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Columbus McKinnon Reports Financial Results for Second Quarter Fiscal Year 2022

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BUFFALO, N.Y., October 28, 2021--(BUSINESS WIRE)--Columbus McKinnon Corporation (Nasdaq: CMCO), a leading designer, manufacturer and marketer of intelligent motion solutions for material handling, today announced financial results for its fiscal year 2022 second quarter, which ended September 30, 2021. Results include the addition of Dorner Manufacturing Corporation, which was acquired on April 7, 2021.

Second Quarter Highlights (compared with prior year period)

  • 42% revenue growth driven by strong volume, contribution of acquisition and strategic pricing

  • CMBS enables continued margin expansion resulting in record gross margin of 36.3%, up 80 basis points; record adjusted gross margin of 36.7% expanded 230 basis points

  • Strategic pricing more than offset material cost inflation pressure

  • Achieved net income of $15.2 million, or $0.53 per diluted share; adjusted earnings per diluted share was $0.74

  • Adjusted EBITDA was $36.0 million, or 16.1% of revenue up 270 basis points

  • Generated $25.3 million in cash from operations or $22.2 million in free cash flow1

David Wilson, President and CEO of Columbus McKinnon, commented, "Demand for our products remains strong as we execute our Blueprint for Growth 2.0 strategy. Our team has worked tirelessly to address supply chain challenges with agility and has overcome the impacts of rapid inflation with additional price increases. We believe the Columbus McKinnon Business System ("CMBS"), which provides the framework to scale the organization, is becoming more robust and enabling improved results. Also of note, the Dorner acquisition has provided a foundation to evolve our business model into higher growth, less cyclical industries as we continue to expand in the Life Sciences, E-Commerce and Consumer Packaging markets. We expect to leverage this platform to further transform our Company into a high value, intelligent motion enterprise."

1 Free cash flow is a non-GAAP measure defined as cash from operations less capital expenditures. See the accompanying discussion and reconciliation found in the Additional Data table in this release.

Second Quarter Fiscal 2022 Sales

($ in millions)

Q2 FY 22

Q2 FY 21

Change

% Change

Net sales

$

223.6

$

157.8

$

65.8

41.7

%

U.S. sales

$

130.7

$

84.7

$

46.0

54.3

%

% of total

58

%

54

%

Non-U.S. sales

$

92.9

$

73.1

$

19.8

27.1

%

% of total

42

%

46

%

For the quarter, sales increased $65.8 million, or 41.7%. The Dorner acquisition added $33.5 million in sales. In the U.S., volume improved $16.7 million, or 19.7%, and price improved $2.0 million, or 2.4%. U.S. sales related to the acquisition were $27.3 million. Outside the U.S., volume improved $9.7 million, or 13.3%, and price improved $2.0 million, or 2.7%. The Dorner acquisition added $6.3 million of sales outside the U.S. Foreign currency translation was favorable $1.9 million, or 1.2% of total sales.

Second Quarter Fiscal 2022 Operating Results

($ in millions)

Q2 FY 22

Q2 FY 21

Change

% Change

Gross profit

$

81.1

$

56.0

$

25.1

44.8

%

Gross margin

36.3

%

35.5

%

80 bps

Income from operations

$

23.7

$

15.8

$

7.8

49.6

%

Operating margin

10.6

%

10.0

%

60 bps

Adjusted income from operations*

$

25.5

$

14.0

$

11.5

81.9

%

Adjusted operating margin*

11.4

%

8.9

%

250 bps

Net income (loss)

$

15.2

$

(4.1)

$

19.3

NM

Net income (loss) margin

6.8

%

(2.6)

%

940 bps

Diluted EPS

$

0.53

$

(0.17)

$

0.70

NM

Adjusted EPS*

$

0.74

$

0.44

$

0.30

68.2

%

Adjusted EBITDA*

$

36.0

$

21.1

$

14.8

70.2

%

Adjusted EBITDA margin*

16.1

%

13.4

%

270 bps

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

Dorner added $3.4 million in adjusted operating income. Adjusted earnings per diluted share was $0.74 in the fiscal 2022 second quarter compared with $0.44 in the prior year. Adjusted EPS excludes amortization of intangible assets related to acquisitions. The Company believes this better represents its inherent earnings power and cash generation capability.

