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Columbus McKinnon Blueprint for Growth Strategy Drove Margin Expansion, Earnings Growth and Strong Cash Generation in Third Quarter Fiscal Year 2020

02/04/2020

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 third quarter, which ended December 31, 2019.

Third Quarter Highlights (compared with prior-year period)

  • Blueprint for Growth strategy delivers strong operating results overcoming weaker industrial environment
  • Gross margin expanded 20 basis points to 34.0%; Achieved 11th consecutive quarter of year-over-year expansion
  • Diluted earnings per share was $0.63; adjusted diluted earnings per share increased $0.03 to $0.64
  • Cash from operations increased 24% to $32.4 million for the quarter and was up 31% year-to-date to $70.3 million

Richard Fleming, Chairman and Interim CEO of Columbus McKinnon, commented, “The successful execution of our Blueprint for Growth strategy continues to deliver solid financial results. The Company demonstrated strengthened earnings power and cash generation during a weaker industrial environment. In fact, the 80/20 Process contributed approximately $5.7 million in operating income in the quarter and EBTIDA margin expanded by 100 basis points to 15.2%, even as revenue declined. This was our 12th consecutive quarter of EBTIDA margin expansion, keeping us on course to achieve our 19% EBTIDA margin goal in fiscal 2022. We also generated over $30 million in free cash flow in the quarter.”

The implementation of our business operating system E-PAS™ (“Earnings Power Acceleration System”) provides the tools needed during tougher markets to compete effectively and operate efficiently. We completed the closure of the facility in China ahead of schedule and are on track for the second facility closure in Ohio to be completed in the first quarter of fiscal 2021. Importantly, we continue to make focused investments in innovation and expand our engineering capabilities.”

Third Quarter Fiscal 2020 Sales

($ in millions)

Q3 FY 20

 

Q3 FY 19

 

Change

 

% Change

Net sales

$

 

199.4

 

 

$

 

217.4

 

 

$

 

(18.1

)

 

(8.3

)%

 

 

 

 

 

 

 

 

U.S. sales

$

 

108.4

 

 

$

 

116.0

 

 

$

 

(7.6

)

 

(6.6

)%

% of total

 

54

%

 

 

53

%

 

 

 

 

Non-U.S. sales

$

 

91.0

 

 

$

 

101.4

 

 

$

 

(10.4

)

 

(10.3

)%

% of total

 

46

%

 

 

47

%

 

 

 

 

Of the $18.1 million decline in revenue, $9.0 million, or 50%, was related to divestitures from the prior-year period. Foreign currency translation also had a $1.7 million, or 0.8%, negative impact on sales. Sales in the U.S. were down $7.6 million, of which $4.9 million was related to divestitures in the prior-year period. Sales outside the U.S., adjusted for foreign currency translation, were down $8.7 million, of which $4.1 million was related to divestitures in the prior-year period. Improved pricing was offset by volume declines in all regions, except the Asia Pacific market, which had the benefit of a rail project in the period.

Third Quarter Fiscal 2020 Operating Results

($ in millions)

Q3 FY 20

 

Q3 FY 19

 

Change

 

% Change

Gross profit

$

 

67.9

 

 

$

 

73.4

 

 

$

 

(5.5

)

 

(7.5

)%

Gross margin

 

34.0

%

 

 

33.8

%

 

20 bps

 

 

Income from operations

$

 

20.9

 

 

$

 

6.6

 

 

$

 

14.2

 

 

214.3

%

Operating margin

 

10.5

%

 

 

3.1

%

 

740 bps

 

 

Net income

$

 

15.3

 

 

$

 

(0.8

)

 

$

 

16.0

 

 

NM

Diluted EPS

$

 

0.63

 

 

$

 

(0.03

)

 

$

 

0.66

 

 

NM

Adjusted EBITDA *

$

 

30.4

 

 

$

 

30.8

 

 

$

 

(0.4

)

 

(1.3

)%

Adjusted EBITDA margin

 

15.2

%

 

 

14.2

%

 

100 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).

