Columbus McKinnon Operating Income Increased 32% on 7% Sales Growth in Third Quarter Fiscal Year 2023

BUFFALO, N.Y., February 01, 2023--(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 2023 third quarter, which ended December 31, 2022. Results include the addition of Garvey Corporation, which was acquired on December 1, 2021.

Third Quarter Highlights (compared with prior year period)

• Sales were up 7% to $230.4 million driven by improved volume and pricing; up 11% on a constant currency basis

• Operating income increased 32% to $20.2 million on expanded gross margin and operating leverage driven by price, strong acquisition performance and higher volume

• Solid operating performance drove net income growth of 22% to $12.0 million, or $0.42 per diluted share; adjusted EPS for the quarter was $0.72

• Daily order rate up 3% sequentially to $215.0 million compared with the second quarter

• Backlog of $329.1 million reflects 28% reduction in past due orders in quarter

• Paid down $30.4 million in debt year-to-date; reduced net debt leverage ratio to 2.7x

David J. Wilson, President and CEO, commented, "We achieved solid sales growth as our team took steps to improve our customers’ experience through reductions in past due backlog and improvements in lead times. We were also very pleased with sales and orders in Europe, which have held up well under our new leadership structure. Encouragingly, operating income grew by 32% on 7% higher sales. Importantly, we further reduced debt by $10 million in the quarter in line with our current capital allocation priorities as we continue to strengthen our balance sheet."

He added, "We are transforming Columbus McKinnon into a leading motion control enterprise for material handling. Our strategy pursues expansion in secular growth markets while leveraging the broader benefits associated with the megatrends of supply chain automation, industrial productivity and regionalization. We are expanding our technology offerings and market reach through innovation while continually exploring opportunities to selectively acquire new capabilities. We expect the Columbus McKinnon Business System to provide the discipline and processes to execute our plan. We believe our actions are improving the business and we remain optimistic regarding our ability to achieve our long-term financial objectives."

Third Quarter Fiscal 2023 Sales

($ in millions)		Q3 FY 23				Q3 FY 22				Change			% Change
Net sales		$	230.4			$	216.1			$	14.3		6.6	%
U.S. sales		$	141.4			$	128.7			$	12.7		9.9	%
% of total			61	%			60	%
Non-U.S. sales		$	89.0			$	87.4			$	1.6		1.8	%
% of total			39	%			40	%

For the quarter, sales increased $14.3 million, or 6.6%. The acquisition contributed $4.9 million in sales, of which $4.5 million was in the U.S. In the U.S., price improved $7.5 million, or 5.8%, and volume increased $0.7 million, or 0.6%. Outside the U.S., increased volume of $5.1 million, or 5.9%, price improvement of $4.4 million, or 5.1%, and $0.4 million of sales related to the acquisitions more than offset unfavorable foreign currency translation of $8.4M.

Third Quarter Fiscal 2023 Operating Results

($ in millions)		Q3 FY 23				Q3 FY 22				Change			% Change
Gross profit		$	82.0			$	75.1			$	6.9		9.3	%
Gross margin			35.6	%			34.7	%		90 bps
Adjusted gross profit*		$	82.0			$	79.6			$	2.4		3.0	%
Adjusted gross margin*			35.6	%			36.7	%		(110) bps
Income from operations		$	20.2			$	15.3			$	4.9		31.8	%
Operating margin			8.8	%			7.1	%		170 bps
Adjusted income from operations*		$	23.5			$	20.5			$	3.0		14.6	%
Adjusted operating margin*			10.2	%			9.5	%		70 bps
Net income (loss)		$	12.0			$	9.9			$	2.1		21.6	%
Net income (loss) margin			5.2	%			4.6	%		60 bps
Diluted EPS		$	0.42			$	0.34			$	0.08		23.5	%
Adjusted EPS*		$	0.72			$	0.60			$	0.12		20.0	%
Adjusted EBITDA*		$	34.0			$	30.7			$	3.3		10.7	%
Adjusted EBITDA margin*			14.7	%			14.2	%		50 bps

*Adjusted gross profit, adjusted gross margin, adjusted income from operations, 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.

Adjusted earnings per diluted share of $0.72 excludes amortization of intangible assets related to acquisitions. The Company believes this better represents its inherent earnings power and cash generation capability.

The Company paid down $10 million in long term debt in the quarter and used $1 million in cash to repurchase 31,085 shares at an average price of $32.17 per share.

Fourth Quarter Fiscal 2023 Outlook

Columbus McKinnon expects fourth quarter fiscal 2023 sales of approximately $240 million to $250 million at current exchange rates. At the mid-point of this guidance range, the growth rate for the full year of fiscal 2023 is expected to be approximately 6% on a constant currency basis.