Third Quarter Fiscal 2022 Outlook

Columbus McKinnon expects third quarter fiscal 2022 sales of approximately $215 million at current exchange rates. This outlook includes the expectation that supply chain constraints continue and reflects typical seasonality, given holidays and fewer shipping days.

Teleconference/webcast

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

The conference call can be accessed by dialing 201-493-6780. The listen-only audio webcast can be monitored at investors.columbusmckinnon.com. To listen to the archived call, dial 412-317-6671 and enter the passcode 13723730. The telephonic replay will be available from 1:00 PM Eastern Time on the day of the call through Thursday, November 4. Alternatively, an archived webcast of the call can be found on the Company’s website. In addition, a transcript of the call will be posted to the website once available.

About Columbus McKinnon

Columbus McKinnon is a leading worldwide designer, manufacturer and marketer of intelligent motion solutions that moves the world forward and improves 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.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 supply chain challenges and inflation, the ability of the Company to scale the organization, achieve its Blueprint for Growth 2.0 strategy and execute CMBS; and the Company’s ability to achieve revenue expectations, global economic and business conditions, conditions affecting the industries served by the Company and its subsidiaries, the Company's customers and suppliers, competitor responses to the Company's products and services, the overall market acceptance of such products and services, the ability to expand into new markets and geographic regions, and other factors disclosed in the Company's periodic reports filed with the Securities and Exchange Commission. The Company assumes no obligation to update the forward-looking information contained in this release.

Financial tables follow.

COLUMBUS McKINNON CORPORATION

Condensed Consolidated Income Statements - UNAUDITED

(In thousands, except per share and percentage data)

Three Months Ended

September 30, 2021

September 30, 2020

Change

Net sales

$

223,635

$

157,790

41.7

%

Cost of products sold

142,500

101,765

40.0

%

Gross profit

81,135

56,025

44.8

%

Gross profit margin

36.3

%

35.5

%

Selling expenses

24,157

18,563

30.1

%

% of net sales

10.8

%

11.8

%

General and administrative expenses

23,208

15,554

49.2

%

% of net sales

10.4

%

9.9

%

Research and development expenses

3,825

2,896

32.1

%

% of net sales

1.7

%

1.8

%

Amortization of intangibles

6,285

3,192

96.9

%

Income from operations

23,660

15,820

49.6

%

Operating margin

10.6

%

10.0

%

Interest and debt expense

4,587

3,018

52.0

%

Investment (income) loss

(115)

(357)

(67.8)

%

Foreign currency exchange (gain) loss

441

397

11.1

%

Other (income) expense, net

(539)

16,911

NM

Income (loss) before income tax expense (benefit)

19,286

(4,149)

NM

Income tax expense (benefit)

4,083

(45)

NM

Net income (loss)

$

15,203

$

(4,104)

NM

Average basic shares outstanding

28,418

23,883

19.0

%

Basic income (loss) per share

$

0.53

$

(0.17)

NM

Average diluted shares outstanding

28,756

23,883

20.4

%

Diluted income (loss) per share

$

0.53

$

(0.17)

NM

Dividends declared per common share

$

0.06

$

0.06

COLUMBUS McKINNON CORPORATION

Condensed Consolidated Income Statements - UNAUDITED

(In thousands, except per share and percentage data)

Six Months Ended

September 30, 2021

September 30, 2020

Change

Net sales

$

437,099

$

296,860

47.2

%

Cost of products sold

281,901

196,038

43.8

%

Gross profit

155,198

100,822

53.9

%

Gross profit margin

35.5

%

34.0

%

Selling expenses

47,639

37,258

27.9

%

% of net sales

10.9

%

12.6

%

General and administrative expenses

53,351

33,983

57.0

%

% of net sales

12.2

%

11.4

%

Research and development expenses

7,408

5,665

30.8

%

% of net sales

1.7

%

1.9

%

Amortization of intangibles

12,394

6,307

96.5

%

Income from operations

34,406

17,609

95.4

%

Operating margin

7.9

%

5.9

%

Interest and debt expense

10,399

6,206

67.6

%

Cost of debt refinancing

14,803

NM

Investment (income) loss

(548)

(934)

(41.3)

%

Foreign currency exchange (gain) loss

535

481

11.2

%

Other (income) expense, net

(289)

19,937

NM

Income (loss) before income tax expense (benefit)

9,506

(8,081)

NM

Income tax expense (benefit)

1,566

(1,008)

NM

Net income (loss)

$

7,940

$

(7,073)

