Columbus McKinnon Reports Financial Results for First Quarter Fiscal Year 2022

Rhea-AI Summary

Columbus McKinnon Corporation (CMCO) reported a strong start to fiscal year 2022 with first-quarter revenues reaching $213.5 million, up 53% year-over-year, driven by 24% organic growth. The Dorner Manufacturing acquisition contributed $34.2 million in sales. Gross margin expanded by 250 bps to 34.7%, with adjusted gross margin hitting a record 36.3%. Despite a net loss of $7.3 million, adjusted EPS surged to $0.69 from $0.17 the previous year. The company projects Q2 sales between $225 million and $230 million, supported by a record backlog.

Positive

• Revenue increased to $213.5 million, a 53% rise.
• Adjusted EPS grew to $0.69, up 305.9% from $0.17.
• Gross margin expanded by 250 bps to 34.7%.
• Operating margin improved to 5.0%, with adjusted operating margin at 11.1%.
• Record backlog and strong demand across all markets.

Negative

• Net loss of $7.3 million, compared to a $3.0 million loss in the prior year.
• Diluted EPS decreased to $0.27, worsening from $0.12.

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 first quarter, which ended June 30, 2021. Results include the addition of Dorner Manufacturing Corporation, which was acquired on April 7, 2021.

First Quarter Highlights (compared with prior year period)

• Revenue of $213.5 million up 53%, supported by organic growth of 24%
• Gross margin expanded 250 bps to 34.7%; Achieved record adjusted gross margin of 36.3% with incremental 80 bps contribution from Dorner acquisition
• Operating margin expanded 370 bps to 5.0%; Adjusted operating margin expanded
  750 bps to 11.1%
• Advancing Blueprint for Growth 2.0 strategy and focusing on growth initiatives

David Wilson, President and CEO of Columbus McKinnon, commented, “We had a very good start to fiscal 2022 delivering strong growth, expanding margins and achieving record backlog. We are encouraged by increasing demand in all markets. Importantly, we are also having success with our new products and customer solutions, as we continue to advance our Blueprint for Growth 2.0 strategy. Dorner, our new conveying solutions platform, is seeing strong demand and is outpacing expectations. We are working across the enterprise to drive growth initiatives as we pursue the many opportunities in front of us.”

First Quarter Fiscal 2022 Sales

($ in millions)	Q1 FY 22				Q1 FY 21				Change				% Change
Net sales	$	213.5			$	139.1			$	74.4			53.5	%
U.S. sales	$	124.5			$	74.7			$	49.8			66.7	%
% of total	58		%		54		%
Non-U.S. sales	$	89.0			$	64.4			$	24.6			38.2	%
% of total	42		%		46		%

For the quarter, sales increased $74.4 million, or 53.5%. The Dorner acquisition added $34.2 million in sales. In the U.S., volume improved $20.8 million, or 27.8%, and price improved $0.6 million, or 0.9%. U.S. sales related to the acquisition were $28.3 million. Outside the U.S., volume improved $10.5 million, or 16.4%, and price improved $1.3 million, or 2.0%. The Dorner acquisition added $5.9 million of sales outside the U.S. Foreign currency translation was favorable $6.9 million, or 5.0% of total sales.

First Quarter Fiscal 2022 Operating Results

($ in millions)	Q1 FY 22					Q1 FY 21					Change					% Change
Gross profit	$	74.1				$	44.8				$	29.3				65.3	%
Gross margin	34.7			%		32.2			%		250 bps
Income from operations	$	10.7				$	1.8				$	9.0				500.7	%
Operating margin	5.0			%		1.3			%		370 bps
Adjusted income from operations*	$	23.6				$	5.0				$	18.6				371.2	%
Adjusted operating margin*	11.1			%		3.6			%		750 bps
Net income (loss)	$	(7.3	)			$	(3.0	)			$	(4.3	)			NM
Net income (loss) margin	(3.4		)	%		(2.1		)	%		(130) bps
Diluted EPS	$	(0.27	)			$	(0.12	)			$	(0.15	)			NM
Adjusted EPS*	$	0.69				$	0.17				$	0.52				305.9	%
Adjusted EBITDA*	$	34.1				$	12.1				$	22.0				181.8	%
Adjusted EBITDA margin*	16.0			%		8.7			%		730 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 contributed $5.1 million in operating income excluding inventory step up expense of $3.0 million and acquisition deal costs of $1.0 million. Adjusted earnings per diluted share was $0.69 in the fiscal 2022 first quarter compared with $0.17 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.

