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Columbus McKinnon Reports 33% Operating Income Growth on 10% Net Sales Growth for Third Quarter Fiscal Year 2024

Published: 2024-01-31 11:30:00 ET
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Strong orders in the quarter led by precision conveyance platform

CHARLOTTE, N.C.--(BUSINESS WIRE)-- Columbus McKinnon Corporation (Nasdaq: CMCO) (“Columbus McKinnon” or the “Company”), a leading designer, manufacturer and marketer of intelligent motion solutions for material handling, today announced financial results for its fiscal year 2024 third quarter, which ended December 31, 2023. Results include the addition of montratec®, which was acquired on May 31, 2023 ("the acquisition").

Third Quarter Highlights (compared with prior-year period, except where otherwise noted)

  • Orders increased 8% demonstrating continued progress with growth initiatives and included a 23% increase in precision conveyance orders
  • Net sales increased 10% to $254.1 million primarily driven by strength across all product platforms led by precision conveyance
  • Gross margin expanded 130 basis points to 36.9%; Adjusted Gross Margin1 expanded 160 basis points to 37.2%
  • Operating income increased 33% to $26.9 million, or 10.6% of net sales; Adjusted Operating Income1 was $29.7 million, or 11.7% of net sales
  • Net cash provided by operating activities was $28.6 million in the first nine months of fiscal 2024, up 69% from the prior year period; continued accelerated debt repayment in the quarter
  • Completed construction and took occupancy of a state-of-the-art manufacturing center of excellence in Mexico, which will provide significant growth capacity and cost savings over time

“We are pleased with the strong orders, sales, operating income, and cash flow generation we delivered in the quarter. Our team continued to execute commercial and operational initiatives, improving productivity, reducing lead times, and enhancing our customer experience. Our top-line growth translated to expanded operating margin demonstrating the incremental leverage of our business as we continue to drive year-over-year improvements leveraging CMBS and the 80/20 process,” said David J. Wilson, President and Chief Executive Officer. “We have an encouraging funnel for both short cycle and large projects as we continue to execute on our strategy to become a leader in intelligent motion solutions. Our progress gives us confidence in our near- and long-term financial objectives, which we believe will drive meaningful shareholder value.”

___________________________

1 Adjusted Gross Profit, Adjusted Gross Margin, Adjusted Operating Income and Adjusted Operating Margin are non-GAAP financial measures. See accompanying discussion and reconciliation tables provided in this release for reconciliations of these non-GAAP financial measures to the closest corresponding GAAP financial measures.

Third Quarter Fiscal 2024 Sales

($ in millions)

Q3 FY 24

 

Q3 FY 23

 

Change

 

% Change

Net sales

$

254.1

 

 

$

230.4

 

 

$

23.7

 

 

10.3

%

U.S. sales

$

138.5

 

 

$

141.4

 

 

$

(2.9

)

 

(2.1

) %

% of total

 

55

%

 

 

61

%

 

 

 

 

Non-U.S. sales

$

115.6

 

 

$

89.0

 

 

$

26.6

 

 

29.9

%

% of total

 

45

%

 

 

39

%

 

 

 

 

For the quarter, net sales increased $23.7 million, or 10.3%. The acquisition contributed $15.5 million, or 6.7%, of the increase. In the U.S., sales were down $2.9 million, or 2.1%. Price improvement of $2.2 million and $0.2 million of contribution from the acquisition helped to offset $5.4 million in lower volume. Sales outside the U.S. increased $26.6 million, or 29.9%, driven by $15.3 million of sales related to the acquisition, $4.3 million of price improvement and $3.0 million of higher volume. Favorable foreign currency translation was $4.1 million.

Third Quarter Fiscal 2024 Operating Results

($ in millions)

Q3 FY 24

 

Q3 FY 23

 

Change

 

% Change

Gross profit

$

93.9

 

 

$

82.0

 

 

$

11.9

 

 

14.4

%

Gross margin

 

36.9

%

 

35.6 % %

 

130 bps

 

 

Adjusted Gross Profit1

$

94.5

 

 

$

82.0

 

 

$

12.4

 

 

15.2

%

Adjusted Gross Margin1

 

37.2

%

 

 

35.6

%

 

160 bps

 

 

Income from operations

$

26.9

 

 

$

20.2

 

 

$

6.7

 

 

33.4

%

Operating margin

 

10.6

%

 

 

8.8

%

 

180 bps

 

 

Adjusted Operating Income1

$

29.7

 

 

$

23.5

 