Strategic pricing and other benefits from the 80/20 Process helped to offset headwinds, including lower volume and related under absorption of factory fixed costs, as well as higher medical costs. This contributed to the 20 basis point improvement in gross margin. For more information on changes in gross profit, please see the table on page 8 of this release. Adjusted income from operations was $23.1 million, up $0.2 million, or 1.1%, compared with the third quarter of fiscal 2019. Adjusted operating margin expanded 110 basis points from the impact of the 80/20 Process. (See the reconciliation of GAAP income from operations to adjusted income from operations on page 11 of this release.)

Adjusted EBITDA margin was 15.2% for the quarter, an expansion of 100 basis points over the prior-year period. (See the reconciliation of GAAP net income to adjusted EBITDA on page 13 of this release.)

Fourth Quarter Fiscal 2020 Outlook

As has been well noted, macroeconomic conditions for industrial companies have slowed. While the Company’s third quarter orders and backlog were indicative of these conditions, the Company believes the Blueprint for Growth strategy is effective in all economic environments. Columbus McKinnon expects that the benefits 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 fourth quarter of fiscal year 2020 to be approximately $196 million to $201 million, down about 5% to 7% compared with revenue of approximately $210 million in the prior-year period (excluding divestitures and adjusted for foreign currency translation at current rates).

Teleconference/webcast

Columbus McKinnon will host a conference call and live webcast Tuesday, February 4, 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 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 13697631. The telephonic replay will be available from 1:00 PM Eastern Time on the day of the call through Tuesday, February 11, 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 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.

 

COLUMBUS McKINNON CORPORATION

Condensed Consolidated Income Statements - UNAUDITED

(In thousands, except per share and percentage data)

 

 

 

Three Months Ended

 

 

 

 

December 31,
2019

 

December 31,
2018

 

Change

Net sales

 

$

 

199,355

 

 

$

 

217,415

 

 

(8.3

)%

Cost of products sold

 

 

131,483

 

 

 

144,010

 

 

(8.7

)%

Gross profit

 

 

67,872

 

 

 

73,405

 

 

(7.5

)%

Gross profit margin

 

 

34.0

%

 

 

33.8

%

 

 

Selling expenses

 

 

23,169

 

 

 

23,858

 

 

(2.9

)%

% of net sales

 

 

11.6

%

 

 

11.0

%

 

 

General and administrative expenses

 

 

17,960

 

 

 

20,379

 

 

(11.9

)%

% of net sales

 

 

9.0

%

 

 

9.4

%

 

 

Research and development expenses

 

 

2,628

 

 

 

3,271

 

 

(19.7

)%

% of net sales

 

 

1.3

%

 

 

1.5

%

 

 

Net loss on sales of businesses, including impairment

 

 

 

 

15,550

 

 

NM

Amortization of intangibles

 

 

3,229

 

 

 

3,701

 

 

(12.8

)%

Income from operations

 

 

20,886

 

 

 

6,646

 

 

214.3

%

Operating margin

 

 

10.5

%

 

 

3.1

%

 

 

Interest and debt expense

 

 

3,423

 

 

 

4,330

 

 

(20.9

)%

Investment (income) loss

 

 

(408

)

 

 

82

 

 

NM

Foreign currency exchange (gain) loss

 

 

188

 

 

 

(25

)

 

NM

Other (income) expense, net

 

 

199

 

 

 

(70

)

 

NM

Income before income tax expense

 

 

17,484

 

 

 

2,329

 

 

650.7

%

Income tax expense

 

 

2,234

 

 

 

3,111

 

 

(28.2

)%

Net income (loss)

 

$

 

15,250

 

 

$

 

(782

)

 

NM

 

 

 

 

 

 

 

Average basic shares outstanding

 

 

23,679

 

 

 

23,348

 

 

1.4

%

Basic income (loss) per share

 