Second Quarter Fiscal 2022 Outlook

The Company expects second quarter fiscal 2022 sales to be within a range of approximately $225 million to $230 million at current exchange rates.

Mr. Wilson concluded, “We are excited about the progress we are making and are increasingly encouraged by our potential over the longer term. With record backlog and increasing order trends, we expect to deliver a solid year of recovery even as we navigate the dynamic landscape of supply chain and staffing challenges. More importantly, we are making the investments necessary to execute on our strategy and implement the Columbus McKinnon Business System (“CMBS”) to drive further growth, enable scalability, improve our earnings power and achieve our goal of 19% adjusted EBITDA margin in fiscal 2023.”

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 412-317-6026. 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 10158268. The telephonic replay will be available from 1:00 PM Eastern Time on the day of the call through Thursday, August 5, 2021. 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 efficiently and ergonomically move, lift, position and secure 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 ability of the Company to integrate Dorner, the impact of supply chain and staffing challenges, the ability of the Company to achieve its Blueprint for Growth 2.0 strategy and execute CMBS; and the amount of integration costs and the Company’s efforts to reduce costs, maintain liquidity and generate cash, the Company’s ability to grow market share, the 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
		June 30, 2021					June 30, 2020					Change
Net sales		$	213,464				$	139,070				53.5		%
Cost of products sold		139,401					94,273					47.9		%
Gross profit		74,063					44,797					65.3		%
Gross profit margin		34.7			%		32.2			%
Selling expenses		23,482					18,695					25.6		%
% of net sales		11.0			%		13.4			%
General and administrative expenses		30,143					18,429					63.6		%
% of net sales		14.1			%		13.3			%
Research and development expenses		3,583					2,769					29.4		%
% of net sales		1.7			%		2.0			%
Amortization of intangibles		6,109					3,115					96.1		%
Income from operations		10,746					1,789					500.7		%
Operating margin		5.0			%		1.3			%
Interest and debt expense		5,812					3,188					82.3		%
Cost of debt refinancing		14,803					—					NM
Investment (income) loss		(433		)			(577		)			(25.0	)	%
Foreign currency exchange (gain) loss		94					84					11.9		%
Other (income) expense, net		250					3,026					(91.7	)	%
Income (loss) before income tax expense (benefit)		(9,780		)			(3,932		)			NM
Income tax expense (benefit)		(2,517		)			(963		)			NM
Net income (loss)		$	(7,263	)			$	(2,969	)			NM
Average basic shares outstanding		26,762					23,802					12.4		%
Basic income (loss) per share		$	(0.27	)			$	(0.12	)			NM
Average diluted shares outstanding		26,762					23,802					12.4		%
Diluted income (loss) per share		$	(0.27	)			$	(0.12	)			NM

COLUMBUS McKINNON CORPORATION Condensed Consolidated Balance Sheets (In thousands)
		June 30, 2021					March 31, 2021
		(unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	88,654				$	202,127
Trade accounts receivable		123,168					105,464
Inventories		138,658					111,488
Prepaid expenses and other		31,696					22,763
Total current assets		382,176					441,842
Property, plant, and equipment, net		99,597					74,753
Goodwill		621,939					331,176
Other intangibles, net		401,859					213,362
Marketable securities		10,072					7,968
Deferred taxes on income		1,160					20,080
Other assets		63,827					61,251
Total assets		$	1,580,630				$	1,150,432
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Trade accounts payable		$	71,570				$	68,593
Accrued liabilities		113,143					110,816
Current portion of long-term debt and finance lease obligations		60,501					4,450
Total current liabilities		245,214					183,859
Term loan and finance lease obligations		398,795					244,504
Other non-current liabilities		212,168					191,920
Total liabilities		856,177					620,283
Shareholders’ equity:
Common stock		284					240
Additional paid-in capital		495,541					296,093
Retained earnings		286,539					293,802
Accumulated other comprehensive loss		(57,911		)			(59,986		)
Total shareholders’ equity		724,453					530,149
Total liabilities and shareholders’ equity		$	1,580,630				$	1,150,432