 

$

6.3

 

 

26.8

%

Adjusted Operating Margin1

 

11.7

%

 

 

10.2

%

 

150 bps

 

 

Net income

$

9.7

 

 

$

12.0

 

 

$

(2.3

)

 

(19.1

) %

Net income margin

 

3.8

%

 

 

5.2

%

 

(140) bps

 

 

Diluted EPS

$

0.34

 

 

$

0.42

 

 

$

(0.08

)

 

(19.0

) %

Adjusted Diluted EPS1

$

0.74

 

 

$

0.72

 

 

$

0.02

 

 

2.8

%

Adjusted EBITDA1

$

41.3

 

 

$

34.0

 

 

$

7.4

 

 

21.7

%

Adjusted EBITDA Margin2

 

16.3

%

 

 

14.7

%

 

160 bps

 

 

Adjusted Diluted EPS1 of $0.74 excludes amortization of intangible assets related to acquisitions. The Company believes this better represents its inherent earnings power and cash generation capability.

Fourth Quarter Fiscal 2024 Guidance

Columbus McKinnon expects net sales of approximately $260 million to $270 million at current exchange rates. This represents 4% growth year-over-year at the midpoint of the range.

______________________________

1 Adjusted Gross Profit, Adjusted Gross Margin, Adjusted Operating Income, Adjusted Operating Margin, Adjusted Diluted EPS, Adjusted EBITDA, and Adjusted EBITDA Margin are non-GAAP financial measures. See accompanying discussion and reconciliation tables provided in this release for reconciliations of these non-GAAP financial measures to the closest corresponding GAAP financial measures.

Teleconference/webcast

Columbus McKinnon will host a conference call today at 10:00 AM Eastern Time to discuss the Company’s financial results and strategy. The conference call will be accessible through live webcast and via phone by dialing 201-493-6780. The webcast, earnings release and earnings presentation will be available at the Company’s investor relations website at investors.cmco.com. A replay of the webcast will also be archived on the Company’s investor relations website and available via phone by dialing 412-317-6671 and enter the conference ID number 13743372 through Wednesday, February 7, 2024.

About Columbus McKinnon

Columbus McKinnon is a leading worldwide designer, manufacturer and marketer of intelligent motion solutions that move the world forward and improve lives by efficiently and ergonomically moving, lifting, positioning, and securing 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.cmco.com.

Safe Harbor Statement

This news release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are generally identified by the use of forward-looking terminology, including the terms “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “illustrative,” “intend,” “likely,” “may,” “opportunity,” “plan,” “possible,” “potential,” “predict,” “project,” “shall,” “should,” “target,” “will,” “would” and, in each case, their negative or other various or comparable terminology. All statements other than statements of historical facts contained in this document, including, but are not limited to, statements relating to: (i) our strategy, outlook and growth prospects and our fourth quarter fiscal 2024 net sales; (ii) our operational and financial targets and capital distribution policy; (iii) general economic trend and trends in the industry and markets; (iv) the risk and costs associated with the integration of, and our ability to integrate acquisitions successfully to achieve synergies; (v) the proper application of generally accepted accounting principles, which are highly complex and involve many subjective assumptions, estimates and judgements; (vi) the effectiveness of our new facility in Monterrey, Mexico to provide cost savings and margin improvement and (vii) the competitive environment in which we operate; are forward looking statements. Forward-looking statements are not based on historical facts, but instead represent our current expectations and assumptions regarding our business, the economy and other future conditions, and involve known and unknown risks, uncertainties and other factors that could cause the actual results, performance or achievements of the Company to differ materially from any future results, performance or achievements expressed or implied by the forward-looking statements. It is not possible to predict or identify all such risks. These risks include, but are not limited to, the risk factors that are described under the section titled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended March 31, 2023 as well as in our other filings with the Securities and Exchange Commission, which are available on its website at www.sec.gov. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Forward-looking statements speak only as of the date they are made. Columbus McKinnon undertakes no duty to update publicly any such forward-looking statement, whether as a result of new information, future events or otherwise, except as may be required by applicable law, regulation or other competent legal authority.

Financial tables follow.