$

 

0.64

 

 

$

 

(0.03

)

 

NM

 

 

 

 

 

 

 

Average diluted shares outstanding

 

 

24,031

 

 

 

23,348

 

 

2.9

%

Diluted income (loss) per share

 

$

 

0.63

 

 

$

 

(0.03

)

 

NM

 

 

 

 

 

 

 

Dividends declared per common share

 

$

 

0.06

 

 

$

 

0.05

 

 

 

 

COLUMBUS McKINNON CORPORATION

Condensed Consolidated Income Statements - UNAUDITED

(In thousands, except per share and percentage data)

 

 

 

Nine Months Ended

 

 

 

 

December 31,
2019

 

December 31,
2018

 

Change

Net sales

 

$

 

619,676

 

 

$

 

659,549

 

 

(6.0

)%

Cost of products sold

 

 

402,699

 

 

 

430,597

 

 

(6.5

)%

Gross profit

 

 

216,977

 

 

 

228,952

 

 

(5.2

)%

Gross profit margin

 

 

35.0

%

 

 

34.7

%

 

 

Selling expenses

 

 

68,801

 

 

 

73,940

 

 

(7.0

)%

% of net sales

 

 

11.1

%

 

 

11.2

%

 

 

General and administrative expenses

 

 

56,713

 

 

 

61,893

 

 

(8.4

)%

% of net sales

 

 

9.2

%

 

 

9.4

%

 

 

Research and development expenses

 

 

8,419

 

 

 

10,137

 

 

(16.9

)%

% of net sales

 

 

1.4

%

 

 

1.5

%

 

 

Net loss on sales of businesses, including impairment

 

 

176

 

 

 

26,650

 

 

(99.3

)%

Amortization of intangibles

 

 

9,708

 

 

 

11,358

 

 

(14.5

)%

Income from operations

 

 

73,160

 

 

 

44,974

 

 

62.7

%

Operating margin

 

 

11.8

%

 

 

6.8

%

 

 

Interest and debt expense

 

 

11,034

 

 

 

13,185

 

 

(16.3

)%

Investment (income) loss

 

 

(939

)

 

 

(297

)

 

216.2

%

Foreign currency exchange (gain) loss

 

 

(518

)

 

 

206

 

 

NM

Other (income) expense, net

 

 

618

 

 

 

(417

)

 

NM

Income before income tax expense

 

 

62,965

 

 

 

32,297

 

 

95.0

%

Income tax expense

 

 

12,537

 

 

 

9,461

 

 

32.5

%

Net income

 

$

 

50,428

 

 

$

 

22,836

 

 

120.8

%

 

 

 

 

 

 

 

Average basic shares outstanding

 

 

23,581

 

 

 

23,245

 

 

1.4

%

Basic income per share

 

$

 

2.14

 

 

$

 

0.98

 

 

118.4

%

 

 

 

 

 

 

 

Average diluted shares outstanding

 

 

23,925

 

 

 

23,647

 

 

1.2

%

Diluted income per share

 

$

 

2.11

 

 

$

 

0.97

 

 

117.5

%

 

 

 

 

 

 

 

Dividends declared per common share

 

$

 

0.12

 

 

$

 

0.10

 

 

 

 

COLUMBUS McKINNON CORPORATION

Condensed Consolidated Balance Sheets

(In thousands)

 

 

 

December 31, 2019

 

March 31, 2019

 

 

(unaudited)

 

 

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

 

84,014

 

 

$

 

71,093

 

Trade accounts receivable

 

 

125,386

 

 

 

129,157

 

Inventories

 

 

135,449

 

 

 

146,263

 

Prepaid expenses and other

 

 

16,890

 

 

 

16,075

 

Total current assets

 

 

361,739

 

 

 

362,588

 

 

 

 

 

 

Property, plant, and equipment, net

 

 

81,117

 

 

 

87,303

 

Goodwill

 

 

322,766

 

 

 