COLUMBUS McKINNON CORPORATION Condensed Consolidated Statements of Cash Flows - UNAUDITED (In thousands)
		Three Months Ended
		June 30, 2021					June 30, 2020
Operating activities:
Net income (loss)		$	(7,263	)			$	(2,969	)
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:
Depreciation and amortization		10,467					7,081
Deferred income taxes and related valuation allowance		(245		)			(1,500		)
Net loss (gain) on sale of real estate, investments, and other		(391		)			(494		)
Stock based compensation		2,262					2,071
Amortization of deferred financing costs		471					665
Cost of debt refinancing		14,803					—
Non-cash pension settlement expense		—					2,722
Non-cash lease expense		1,989					1,876
Changes in operating assets and liabilities, net of effects of business acquisitions and divestitures:
Trade accounts receivable		2,043					27,955
Inventories		(10,802		)			3,924
Prepaid expenses and other		(5,714		)			(2,766		)
Other assets		35					(39		)
Trade accounts payable		(5,879		)			(18,248		)
Accrued liabilities		(5,945		)			(7,926		)
Non-current liabilities		(3,227		)			(2,836		)
Net cash provided by (used for) operating activities		(7,396		)			9,516
Investing activities:
Proceeds from sales of marketable securities		2,181					1,034
Purchases of marketable securities		(4,137		)			(880		)
Capital expenditures		(3,648		)			(1,088		)
Proceeds from sale of building, net of transaction costs		—					6,363
Proceeds from insurance reimbursement		482					—
Purchase of business, net of cash acquired		(475,311		)			—
Net cash provided by (used for) investing activities		(480,433		)			5,429
Financing activities:
Proceeds from issuance of common stock		290					185
Borrowings under line-of-credit agreements		—					25,000
Repayment of debt		(455,040		)			(1,112		)
Proceeds from issuance of long-term debt		650,000					—
Proceeds from equity offering		207,000					—
Fees related to debt and equity offering		(25,292		)			—
Payment of dividends		(1,439		)			(1,427		)
Other		(1,764		)			(927		)
Net cash provided by (used for) financing activities		373,755					21,719
Effect of exchange rate changes on cash		601					1,122
Net change in cash and cash equivalents		(113,473		)			37,786
Cash, cash equivalents, and restricted cash at beginning of year		202,377					114,700
Cash, cash equivalents, and restricted cash at end of period		$	88,904				$	152,486

COLUMBUS McKINNON CORPORATION Q1 FY 2022 Sales Bridge
		Quarter
($ in millions)		$ Change				% Change
Fiscal 2021 Sales		$	139.1
Acquisitions		34.2				24.6	%
Volume		31.3				22.5	%
Pricing		2.0				1.4	%
Foreign currency translation		6.9				5.0	%
Total change		$	74.4			53.5	%
Fiscal 2022 Sales		$	213.5

COLUMBUS McKINNON CORPORATION Q1 FY 2022 Gross Profit Bridge
($ in millions)	Quarter
Fiscal 2021 Gross Profit	$	44.8
Acquisition	14.0
Sales volume and mix	11.6
Productivity, net of other cost changes	2.9
Foreign currency translation	2.4
Prior year factory closure costs	1.9
Pricing, net of material cost inflation	0.7
Prior year business realignment costs	0.3
Acquisition integration costs	(0.5		)
Tariffs	(1.0		)
Acquisition inventory step-up expense	(3.0		)
Total change	29.3
Fiscal 2022 Gross Profit	$	74.1

					U.S. Shipping Days by Quarter
					Q1		Q2		Q3		Q4		Total
FY 22					63		64		61		63		251
FY 21					63		64		61		63		251

COLUMBUS McKINNON CORPORATION Additional Data - UNAUDITED
		June 30, 2021						March 31, 2021					June 30, 2020
($ in millions)
Backlog		$	247.4					$	171.7				$	130.7
Long-term backlog
Expected to ship beyond 3 months		$	107.3					$	68.0				$	52.8
Long-term backlog as % of total backlog		43.4				%		39.6			%		40.4			%
Trade accounts receivable
Days sales outstanding		52.5				days		51.5			days		63.1			days
Inventory turns per year
(based on cost of products sold)		4.0				turns		4.4			turns		3.0			turns
Days' inventory		90.8				days		83.3			days		120.6			days
Trade accounts payable
Days payables outstanding		52.4				days		58.7			days		44.4			days
Working capital as a % of sales		12.5				%		9.3			%		14.9			%
Net cash provided by (used for) operating activities		$	(7.4	)				$	26.9				$	9.5
Capital expenditures		$	3.6					$	6.4				$	1.1
Free cash flow (1)		$	(11.0	)				$	20.5				$	8.4
Debt to total capitalization percentage		38.8				%		32.0			%		37.1			%
Debt, net of cash, to net total capitalization		33.8				%		8.1			%		20.9			%

(1)		Free cash flow is defined as cash from operations less capital expenditures. Free cash flow 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 free cash flow, is important for investors and other readers of the Company’s financial statements.
		Components may not add due to rounding.