COLUMBUS McKINNON CORPORATIONCondensed Consolidated Income Statements - UNAUDITED (In thousands, except per share and percentage data)

 

 

Three Months Ended

 

 

 

 

December 31, 2023

 

December 31, 2022

 

Change

Net sales

 

$

254,143

 

 

$

230,370

 

 

10.3

%

Cost of products sold

 

 

160,246

 

 

 

148,326

 

 

8.0

%

Gross profit

 

 

93,897

 

 

 

82,044

 

 

14.4

%

Gross profit margin

 

 

36.9

%

 

 

35.6

%

 

 

Selling expenses

 

 

26,552

 

 

 

25,424

 

 

4.4

%

% of net sales

 

 

10.4

%

 

 

11.0

%

 

 

General and administrative expenses

 

 

26,255

 

 

 

25,143

 

 

4.4

%

% of net sales

 

 

10.3

%

 

 

10.9

%

 

 

Research and development expenses

 

 

6,692

 

 

 

4,839

 

 

38.3

%

% of net sales

 

 

2.6

%

 

 

2.1

%

 

 

Amortization of intangibles

 

 

7,486

 

 

 

6,459

 

 

15.9

%

Income from operations

 

26,912

 

 

20,179

 

 

33.4

%

Operating margin

 

 

10.6

%

 

 

8.8

%

 

 

Interest and debt expense

 

 

9,952

 

 

 

7,303

 

 

36.3

%

Investment (income) loss

 

 

(758

)

 

 

(574

)

 

32.1

%

Foreign currency exchange (gain) loss

 

 

(1,155

)

 

 

(3,359

)

 

(65.6

) %

Other (income) expense, net

 

 

5,234

 

 

 

79

 

 

6,525.3

%

Income (loss) before income tax expense (benefit)

 

13,639

 

 

 

16,730

 

 

(18.5

) %

Income tax expense (benefit)

 

 

3,911

 

 

 

4,701

 

 

(16.8

) %

Net income (loss)

 

$

9,728

 

 

$

12,029

 

 

(19.1

) %

 

 

 

 

 

 

 

Average basic shares outstanding

 

 

28,744

 

 

 

28,626

 

 

0.4

%

Basic income (loss) per share

 

$

0.34

 

 

$

0.42

 

 

(19.0

) %

 

 

 

 

 

 

 

Average diluted shares outstanding

 

 

28,991

 

 

 

28,778

 

 

0.7

%

Diluted income (loss) per share

 

$

0.34

 

 

$

0.42

 

 

(19.0

) %

 

 

 

 

 

 

 

Dividends declared per common share

 

$

0.07

 

 

$

0.07

 

 

 

COLUMBUS McKINNON CORPORATIONCondensed Consolidated Income Statements - UNAUDITED (In thousands, except per share and percentage data)

 

 

Nine Months Ended

 

 

 

 

December 31, 2023

 

December 31, 2022

 

Change

Net sales

 

$

748,036

 

 

$

682,397

 

 

9.6

%

Cost of products sold

 

 

467,513

 

 

 

431,516

 

 

8.3

%

Gross profit

 

 

280,523

 

 

 

250,881

 

 

11.8

%

Gross profit margin

 

 

37.5

%

 

 

36.8

%

 

 

Selling expenses

 

 

78,400

 

 

 

77,197

 

 

1.6

%

% of net sales

 

 

10.5

%

 

 

11.3

%

 

 

General and administrative expenses

 

 

79,407

 

 

 

68,441

 

 

16.0

%

% of net sales

 

 

10.6

%

 

 

10.0

%

 

 

Research and development expenses

 

 

19,134

 

 

 

15,429

 

 

24.0

%

% of net sales

 

 

2.6

%

 

 

2.3

%

 

 

Amortization of intangibles

 

 

21,871

 

 

 

19,442

 

 

12.5

%

Income from operations

 

 

81,711

 

 

 

70,372

 

 

16.1

%

Operating margin

 

 

10.9

%

 

 

10.3

%

 

 

Interest and debt expense

 

 

28,788

 

 

 

20,274

 

 

42.0

%

Investment (income) loss

 

 

(1,212

)

 

 

168

 

 

NM

 

Foreign currency exchange (gain) loss

 

 

1,074

 

 

 

(1,152

)

 

NM

 

Other (income) expense, net

 

 

5,840

 

 

 

(1,999

)

 

NM

 

Income (loss) before income tax expense (benefit)

 

 

47,221

 

 

 

53,081

 

 

(11.0

) %

Income tax expense (benefit)

 

 

12,405

 

 

 

18,547

 

 

(33.1

) %

Net income (loss)

 

$

34,816

 

 

$

34,534

 

 

0.8

%

 

 

 

 

 

 

 

Average basic shares outstanding

 

 

28,711

 

 

 

28,597

 

 

0.4

%

Basic income (loss) per share

 

