CMCO

COLUMBUS MCKINNON CORP

Industrials | Small Cap

$0.70

EPS Forecast

$248.9

Revenue Forecast

The company already released most recent quarter's earnings. We will publish our AI's next quarter's forecast around 2024-12-31
EX-99.1 2 exhibit99102042020.htm EXHIBIT 99.1 Exhibit

cmcoa22.jpg 
EXHIBIT 99.1
News Release
 
205 Crosspoint Parkway
Buffalo, NY 14068
Immediate Release     
Columbus McKinnon Blueprint for Growth Strategy Drove Margin Expansion, Earnings Growth and Strong Cash Generation in Third Quarter Fiscal Year 2020

BUFFALO, NY, February 4, 2020 - 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.”


Columbus McKinnon Blueprint for Growth Strategy Drove Margin Expansion, Earnings Growth and Strong Cash Generation in Third Quarter Fiscal Year 2020
Page 2 of 13
February 4, 2020

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.)



Columbus McKinnon Blueprint for Growth Strategy Drove Margin Expansion, Earnings Growth and Strong Cash Generation in Third Quarter Fiscal Year 2020
Page 3 of 13
February 4, 2020

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.
Contacts:
Gregory P. Rustowicz
Investor Relations:
Vice President - Finance and Chief Financial Officer
Deborah K. Pawlowski
Columbus McKinnon Corporation
Kei Advisors LLC
716-689-5442
716-843-3908
greg.rustowicz@cmworks.com
dpawlowski@keiadvisors.com
Financial tables follow.



Columbus McKinnon Blueprint for Growth Strategy Drove Margin Expansion, Earnings Growth and Strong Cash Generation in Third Quarter Fiscal Year 2020
Page 4 of 13
February 4, 2020

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 Blueprint for Growth Strategy Drove Margin Expansion, Earnings Growth and Strong Cash Generation in Third Quarter Fiscal Year 2020
Page 5 of 13
February 4, 2020

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 Blueprint for Growth Strategy Drove Margin Expansion, Earnings Growth and Strong Cash Generation in Third Quarter Fiscal Year 2020
Page 6 of 13
February 4, 2020

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 Blueprint for Growth Strategy Drove Margin Expansion, Earnings Growth and Strong Cash Generation in Third Quarter Fiscal Year 2020
Page 7 of 13
February 4, 2020

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 Blueprint for Growth Strategy Drove Margin Expansion, Earnings Growth and Strong Cash Generation in Third Quarter Fiscal Year 2020
Page 8 of 13
February 4, 2020

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 Blueprint for Growth Strategy Drove Margin Expansion, Earnings Growth and Strong Cash Generation in Third Quarter Fiscal Year 2020
Page 9 of 13
February 4, 2020

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 Blueprint for Growth Strategy Drove Margin Expansion, Earnings Growth and Strong Cash Generation in Third Quarter Fiscal Year 2020
Page 10 of 13
February 4, 2020

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 Blueprint for Growth Strategy Drove Margin Expansion, Earnings Growth and Strong Cash Generation in Third Quarter Fiscal Year 2020
Page 11 of 13
February 4, 2020

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 Blueprint for Growth Strategy Drove Margin Expansion, Earnings Growth and Strong Cash Generation in Third Quarter Fiscal Year 2020
Page 12 of 13
February 4, 2020

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 Blueprint for Growth Strategy Drove Margin Expansion, Earnings Growth and Strong Cash Generation in Third Quarter Fiscal Year 2020
Page 13 of 13
February 4, 2020

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.