NM

Average basic shares outstanding

27,594

23,843

15.7

%

Basic income (loss) per share

$

0.29

$

(0.30)

NM

Average diluted shares outstanding

27,957

23,843

17.3

%

Diluted income (loss) per share

$

0.28

$

(0.30)

NM

Dividends declared per common share

$

0.06

$

0.06

COLUMBUS McKINNON CORPORATION

Condensed Consolidated Balance Sheets

(In thousands)

September 30, 2021

March 31, 2021

(unaudited)

ASSETS

Current assets:

Cash and cash equivalents

$

105,311

$

202,127

Trade accounts receivable

125,451

105,464

Inventories

147,925

111,488

Prepaid expenses and other

28,926

22,763

Total current assets

407,613

441,842

Property, plant, and equipment, net

97,117

74,753

Goodwill

615,329

331,176

Other intangibles, net

392,700

213,362

Marketable securities

10,072

7,968

Deferred taxes on income

1,960

20,080

Other assets

61,184

61,251

Total assets

$

1,585,975

$

1,150,432

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Trade accounts payable

$

71,458

$

68,593

Accrued liabilities

104,924

110,816

Current portion of long-term debt and finance lease obligations

60,515

4,450

Total current liabilities

236,897

183,859

Term loan and finance lease obligations

392,728

244,504

Other non-current liabilities

221,192

191,920

Total liabilities

850,817

620,283

Shareholders’ equity:

Common stock

284

240

Additional paid-in capital

499,758

296,093

Retained earnings

300,036

293,802

Accumulated other comprehensive loss

(64,920)

(59,986)

Total shareholders’ equity

735,158

530,149

Total liabilities and shareholders’ equity

$

1,585,975

$

1,150,432

COLUMBUS McKINNON CORPORATION

Condensed Consolidated Statements of Cash Flows - UNAUDITED

(In thousands)

Six Months Ended

September 30, 2021

September 30, 2020

Operating activities:

Net income (loss)

$

7,940

$

(7,073)

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

Depreciation and amortization

20,969

14,210

Deferred income taxes and related valuation allowance

(1,235)

(6,745)

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

(462)

(557)

Stock based compensation

5,504

3,989

Amortization of deferred financing costs

867

1,327

Cost of debt refinancing

14,803

Loss (gain) on hedging instruments

672

Non-cash pension settlement expense

19,046

Gain on sale of building

(375)

(2,638)

Non-cash lease expense

3,939

3,785

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

Trade accounts receivable

(1,709)

33,594

Inventories

(21,959)

18,987

Prepaid expenses and other

(2,779)

(1,627)

Other assets

42

570

Trade accounts payable

(6,274)

(20,078)

Accrued liabilities

1,908

(7,895)

Non-current liabilities

(3,909)

(1,952)

Net cash provided by (used for) operating activities

17,942

46,943

Investing activities:

Proceeds from sales of marketable securities

2,734

1,034

Purchases of marketable securities

(4,768)

(1,759)

Capital expenditures

(6,752)

(2,779)

Proceeds from sale of building, net of transaction costs

461

5,453

Proceeds from insurance reimbursement

482

Purchase of business, net of cash acquired

(472,954)

Dividend received from equity method investment

587

Net cash provided by (used for) investing activities

(480,797)

2,536

Financing activities:

Proceeds from issuance of common stock

1,412

429

Borrowings under line-of-credit agreements

25,000

Repayment of debt

(461,286)

(2,225)

Proceeds from issuance of long-term debt

650,000

Proceeds from equity offering

207,000

Fees related to debt and equity offering

(25,292)

(826)

Cash inflows from hedging activities

7,007

Cash outflows from hedging activities

(6,927)

Payment of dividends

(3,145)

(2,860)

Other

(1,909)

(982)

Net cash provided by (used for) financing activities

366,860

18,536

Effect of exchange rate changes on cash

(821)

4,091

Net change in cash and cash equivalents

(96,816)

72,106

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

202,377

114,700

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

$

105,561

$

186,806

COLUMBUS McKINNON CORPORATION

Q2 FY 2022 Sales Bridge

Quarter

Year To Date

($ in millions)

$ Change

% Change

$ Change

% Change

Fiscal 2021 Sales

$

157.8

$

296.9

Acquisitions

21.3

%

67.7

22.8

%

Volume

26.4

16.7

%

57.7

19.4

%

Pricing

4.0

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