322,816

 

Other intangibles, net

 

 

223,206

 

 

 

232,940

 

Marketable securities

 

 

7,370

 

 

 

7,028

 

Deferred taxes on income

 

 

25,117

 

 

 

27,707

 

Other assets

 

 

58,544

 

 

 

21,189

 

Total assets

 

$

 

1,079,859

 

 

$

 

1,061,571

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Trade accounts payable

 

$

 

46,317

 

 

$

 

46,974

 

Accrued liabilities

 

 

94,205

 

 

 

99,304

 

Current portion of long-term debt

 

 

65,000

 

 

 

65,000

 

Total current liabilities

 

 

205,522

 

 

 

211,278

 

 

 

 

 

 

Term loan and revolving credit facility

 

 

186,893

 

 

 

235,320

 

Other non-current liabilities

 

 

203,078

 

 

 

183,814

 

Total liabilities

 

 

595,493

 

 

 

630,412

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

Common stock

 

 

237

 

 

 

234

 

Additional paid-in capital

 

 

284,842

 

 

 

277,518

 

Retained earnings

 

 

284,047

 

 

 

236,459

 

Accumulated other comprehensive loss

 

 

(84,760

)

 

 

(83,052

)

Total shareholders’ equity

 

 

484,366

 

 

 

431,159

 

Total liabilities and shareholders’ equity

 

$

 

1,079,859

 

 

$

 

1,061,571

 

 

COLUMBUS McKINNON CORPORATION

Condensed Consolidated Statements of Cash Flows - UNAUDITED

(In thousands)

 

 

 

Nine Months Ended

 

 

December 31,
2019

 

December 31,
2018

Operating activities:

 

 

 

 

Net income

 

$

 

50,428

 

 

$

 

22,836

 

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

 

 

 

 

Depreciation and amortization

 

 

21,991

 

 

 

24,763

 

Deferred income taxes and related valuation allowance

 

 

1,247

 

 

 

(2,353

)

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

 

 

(602

)

 

 

109

 

Stock based compensation

 

 

3,510

 

 

 

4,625

 

Amortization of deferred financing costs

 

 

1,782

 

 

 

1,992

 

Net loss on sales of businesses, including impairment

 

 

176

 

 

 

26,650

 

Non-cash lease expense

 

 

6,136

 

 

 

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

 

 

 

 

Trade accounts receivable

 

 

3,989

 

 

 

(1,407

)

Inventories

 

 

10,870

 

 

 

(13,043

)

Prepaid expenses and other

 

 

(3,224

)

 

 

(103

)

Other assets

 

 

726

 

 

 

232

 

Trade accounts payable

 

 

(3,013

)

 

 

(5,330

)

Accrued liabilities

 

 

(11,458

)

 

 

3,558

 

Non-current liabilities

 

 

(12,306

)

 

 

(8,733

)

Net cash provided by (used for) operating activities

 

 

70,252

 

 

 

53,796

 

 

 

 

 

 

Investing activities:

 

 

 

 

Proceeds from sales of marketable securities

 

 

4,908

 

 

 

1,238

 

Purchases of marketable securities

 

 

(4,961

)

 

 

(835

)

Capital expenditures

 

 

(6,761

)

 

 

(7,236

)

Proceeds from sale of equipment and real estate

 

 

51

 

 

 

176

 

Net (payments) proceeds from sales of businesses

 

 

(214

)

 

 

5,103

 

Payment of restricted cash to former owner

 

 

 

 

(294

)

Net cash provided by (used for) investing activities

 

 

(6,977

)

 

 

(1,848

)

 

 

 

 

 

Financing activities:

 

 

 

 

Proceeds from the issuance of common stock

 

 

4,457

 

 

 

3,708

 

Repayment of debt

 

 

(50,000

)

 

 

(50,051

)

Payment of dividends

 

 

(4,245

)

 

 

(3,484

)

Other

 

 

(643

)

 

 

(1,941

)