Mr. Wilson concluded, "We are encouraged with our prospects as we enter our fourth quarter and advance the transformation of Columbus McKinnon. We have several initiatives underway that will improve our customers’ experience, strengthen our business, expand margins and drive further innovation. Importantly, we expect to continue delivering year-over-year growth despite a slowing economic environment as we advance our strategy to achieve our long-term financial objectives."

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 conference ID number 13735008. The telephonic replay will be available from 1:00 PM Eastern Time on the day of the call through Wednesday, February 8, 2023. Alternatively, an archived webcast of the call can be found on the Company’s website and a transcript of the call will be posted there once available.

About Columbus McKinnon

Columbus McKinnon is a leading worldwide designer, manufacturer and marketer of intelligent motion solutions that move the world forward and improve lives by efficiently and ergonomically moving, lifting, positioning and securing materials. Key products include hoists, crane components, precision conveyor systems, rigging tools, light rail workstations and digital power and motion control systems. The Company is focused on commercial and industrial applications that require the safety and quality provided by its superior design and engineering know-how. Comprehensive information on Columbus McKinnon is available at www.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 expected growth, future sales and EBITDA margins, and future potential to deliver results; the execution of its strategy and further transformation of the Company with stronger growth, less cyclicality and higher margins, and achievement of certain goals. These statements 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 financial targets including revenue and adjusted EBITDA margin, and to execute CMBS and the Core Growth Framework; global economic and business conditions affecting the industries served by the Company and its subsidiaries including COVID-19; 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. Consequently, such forward-looking statements should be regarded as current plans, estimates and beliefs. 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, 2022				December 31, 2021				Change
Net sales		$	230,370			$	216,088			6.6	%
Cost of products sold			148,326				141,031			5.2	%
Gross profit			82,044				75,057			9.3	%
Gross profit margin			35.6	%			34.7	%
Selling expenses			25,424				24,468			3.9	%
% of net sales			11.0	%			11.3	%
General and administrative expenses			25,143				25,144			—	%
% of net sales			10.9	%			11.6	%
Research and development expenses			4,839				3,875			24.9	%
% of net sales			2.1	%			1.8	%
Amortization of intangibles			6,459				6,254			3.3	%
Income from operations		$	20,179			$	15,316			31.8	%
Operating margin			8.8	%			7.1	%
Interest and debt expense			7,303				4,375			66.9	%
Investment (income) loss			(574	)			(76	)		655.3	%
Foreign currency exchange (gain) loss			(3,359	)			512			(756.1	)%
Other (income) expense, net			79				(455	)		(117.4	)%
Income (loss) before income tax expense (benefit)		$	16,730				10,960			52.6	%
Income tax expense (benefit)			4,701				1,066			341.0	%
Net income (loss)		$	12,029			$	9,894			21.6	%
Average basic shares outstanding			28,626				28,469			0.6	%
Basic income (loss) per share		$	0.42			$	0.35			20.0	%
Average diluted shares outstanding			28,778				28,840			(0.2	)%
Diluted income (loss) per share		$	0.42			$	0.34			23.5	%
Dividends declared per common share		$	0.07			$	0.06

COLUMBUS McKINNON CORPORATION Condensed Consolidated Income Statements - UNAUDITED (In thousands, except per share and percentage data)
		Nine Months Ended
		December 31, 2022				December 31, 2021				Change
Net sales		$	682,397			$	653,187			4.5	%
Cost of products sold			431,516				422,932			2.0	%
Gross profit			250,881				230,255			9.0	%
Gross profit margin			36.8	%			35.3	%
Selling expenses			77,197				72,107			7.1	%
% of net sales			11.3	%			11.0	%
General and administrative expenses			68,441				78,495			(12.8	)%
% of net sales			10.0	%			12.0	%
Research and development expenses			15,429				11,283			36.7	%
% of net sales			2.3	%			1.7	%
Amortization of intangibles			19,442				18,648			4.3	%
Income from operations			70,372				49,722			41.5	%
Operating margin			10.3	%			7.6	%
Interest and debt expense			20,274				14,774			37.2	%
Cost of debt refinancing			—				14,803			(100.0	)%
Investment (income) loss			168				(624	)		(126.9	)%
Foreign currency exchange (gain) loss			(1,152	)			1,047			(210.0	)%
Other (income) expense, net			(1,999	)			(744	)		168.7	%
Income (loss) before income tax expense (benefit)			53,081				20,466			159.4	%
Income tax expense (benefit)			18,547				2,632			604.7	%
Net income (loss)			34,534		...