKinnon, commented, “We are executing to plan, and our results demonstrate the continued success of our Blueprint for Growth strategy and the implementation of our business operating system E-PAS™ (“Earnings Power Acceleration System”). The execution of our strategy drove more than an 8% increase in adjusted net income. Importantly, we continue to demonstrate our cash generating strength, producing $40 million in cash from operating activities in the quarter.”

He continued, “The 80/20 Process, specifically strategic pricing and indirect cost reductions, along with factory closures provided approximately $9 million in operating income year-to-date of which $5.2 million was in the second quarter. This more than offset industrial market headwinds, higher medical costs, tariffs and the impact of divesting less profitable businesses. We now expect our Blueprint for Growth strategy to contribute approximately $18 million in operating income in fiscal 2020, up from our previous expectation of $12 million.”

Mr. Morelli concluded, “Our self-help strategy is enabling significant investment in product development, marketing and digital initiatives despite weaker economic conditions. Early examples of innovation to solve high value customer problems include automating workstations with ProPath™, integrating load sensing into hoists and productizing custom automation into modules. These products improve customer safety, productivity and up time.”

Second Quarter Fiscal 2020 Sales

Adjusted for the $9.2 million of sales from divestitures from the prior-year period and the $4.0 million negative impact of foreign currency translation, sales grew 1.8% due to the impact of the 80/20 Process and strong volume in our projects business which more than offset weakness in our short cycle business. Sales outside the U.S., adjusted for divestitures and foreign currency translation, were up $2.8 million, or 2.9%, while U.S. sales, adjusted for divestitures, were up $0.9 million, or 0.8%.

Second Quarter Fiscal 2020 Operating Results

*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).

Gross margin expanded as pricing, net of material cost inflation, and productivity offset tariffs, the negative effects of foreign currency exchange, factory closure and business realignment costs. For more information on changes in gross profit, please see the table on page 8 of this release. Adjusted income from operations was $26.3 million, up $0.9 million, or 3.4%, over the second quarter of fiscal 2019. Adjusted operating margin expanded 100 basis points from the impact of the 80/20 Process. Please see the reconciliation of GAAP income from operations to adjusted income from operations on page 11 of this release.

Adjusted EBITDA margin was 16.2% for the quarter, an 80 basis point expansion over the prior-year period. Please see the reconciliation of GAAP net income to adjusted EBITDA on page 13 of this release.

Third Quarter Fiscal 2020 Outlook

Progress with the 80/20 Process has enabled the Company to announce the intended closure of a second facility in Ohio. This is expected to provide annual savings of approximately $5 million beginning in the third quarter of fiscal 2021. Well-reported industrial market weakness will likely continue however, we are encouraged that industrial market indicators are stabilizing. The Company believes that savings realized from its Blueprint for Growth strategy can continue to offset headwinds, fund investments for growth, and drive margin and earnings expansion. The Company expects revenue in the third quarter of fiscal year 2020 to be down approximately 2% compared with revenue of $205 million in the prior-year period (adjusted for divestitures and foreign currency translation at current rates).

Teleconference/webcast

Columbus McKinnon will host a conference call and live webcast Thursday, November 7, 2019 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 www.cmworks.com/investors. 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 www.cmworks.com/investors. To listen to the archived call, dial 412-317-6671 and enter the passcode 13694761. The telephonic replay will be available from 1:00 PM Eastern Time on the day of the call through Thursday, November 14, 2019. 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 http://www.cmworks.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 effectiveness of the Company’s 80/20 Process to simplify operations, the ability of the Company’s Operational Excellence initiatives to drive profitability, the success of the Company’s efforts to Ramp the Growth Engine, 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.

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

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.

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.

(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.

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 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20191107005302/en/

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

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

Source: Columbus McKinnon Corporation