$

1.21

 

 

$

1.21

 

 

%

 

 

 

 

 

 

 

Average diluted shares outstanding

 

 

28,979

 

 

 

28,767

 

 

0.7

%

Diluted income (loss) per share

 

$

1.20

 

 

$

1.20

 

 

%

 

 

 

 

 

 

 

Dividends declared per common share

 

$

0.14

 

 

$

0.14

 

 

 

COLUMBUS McKINNON CORPORATIONCondensed Consolidated Balance Sheets (In thousands)

 

 

December 31, 2023

 

March 31, 2023

 

 

(Unaudited)

 

 

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

102,945

 

 

$

133,176

 

Trade accounts receivable

 

$

173,411

 

 

$

151,451

 

Inventories

 

$

204,396

 

 

$

179,359

 

Prepaid expenses and other

 

$

35,660

 

 

$

32,254

 

Total current assets

 

$

516,412

 

 

$

496,240

 

 

 

 

 

 

Property, plant, and equipment, net

 

$

102,729

 

 

$

94,360

 

Goodwill

 

$

728,427

 

 

$

644,629

 

Other intangibles, net

 

$

396,317

 

 

$

362,537

 

Marketable securities

 

$

12,388

 

 

$

10,368

 

Deferred taxes on income

 

$

1,990

 

 

$

2,035

 

Other assets

 

$

99,047

 

 

$

88,286

 

Total assets

 

$

1,857,310

 

 

$

1,698,455

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Trade accounts payable

 

$

76,151

 

 

$

76,736

 

Accrued liabilities

 

$

142,518

 

 

$

124,317

 

Current portion of long-term debt and finance lease obligations

 

$

50,652

 

 

$

40,604

 

Total current liabilities

 

$

269,321

 

 

$

241,657

 

 

 

 

 

 

Term loan, AR securitization facility and finance lease obligations

 

$

499,388

 

 

$

430,988

 

Other non current liabilities

 

$

210,164

 

 

$

192,013

 

Total liabilities

 

$

978,873

 

 

$

864,658

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

Common stock

 

$

288

 

 

$

286

 

Treasury stock

 

$

(1,001

)

 

$

(1,001

)

Additional paid in capital

 

$

522,587

 

 

$

515,797

 

Retained earnings

 

$

387,550

 

 

$

356,758

 

Accumulated other comprehensive loss

 

$

(30,987

)

 

$

(38,043

)

Total shareholders’ equity

 

$

878,437

 

 

$

833,797

 

Total liabilities and shareholders’ equity

 

$

1,857,310

 

 

$

1,698,455

 

COLUMBUS McKINNON CORPORATIONCondensed Consolidated Statements of Cash Flows - UNAUDITED (In thousands)

 

 

Nine Months Ended

 

 

December 31, 2023

 

December 31, 2022

Operating activities:

 

 

 

 

Net income (loss)

 

$

34,816

 

 

$

34,534

 

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

 

 

 

 

Depreciation and amortization

 

$

34,052

 

 

$

31,380

 

Deferred income taxes and related valuation allowance

 

$

(6,495

)

 

$

(783

)

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

 

$

(967

)

 

$

347

 

Non-cash pension settlement

 

$

4,599

 

 

$

 

Stock-based compensation

 

$

8,473

 

 

$

7,039

 

Amortization of deferred financing costs

 

$

1,728

 

 

$

1,291

 

Loss (gain) on hedging instruments

 

$

1,193

 

 

$

(598

)

Gain on sale of building

 

$

 

 

$

(232

)

Loss on retirement of fixed asset

 

$

 

 

$

175

 

Non-cash lease expense

 

$

7,080

 

 

$

5,814

 

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

 

 

 

 

Trade accounts receivable

 

$

(14,911

)

 

$

(1,401

)

Inventories

 

$

(17,764

)

 

$

(31,701

)

Prepaid expenses and other

 

$

(2,897

)

 

$

4,905

 

Other assets

 

$

(859

)

 

$

(232

)

Trade accounts payable

 

$

(1,387

)

 

$

(18,756

)

Accrued liabilities

 

$

(7,236

)

 

$

(7,498

)

Non-current liabilities

 

$

(10,834

)

 

$

(7,382

)

Net cash provided by (used for) operating activities

 

$

28,591

 

 

$

16,902

 

 

 

 

 

 

Investing activities:

 

 

 

 

Proceeds from sales of marketable securities

 

$

1,101

 

 

$

2,650

 

Purchases of marketable securities

 