Net cash provided by (used for) financing activities

 

 

(50,431

)

 

 

(51,768

)

 

 

 

 

 

Effect of exchange rate changes on cash

 

 

77

 

 

 

(5,416

)

 

 

 

 

 

Net change in cash and cash equivalents

 

 

12,921

 

 

 

(5,236

)

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

 

 

71,343

 

 

 

63,565

 

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

 

$

 

84,264

 

 

$

 

58,329

 

 

COLUMBUS McKINNON CORPORATION

Q3 FY 2020 Sales Bridge

 

 

 

Quarter

 

Year To Date

($ in millions)

 

$ Change

 

% Change

 

$ Change

 

% Change

Fiscal 2019 Sales

 

$

 

217.4

 

 

 

 

$

 

659.5

 

 

 

Divestitures

 

 

(9.0

)

 

 

 

 

(29.3

)

 

 

Fiscal 2019 Sales adjusted for
divestitures

 

$

 

208.4

 

 

 

 

$

 

630.2

 

 

 

 

 

 

 

 

 

 

 

 

Volume

 

 

(10.6

)

 

(5.2

)%

 

 

(10.0

)

 

(1.6

)%

Pricing

 

 

3.3

 

 

1.6

%

 

 

10.3

 

 

1.6

%

Foreign currency translation

 

 

(1.7

)

 

(0.8

)%

 

 

(10.8

)

 

(1.7

)%

Total change adjusted for
divestitures

 

$

 

(9.0

)

 

(4.4

)%

 

$

 

(10.5

)

 

(1.7

)%

Fiscal 2020 Sales

 

$

 

199.4

 

 

 

 

$

 

619.7

 

 

 

 

COLUMBUS McKINNON CORPORATION

Q3 FY 2020 Gross Profit Bridge

 

($ in millions)

Quarter

 

Year To Date

Fiscal 2019 Gross Profit

$

 

73.4

 

 

$

 

229.0

 

Divestitures

 

(2.0

)

 

 

(6.1

)

Fiscal 2019 Gross Profit adjusted for divestitures

 

71.4

 

 

 

222.9

 

Pricing, net of material cost inflation

 

2.8

 

 

 

7.9

 

Insurance settlement

 

0.1

 

 

 

0.4

 

Business realignment costs

 

(0.1

)

 

 

Product liability

 

(0.1

)

 

 

(0.3

)

Tariffs

 

0.1

 

 

 

(1.2

)

Factory closures

 

(0.5

)

 

 

(1.3

)

Productivity, net of other cost changes

 

(2.2

)

 

 

(1.9

)

Foreign currency translation

 

(0.6

)

 

 

(3.7

)

Sales volume and mix

 

(3.0

)

 

 

(5.8

)

Total change adjusted for divestitures

$

 

(3.5

)

 

$

 

(5.9

)

Fiscal 2020 Gross Profit

$

 

67.9

 

 

$

 

217.0

 

 

COLUMBUS McKINNON CORPORATION

Additional Data - UNAUDITED

 

 

 

December 31,
2019

 

September 30,
2019

 

December 31,
2018

($ in millions)

 

 

 

 

 

 

 

 

 

Backlog

 

$

 

125.3

 

 

 

$

 

143.1

 

 

 

$

 

159.9

 

 

Backlog excluding divestitures

 

$

 

125.3

 

 

 

$

 

143.1

 

 

 

$

 

154.4

 

 

Long-term backlog

 

 

 

 

 

 

 

 

 

Expected to ship beyond 3 months

 

$

 

51.3

 

 

 

$

 

53.9

 

 

 

$

 

55.1

 

 

Long-term backlog as % of total backlog

 

 

40.9

 

%

 

 

37.7

 

%

 

 

34.5

 

%

 

 

 

 

 

 

 

 

 

 

Trade accounts receivable

 

 

 

 

 

 

 

 

 

Days sales outstanding

 

 

57.2

 

days

 