COLUMBUS McKINNON CORPORATION
Reconciliation of GAAP Gross Profit to Non-GAAP Adjusted Gross Profit
($ in thousands, except per share data)
	Three Months Ended June 30,
	2021				2020
GAAP gross profit	$	74,063			$	44,797
Add back (deduct):
Acquisition inventory step-up expense	2,981				—
Acquisition integration costs	521				—
Factory closures	—				1,928
Business realignment costs	—				329
Non-GAAP adjusted gross profit	$	77,565			$	47,054
Sales	$	213,464			$	139,070
Gross margin - GAAP	34.7		%		32.2		%
Adjusted gross margin - Non-GAAP	36.3		%		33.8		%

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
($ in thousands, except per share data)
	Three Months Ended June 30,
	2021				2020
GAAP income from operations	$	10,746			$	1,789
Add back (deduct):
Acquisition deal and integration costs	9,242				—
Acquisition inventory step-up expense	2,981				—
Business realignment costs	623				821
Factory closures	—				2,256
Insurance recovery legal costs	—				141
Non-GAAP adjusted income from operations	$	23,592			$	5,007
Sales	$	213,464			$	139,070
Operating margin - GAAP	5.0		%		1.3		%
Adjusted operating margin - Non-GAAP	11.1		%		3.6		%

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 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 June 30,
	2021					2020
GAAP net income (loss)	$	(7,263	)			$	(2,969	)
Add back (deduct):
Amortization of intangibles	6,109					3,115
Cost of debt refinancing	14,803					—
Acquisition deal and integration costs	9,242					—
Acquisition inventory step-up expense	2,981					—
Business realignment costs	623					821
Non-cash pension settlement expense	—					2,722
Factory closures	—					2,256
Insurance recovery legal costs	—					141
Normalize tax rate to 22% (1)	(7,792		)			(2,090		)
Non-GAAP adjusted net income	$	18,703				$	3,996
Average diluted shares outstanding	27,159					23,922
Diluted income (loss) per share - GAAP	$	(0.27	)			$	(0.12	)
Diluted income per share - Non-GAAP	$	0.69				$	0.17

(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, including amortization of intangible assets, and also adjusted for 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 with the measures 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. The Company believes that representing adjusted 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 CORPORATION
Reconciliation of GAAP Net Income to Non-GAAP Adjusted EBITDA
($ in thousands)
	Three Months Ended June 30,
	2021					2020
GAAP net income (loss)	$	(7,263	)			$	(2,969	)
Add back (deduct):
Income tax expense (benefit)	(2,517		)			(963		)
Interest and debt expense	5,812					3,188
Investment (income) loss	(433		)			(577		)
Foreign currency exchange (gain) loss	94					84
Other (income) expense, net	250					3,026
Depreciation and amortization expense	10,467					7,081
Cost of debt refinancing	14,803					—
Acquisition deal and integration costs	9,242					—
Acquisition inventory step-up expense	2,981					—
Business realignment costs	623					821
Factory closures	—					2,256
Insurance recovery legal costs	—					141
Non-GAAP adjusted EBITDA	$	34,059				$	12,088
Sales	$	213,464				$	139,070
Net income (loss) margin - GAAP	(3.4		)	%		(2.1		)	%
Adjusted EBITDA margin - Non-GAAP	16.0			%		8.7			%

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.

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FAQ

What were Columbus McKinnon's Q1 2022 earnings results?

Columbus McKinnon reported Q1 2022 revenues of $213.5 million, a 53% increase, with a net loss of $7.3 million and adjusted EPS of $0.69.

What is the revenue outlook for Columbus McKinnon in Q2 2022?

Columbus McKinnon expects Q2 2022 sales to range between $225 million and $230 million.

How did the Dorner acquisition impact Columbus McKinnon's financials?

The Dorner acquisition contributed $34.2 million in sales and $5.1 million in operating income during Q1 2022.

What margins did Columbus McKinnon achieve in Q1 2022?

Gross margin expanded to 34.7%, with an adjusted operating margin of 11.1%.