$

(2,731

)

 

$

(3,121

)

Capital expenditures

 

$

(16,334

)

 

$

(9,511

)

Proceeds from sale of building, net of transaction costs

 

$

 

 

$

373

 

Purchase of businesses, net of cash acquired

 

$

(108,145

)

 

$

(1,616

)

Dividend received from equity method investment

 

$

144

 

 

$

313

 

Net cash provided by (used for) investing activities

 

$

(125,965

)

 

$

(10,912

)

 

 

 

 

 

Financing activities:

 

 

 

 

Proceeds from the issuance of common stock

 

$

556

 

 

$

704

 

Purchases of treasury stock

 

$

 

 

$

(1,001

)

Repayment of debt

 

$

(40,447

)

 

$

(30,402

)

Proceeds from issuance of long-term debt

 

$

120,000

 

 

$

 

Fees paid for borrowings on long-term debt

 

$

(2,859

)

 

$

 

Cash inflows from hedging activities

 

$

18,088

 

 

$

18,422

 

Cash outflows from hedging activities

 

$

(19,303

)

 

$

(17,958

)

Payment of dividends

 

$

(6,027

)

 

$

(6,006

)

Other

 

$

(2,237

)

 

$

(1,398

)

Net cash provided by (used for) financing activities

 

$

67,771

 

 

$

(37,639

)

 

 

 

 

 

Effect of exchange rate changes on cash

 

$

(628

)

 

$

(2,221

)

 

 

 

 

 

Net change in cash and cash equivalents

 

$

(30,231

)

 

$

(33,870

)

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

 

$

133,426

 

 

$

115,640

 

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

 

$

103,195

 

 

$

81,770

 

COLUMBUS McKINNON CORPORATIONQ3 FY 2024 Sales Bridge

 

 

Quarter

 

Year To Date

($ in millions)

 

$ Change

 

% Change

 

$ Change

 

% Change

Fiscal 2023 Sales

 

$

230.4

 

 

 

 

$

682.4

 

 

 

Acquisition

 

 

15.5

 

 

6.7

%

 

 

27.7

 

 

4.1

%

Pricing

 

 

6.5

 

 

2.8

%

 

 

28.1

 

 

4.1

%

Volume

 

 

(2.4

)

 

(1.0

) %

 

 

(0.2

)

 

 

Foreign currency translation

 

 

4.1

 

 

1.8

%

 

 

10.0

 

 

1.4

%

Total change

 

$

23.7

 

 

10.3

%

 

$

65.6

 

 

9.6

%

Fiscal 2024 Sales

 

$

254.1

 

 

 

 

$

748.0

 

 

 

COLUMBUS McKINNON CORPORATIONQ3 FY 2024 Gross Profit Bridge

($ in millions)

Quarter

 

Year To Date

Fiscal 2023 Gross Profit

$

82.0

 

 

$

250.9

 

Acquisition

 

6.7

 

 

 

13.0

 

Price, net of manufacturing costs changes (incl. inflation)

 

4.6

 

 

 

15.8

 

Product liability

 

0.9

 

 

 

0.9

 

Current year business realignment costs

 

(0.6

)

 

 

(0.8

)

Sales volume and mix

 

(1.2

)

 

 

(2.7

)

Foreign currency translation

 

1.4

 

 

 

3.4

 

Total change

 

11.8

 

 

 

29.6

 

Fiscal 2024 Gross Profit

$

93.9

 

 

$

280.5

 

U.S. Shipping Days by Quarter

 

 

Q1

 

Q2

 

Q3

 

Q4

 

Total

FY 24

 

63

 

62

 

61

 

62

 

248

 

 

 

 

 

 

 

 

 

 

 

FY 23

 

63

 

64

 

60

 

63

 

250

COLUMBUS McKINNON CORPORATIONAdditional Data1 (Unaudited)

 

 

December 31, 2023

 

September 30, 2023

 

March 31, 2023

 

December 31, 2022

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

Backlog

 

$

298.4

 

 

$

317.7

 

 

$

308.7

 

 

$

329.1

 

Long-term backlog

 

 

 

 

 

 

 

 

 

 

 

 

Expected to ship beyond 3 months

 

$

151.3

 

 

$

148.3

 

 

$

142.0

 

 

$

164.7

 

Long-term backlog as % of total backlog

 

 

50.7

%

 

 

46.7

%

 

 

46.0

%

 

 

50.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade accounts receivable

 

 

 

 

 

 

 

 

 

 

 

 