 

57.0

 

days

 

 

52.3

 

days

 

 

 

 

 

 

 

 

 

 

Inventory turns per year

 

 

 

 

 

 

 

 

 

(based on cost of products sold)

 

 

3.9

 

turns

 

 

3.8

 

turns

 

 

3.8

 

turns

Days' inventory

 

 

94.0

 

days

 

 

96.9

 

days

 

 

96.1

 

days

 

 

 

 

 

 

 

 

 

 

Trade accounts payable

 

 

 

 

 

 

 

 

 

Days payables outstanding

 

 

32.1

 

days

 

 

33.2

 

days

 

 

25.4

 

days

 

 

 

 

 

 

 

 

 

 

Working capital as a % of sales (1)

 

 

16.5

 

%

 

 

17.2

 

%

 

 

17.9

 

%

 

 

 

 

 

 

 

 

 

 

Debt to total capitalization percentage

 

 

34.2

 

%

 

 

36.9

 

%

 

 

42.8

 

%

 

 

 

 

 

 

 

 

 

 

Debt, net of cash, to net total capitalization

 

 

25.7

 

%

 

 

30.1

 

%

 

 

37.9

 

%

(1) December 31, 2019 figure excludes Crane Equipment & Service, Inc. (CES) and Stahlhammer Bommern GmbH (STB), each of which were divested on February 28, 2019. September 30, 2019 figure excludes CES, STB, and the Tire Shredder business, which was divested on December 28, 2018. December 31, 2018 figure excludes the Tire Shredder business.

U.S. Shipping Days by Quarter

 

 

Q1

 

Q2

 

Q3

 

Q4

 

Total

FY 20

 

63

 

63

 

61

 

64

 

251

 

 

 

 

 

 

 

 

 

 

 

FY 19

 

64

 

63

 

60

 

63

 

250

 

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
December 31,

 

Year To Date
December 31,

 

2019

 

2018

 

2019

 

2018

Gross profit

$

 

67,872

 

 

$

 

73,405

 

 

$

 

216,977

 

 

$

 

228,952

 

Add back (deduct):

 

 

 

 

 

 

 

Factory closures

 

696

 

 

 

200

 

 

 

1,451

 

 

 

200

 

Business realignment costs

 

123

 

 

 

 

 

263

 

 

 

Insurance settlement

 

(77

)

 

 

 

 

(367

)

 

 

Non-GAAP adjusted gross profit

$

 

68,614

 

 

$

 

73,605

 

 

$

 

218,324

 

 

$

 

229,152

 

 

 

 

 

 

 

 

 

Sales

$

 

199,355

 

 

$

 

217,415

 

 

$

 

619,676

 

 

$

 

659,549

 

Adjusted gross margin

 

34.4

%

 

 

33.9

%

 

 

35.2

%

 

 

34.7

%

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
December 31,

 

Year To Date
December 31,

 

2019

 

2018

 

2019

 

2018

Income from operations

$

 

20,886

 

 

$

 

6,646

 

 

$

 

73,160

 

 

$

 

44,974

 

Add back (deduct):

 

 

 

 

 

 

 

Factory closures

 

1,592

 

 

 

200

 

 

 

3,089

 

 

 

200

 

Business realignment costs

 

662

 

 

 

 

 

1,075

 

 

 

1,906

 

Insurance recovery legal costs

 

66

 

 

 

491

 

 

 

425

 

 

 

1,150

 

Net loss on sales of businesses, including
impairment

 

 

 

15,550

 

 

 

176

 

 

 

26,650

 

Insurance settlement

 

(77

)

 

 

 

 

(367

)

 

 

Non-GAAP adjusted income from operations

$

 

23,129

 

 

$

 

22,887

 

 

$

 

77,558

 

 

$

 

74,880

 

 

 

 

 

 

 

 

 

Sales

$

 

199,355

 

 

$

 

217,415

 

 

$

 

619,676

 

 

$

 