Days sales outstanding

 

 

62.1

days

 

 

58.6

days

 

 

54.3

days

 

 

58.0

days

 

 

 

 

 

 

 

 

 

 

 

 

 

Inventory turns per year

 

 

 

 

 

 

 

 

 

 

 

 

(based on cost of products sold)

 

 

3.1

turns

 

 

3.1

turns

 

 

3.6

turns

 

 

3.0

turns

Days' inventory

 

 

117.7

days

 

 

117.7

days

 

 

101.4

days

 

 

121.0

days

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade accounts payable

 

 

 

 

 

 

 

 

 

 

 

 

Days payables outstanding

 

 

50.1

days

 

 

48.3

days

 

 

53.3

days

 

 

52.6

days

 

 

 

 

 

 

 

 

 

 

 

 

 

Working capital as a % of sales 2,3

 

 

20.6

%

 

 

21.8

%

 

 

17.3

%

 

 

22.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by (used for) operating activities

 

$

29.1

 

 

$

16.7

 

 

$

66.7

 

 

$

10.8

 

Capital expenditures

 

$

6.0

 

 

$

5.0

 

 

$

3.1

 

 

$

4.2

 

Free Cash Flow 4

 

$

23.1

 

 

$

11.7

 

 

$

63.6

 

 

$

6.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt to total capitalization percentage

 

 

38.5

%

 

 

39.8

%

 

 

36.1

%

 

 

37.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt, net of cash, to net total capitalization

 

 

33.7

%

 

 

35.3

%

 

 

28.9

%

 

 

33.0

%

1Additional Data: This data is provided to help investors understand financial and operational metrics that management uses to measure the Company’s financial performance and identify trends affecting the business. These measures may not be comparable with or defined in the same manner as other companies.

2 December 31, 2023 and September 30, 2023 exclude the impact of the acquisition of montratec GmbH.

3 December 31, 2022 figure excludes the impact of the acquisition of Garvey Corporation.

4 Free Cash Flow is defined as net cash provided by (used for) operating activities less capital expenditures. Free Cash Flow is not a measure determined in accordance with GAAP and may not be comparable with the measures as defined or used by other companies. Nevertheless, the Company believes that providing non-GAAP financial measures, such as Free Cash Flow, is important for investors and other readers of the Company’s financial statements and assists in understanding the comparison of the current quarter’s Free Cash Flow to Free Cash Flow for historical periods.

 

Components may not add due to rounding.

NON-GAAP FINANCIAL MEASURES

The following information provides definitions and reconciliations of the non-GAAP financial measures presented in this earnings release to the most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles (GAAP). The Company has provided this non-GAAP financial information, which is not calculated or presented in accordance with GAAP, as information supplemental and in addition to the financial measures presented in this earnings release that are calculated and presented in accordance with GAAP. Such non-GAAP financial measures should not be considered superior to, as a substitute for or alternative to, and should be considered in conjunction with, the GAAP financial measures presented in this earnings release. The non-GAAP financial measures in this earnings release may differ from similarly titled measures used by other companies.

COLUMBUS McKINNON CORPORATIONReconciliation of Gross Profit to Adjusted Gross Profit ($ in thousands)

 

Three Months Ended

 

Nine Months Ended

 

December 31, 2023

 

December 31, 2022

 

December 31, 2023

 

December 31, 2022

Gross profit

$

93,897

 

 

$

82,044

 

 

$

280,523

 

 

$

250,881

 

Add back (deduct):

 

 

 

 

 

 

 

Business realignment costs

 

150

 

 

 

 

 

 

346

 

 

 

 

Monterrey, MX new factory start-up costs

 

435

 

 

 

 

 

 

435

 

 

 

 

Adjusted Gross Profit

$

94,482

 

 

$

82,044

 

 

$

281,304

 

 

$

250,881

 

 

 

 

 

 

 

 

 

Net sales

$

254,143

 

 

$

230,370

 

 

$

748,036

 

 

$

682,397

 

 

 

 

 

 

 

 

 

Gross margin

 

36.9

%

 

 

35.6

%

 

 

37.5

%

 

 

36.8

%

Adjusted Gross Margin

 

37.2

%

 

 

35.6

%

 

 

37.6

%

 

 

36.8

%

Adjusted Gross Profit is defined as gross profit as reported, adjusted for certain items. Adjusted Gross Profit Margin is defined as Adjusted Gross Profit divided by net sales. Adjusted Gross Profit and Adjusted Gross Margin are not measures determined in accordance with GAAP and may not be comparable with Adjusted Gross Profit and Adjusted Gross Profit Margin as used by other companies. Nevertheless, Columbus McKinnon believes that providing non-GAAP financial measures, such as Adjusted Gross Profit and Adjusted Gross Profit Margin, are 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 and gross profit margin to the historical periods' gross profit, as well as facilitates a more meaningful comparison of the Company’s gross profit and gross profit margin to that of other companies.

COLUMBUS McKINNON CORPORATIONReconciliation of Income from Operations to Adjusted Operating Income ($ in thousands)

 

Three Months Ended

 

Nine Months Ended

 

December 31, 2023

 

December 31, 2022

 

December 31, 2023

 

December 31, 2022

Income from operations

$

26,912

 

 

$

20,179

 

 

$

81,711

 

 

$

70,372

 

Add back (deduct):

 

 

 

 

 

 

 

Acquisition deal and integration costs

 

113

 

 

 

338

 

 

 

3,208

 

 

 

443

 

Business realignment costs

 

1,452

 

 

 

1,401

 

 

 

1,867

 

 

 

4,292

 

North American warehouse consolidation

 

 

 

 

 

 

 

199

 

 

 

 

Headquarter relocation costs

 

510

 

 

 

315

 

 

 

1,884

 

 

 

315

 

Garvey contingent consideration

 

 

 

 

1,230

 

 

 

 

 

 

1,230

 

Monterrey, MX new factory start-up costs

 

755

 

 

 

 

 

 

755

 

 

 

 

Adjusted Operating Income

$

29,742

 

 

$

23,463

 

 

$

89,624

 

 

$

76,652

 

 

 

 

 

 

 

 

 

Net sales

$

254,143

 

 

$

230,370

 

 

$

748,036

 

 

$

682,397

 

 

 

 

 

 

 

 

 

Operating margin

 

10.6

%

 

 

8.8

%

 

 

10.9

%

 

 

10.3

%

Adjusted Operating Margin

 

11.7

%

 

 

10.2

%

 

 

12.0

%

 

 

11.2

%

Adjusted Operating Income is defined as income from operations as reported, adjusted for certain items. Adjusted Operating Margin is defined as Adjusted Operating Income divided by net sales. Adjusted Operating Income and Adjusted Operating Margin are not measures determined in accordance with GAAP and may not be comparable with Adjusted Operating Income and Adjusted Operating Margin as used by other companies. Nevertheless, Columbus McKinnon believes that providing non-GAAP financial measures, such as Adjusted Operating Income and Adjusted Operating Margin, are 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 and operating margin, as well as facilitates a more meaningful comparison of the Company’s income from operations and operating margin to that of other companies.

COLUMBUS McKINNON CORPORATIONReconciliation of Net Income and Diluted Earnings per Share to Adjusted Net Income and Adjusted Diluted Earnings per Share ($ in thousands, except per share data)

 

Three Months Ended

 

Nine Months Ended

 

December 31, 2023

 

December 31, 2022

 

December 31, 2023

 

December 31, 2022

Net income

$

9,728

 

 

$

12,029

 

 

$

34,816

 

 

$

34,534

Add back (deduct):

 

 

 

 

 

 

 

Amortization of intangibles

 

7,486

 

 

 

6,459

 

 

 

21,871

 

 

 

19,442

Acquisition deal and integration costs

 

113

 

 

 

338

 

 

 

3,208

 

 

 

443

Business realignment costs

 

1,452

 

 

 

1,401

 

 

 

1,867

 

 

 

4,292

North American warehouse consolidation

 

 

 

 

 

 

 

199

 

 

 

Headquarter relocation costs

 

510

 

 

 

315

 

 

 

1,884

 

 

 

315

Garvey contingent consideration

 

 

 

 

1,230

 

 

 

 

 

 

1,230

Monterrey, MX new factory start-up costs

 

755

 

 

 

 

 

 

755

 

 

 

Non-cash pension settlement expense

 

4,599

 

 

 

 

 

 

4,599

 

 

 

Normalize tax rate 1

 

(3,227

)

 

 

(1,123

)

 

 

(7,996

)

 

 

1,210

Adjusted Net Income

$

21,416

 

 

$

20,649

 

 

$

61,203

 

 

$

61,466

 

 

 

 

 

 

 

 

Average diluted shares outstanding

 

28,991

 

 

 

28,778

 

 

 

28,979

 

 

 

28,767

 

 

 

 

 

 

 

 

Diluted income per share

$

0.34

 

 

$

0.42

 

 

$

1.20

 

 

$

1.20

 

 

 

 

 

 

 

 

Adjusted Diluted EPS

$

0.74

 

 

$

0.72

 

 

$

2.11

 

 

$

2.14

1

Applies a normalized tax rate of 25% in fiscal 2024 and 22% in fiscal 2023 to GAAP pre-tax income and non-GAAP adjustments above, which are each pre-tax.