659,549

 

Adjusted operating margin

 

11.6

%

 

 

10.5

%

 

 

12.5

%

 

 

11.4

%

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 (Loss) 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
December 31,

 

Year To Date
December 31,

 

2019

 

2018

 

2019

 

2018

Net income (loss)

$

 

15,250

 

 

$

 

(782

)

 

$

 

50,428

 

 

$

 

22,836

 

Add back (deduct):

 

 

 

 

 

 

 

Factory closures

 

1,592

 

 

 

200

 

 

 

3,089

 

 

 

200

 

Business realignment costs

 

662

 

 

 

 

 

1,075

 

 

 

1,906

 

Insurance recovery legal costs

 

66

 

 

 

491

 

 

 

425

 

 

 

1,150

 

Net loss on sales of businesses, including
impairment

 

 

 

15,550

 

 

 

176

 

 

 

26,650

 

Insurance settlement

 

(77

)

 

 

 

 

(367

)

 

 

Normalize tax rate to 22% (1)

 

(2,106

)

 

 

(974

)

 

 

(2,283

)

 

 

(4,224

)

Non-GAAP adjusted net income

$

 

15,387

 

 

$

 

14,485

 

 

$

 

52,543

 

 

$

 

48,518

 

 

 

 

 

 

 

 

 

Average diluted shares outstanding

 

24,031

 

 

 

23,681

 

 

 

23,925

 

 

 

23,647

 

 

 

 

 

 

 

 

 

Diluted income per share - GAAP

$

 

0.63

 

 

$

 

(0.03

)

 

$

 

2.11

 

 

$

 

0.97

 

 

 

 

 

 

 

 

 

Diluted income per share - Non-GAAP

$

 

0.64

 

 

$

 

0.61

 

 

$

 

2.20

 

 

$

 

2.05

 

(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 (Loss) to Non-GAAP Adjusted EBITDA

($ in thousands)

 

 

Three Months Ended
December 31,

 

Year To Date
December 31,

 

2019

 

2018

 

2019

 

2018

Net income (loss)

$

 

15,250

 

 

$

 

(782

)

 

$

 

50,428

 

 

$

 

22,836

 

Add back (deduct):

 

 

 

 

 

 

 

Income tax expense

 

2,234

 

 

 

3,111

 

 

 

12,537

 

 

 

9,461

 

Interest and debt expense

 

3,423

 

 

 

4,330

 

 

 

11,034

 

 

 

13,185

 

Investment (income) loss

 

(408

)

 

 

82

 

 

 

(939

)

 

 

(297

)

Foreign currency exchange (gain) loss

 

188

 

 

 

(25

)

 

 

(518

)

 

 

206

 

Other (income) expense, net

 

199

 

 

 

(70

)

 

 

618

 

 

 

(417

)

Depreciation and amortization expense

 

7,244

 

 

 

7,901

 

 

 

21,991

 

 

 

24,763

 

Factory closures

 

1,592

 

 

 

200

 

 

 

3,089

 

 

 

200

 

Business realignment costs

 

662

 

 

 

 

 

1,075

 

 

 

1,906

 

Insurance recovery legal costs

 

66

 

 

 

491

 

 

 

425

 

 

 

1,150

 

Net loss on sales of businesses, including
impairment

 

 

 

15,550

 

 

 

176

 

 

 

26,650

 

Insurance settlement

 

(77

)

 

 

 

 

(367

)

 

 

Non-GAAP adjusted EBITDA

$

 

30,373

 

 

$

 

30,788

 

 

$

 

99,549

 

 

$

 

99,643

 

 

 

 

 

 

 

 

 

Sales

$

 

199,355

 

 

$

 

217,415

 

 

$

 

619,676

 

 

$

 

659,549

 

Adjusted EBITDA margin

 

15.2

%

 

 

14.2

%

 

 

16.1

%

 

 

15.1

%

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.

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

Source: Columbus McKinnon Corporation

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