Adjusted Net Income and Adjusted Diluted EPS are defined as net income and diluted EPS as reported, adjusted for certain items, including amortization of intangibles, and also adjusted for a normalized tax rate. Adjusted Net Income and Adjusted Diluted EPS are not measures determined in accordance with GAAP and may not be comparable with the measures used by other companies. Nevertheless, Columbus McKinnon believes that providing non-GAAP financial measures, such as Adjusted Net Income and Adjusted Diluted EPS, are 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 presenting Adjusted Diluted 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 CORPORATIONReconciliation of Net Income to Adjusted EBITDA ($ in thousands)

 

Three Months Ended

 

Nine Months Ended

 

December 31, 2023

 

December 31, 2022

 

December 31, 2023

 

December 31, 2022

Net income

$

9,728

 

 

$

12,029

 

 

$

34,816

 

 

$

34,534

 

Add back (deduct):

 

 

 

 

 

 

 

Income tax expense (benefit)

 

3,911

 

 

 

4,701

 

 

 

12,405

 

 

 

18,547

 

Interest and debt expense

 

9,952

 

 

 

7,303

 

 

 

28,788

 

 

 

20,274

 

Investment (income) loss

 

(758

)

 

 

(574

)

 

 

(1,212

)

 

 

168

 

Foreign currency exchange (gain) loss

 

(1,155

)

 

 

(3,359

)

 

 

1,074

 

 

 

(1,152

)

Other (income) expense, net1

 

5,234

 

 

 

79

 

 

 

5,840

 

 

 

(1,999

)

Depreciation and amortization expense

 

11,570

 

 

 

10,487

 

 

 

34,052

 

 

 

31,380

 

Acquisition deal and integration costs

 

113

 

 

 

338

 

 

 

3,208

 

 

 

443

 

Business realignment costs

 

1,452

 

 

 

1,401

 

 

 

1,867

 

 

 

4,292

 

North American warehouse consolidation

 

 

 

 

 

 

 

199

 

 

 

 

Headquarter relocation costs

 

510

 

 

 

315

 

 

 

1,884

 

 

 

315

 

Garvey contingent consideration

 

 

 

 

1,230

 

 

 

 

 

 

1,230

 

Monterrey, MX new factory start-up costs

 

755

 

 

 

 

 

 

755

 

 

 

 

Adjusted EBITDA

$

41,312

 

 

$

33,950

 

 

$

123,676

 

 

$

108,032

 

 

 

 

 

 

 

 

 

Net sales

$

254,143

 

 

$

230,370

 

 

$

748,036

 

 

$

682,397

 

 

 

 

 

 

 

 

 

Net income margin

 

3.8

%

 

 

5.2

%

 

 

4.7

%

 

 

5.1

%

Adjusted EBITDA Margin

 

16.3

%

 

 

14.7

%

 

 

16.5

%

 

 

15.8

%

 

1

During the quarter ending December 31, 2023, certain employees in one of the Company's U.S. pension plans accepted an offer to settle their pension obligation with a lump sum payment. These lump sum settlements are one of the steps the Company is taking to terminate the plan by transferring the liabilities to a third-party. As a result, the Company recorded a non-cash settlement charge in the amount $4,599,000.

Adjusted EBITDA is defined as net income before interest expense, income taxes, depreciation, amortization, and other adjustments. Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by net sales. Adjusted EBITDA and Adjusted EBITDA Margin are not measures determined in accordance with GAAP and may not be comparable with Adjusted EBITDA and Adjusted EBITDA Margin as used by other companies. Nevertheless, Columbus McKinnon believes that providing non-GAAP financial measures, such as Adjusted EBITDA and Adjusted EBITDA Margin, are important for investors and other readers of the Company’s financial statements.

Gregory P. Rustowicz EVP Finance and CFO Columbus McKinnon Corporation 716-689-5442 greg.rustowicz@cmco.com

Kristine Moser VP IR and Treasurer Columbus McKinnon Corporation 704-942-3253 kristy.moser@cmco.com

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

Source: Columbus McKinnon Corporation