Columbus mckinnon reports record gross margin of 37.5% for first quarter fiscal year 2023
Buffalo, n.y.--(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 first quarter, which ended june 30, 2022. results include the addition of garvey corporation, which was acquired on december 1, 2021. first quarter highlights (compared with prior year period) delivered revenue of $220 million, up 6.5% on a constant currency basis achieved record gross margin of 37.5% as columbus mckinnon business system (cmbs) enabled strong execution realized first quarter fiscal 2023 earnings per diluted share of $0.29 compared with a loss of $0.27 in prior-year; adjusted eps* was $0.69, unchanged from prior-year period continued strength in demand with orders up 11% on a constant currency basis driven by 10% growth in north america and 12% growth in emea maintained strong balance sheet; reduced debt an additional $10 million in quarter david wilson, president and ceo of columbus mckinnon, commented, “we had a strong start to the year with our first quarter results. i am proud of how our team executed to deliver growth and record gross margin while improving the business. the realignment of columbus mckinnon’s structure is enabling cost synergies and improved collaboration across the organization. in fact, our new regional leadership structure has created greater cross-functional engagement and is unlocking even more potential to deliver results in the face of current supply chain challenges, labor constraints and high inflation. encouragingly, we continue to see strong demand for our intelligent motion solutions across a breadth of markets. we are also well positioned financially to execute our strategy and further transform columbus mckinnon into a higher growth, less cyclical enterprise with expanded margins.” *adjusted eps is a non-gaap measure. see accompanying discussion and reconciliation tables in this release regarding the reconciliation of gaap financials to non-gaap measures. first quarter fiscal 2023 sales ($ in millions) q1 fy 23 q1 fy 22 change % change net sales $ 220.3 $ 213.5 $ 6.8 3.2 % u.s. sales $ 138.7 $ 124.5 $ 14.2 11.4 % % of total 63 % 58 % non-u.s. sales $ 81.6 $ 89.0 $ (7.4 ) (8.3 )% % of total 37 % 42 % for the quarter, sales increased $6.8 million, or 3.2%. the acquisition added $8.5 million in sales which helped to offset unfavorable foreign currency translation of $7.0 million, or 3.3% of total sales. in the u.s., volume improved $0.1 million, or 0.1%, and price improved $6.4 million, or 5.1%. u.s. sales related to the acquisition were $7.8 million. outside the u.s., price improvement of $3.2 million, or 3.6% helped to offset the $4.4 million, or 4.9%, decline in volume. the acquisition added $0.7 million of sales outside the u.s. first quarter fiscal 2023 operating results ($ in millions) q1 fy 23 q1 fy 22 change % change gross profit $ 82.5 $ 74.1 $ 8.5 11.4 % gross margin 37.5 % 34.7 % 280 bps adjusted gross profit* $ 82.5 $ 77.6 $ 5.0 6.4 % adjusted gross margin* 37.5 % 36.3 % 120 bps income from operations $ 22.8 $ 10.7 $ 12.1 112.3 % operating margin 10.4 % 5.0 % 540 bps adjusted income from operations* $ 24.6 $ 23.6 $ 1.0 4.1 % adjusted operating margin* 11.1 % 11.1 % 0 bps net income (loss) $ 8.4 $ (7.3 ) $ 15.7 nm net income (loss) margin 3.8 % (3.4 )% 720 bps diluted eps $ 0.29 $ (0.27 ) $ 0.56 nm adjusted eps* $ 0.69 $ 0.69 $ — — % adjusted ebitda* $ 35.0 $ 34.1 $ 1.0 2.8 % adjusted ebitda margin* 15.9 % 16.0 % (10) 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 were $0.69 in the fiscal 2023 first quarter unchanged from the prior-year period. 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 2023 outlook columbus mckinnon expects second quarter fiscal 2023 sales of approximately $230 million to $240 million at current exchange rates, a sequential increase in the mid-to-high single digits. mr. wilson concluded, “we are confident in our ability to deliver our plan as we continue to advance columbus mckinnon’s transformation. we are executing to meet our commitments and to achieve our goals of $1.5 billion in revenue and 21% adjusted ebitda margin in fiscal 2027.” 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 13730934. the telephonic replay will be available from 1:00 pm eastern time on the day of the call through thursday, august 4, 2022. 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 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 june 30, 2022 june 30, 2021 change net sales $ 220,287 $ 213,464 3.2 % cost of products sold 137,768 139,401 (1.2 )% gross profit 82,519 74,063 11.4 % gross profit margin 37.5 % 34.7 % selling expenses 26,156 23,482 11.4 % % of net sales 11.9 % 11.0 % general and administrative expenses 21,881 30,143 (27.4 )% % of net sales 9.9 % 14.1 % research and development expenses 5,130 3,583 43.2 % % of net sales 2.3 % 1.7 % amortization of intangibles 6,535 6,109 7.0 % income from operations 22,817 10,746 112.3 % operating margin 10.4 % 5.0 % interest and debt expense 6,203 5,812 6.7 % cost of debt refinancing — 14,803 (100.0 )% investment (income) loss 430 (433 ) nm foreign currency exchange (gain) loss 1,203 94 1,179.8 % other (income) expense, net (2,303 ) 250 nm income (loss) before income tax expense (benefit) 17,284 (9,780 ) nm income tax expense (benefit) 8,893 (2,517 ) nm net income (loss) $ 8,391 $ (7,263 ) nm average basic shares outstanding 28,544 26,762 6.7 % basic income (loss) per share $ 0.29 $ (0.27 ) nm average diluted shares outstanding 28,699 26,762 7.2 % diluted income (loss) per share $ 0.29 $ (0.27 ) nm columbus mckinnon corporation condensed consolidated balance sheets (in thousands) june 30, 2022 march 31, 2022 (unaudited) assets current assets: cash and cash equivalents $ 85,660 $ 115,390 trade accounts receivable 133,006 147,515 inventories 189,324 172,139 prepaid expenses and other 34,649 31,545 total current assets 442,639 466,589 property, plant, and equipment, net 95,651 97,926 goodwill 640,970 648,849 other intangibles, net 378,398 390,788 marketable securities 10,322 10,294 deferred taxes on income 2,147 2,313 other assets 64,602 68,948 total assets $ 1,634,729 $ 1,685,707 liabilities and shareholders’ equity current liabilities: trade accounts payable $ 73,867 $ 90,881 accrued liabilities 104,820 118,187 current portion of long-term debt and finance lease obligations 40,565 40,551 total current liabilities 219,252 249,619 term loan and finance lease obligations 460,762 470,675 other non-current liabilities 179,534 192,610 total liabilities 859,548 912,904 shareholders’ equity: common stock 286 285 additional paid-in capital 505,926 506,074 retained earnings 324,734 316,343 accumulated other comprehensive loss (55,765 ) (49,899 ) total shareholders’ equity 775,181 772,803 total liabilities and shareholders’ equity $ 1,634,729 $ 1,685,707 columbus mckinnon corporation condensed consolidated statements of cash flows - unaudited (in thousands) three months ended june 30, 2022 june 30, 2021 operating activities: net income (loss) $ 8,391 $ (7,263 ) adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: depreciation and amortization 10,469 10,467 deferred income taxes and related valuation allowance 1,272 (245 ) net loss (gain) on sale of real estate, investments, and other 485 (391 ) stock-based compensation 751 2,262 amortization of deferred financing costs 430 471 cost of debt refinancing — 14,803 loss (gain) on hedging instruments (192 ) — loss on retirement of fixed asset 173 — non-cash lease expense 2,139 1,989 changes in operating assets and liabilities, net of effects of business acquisitions: trade accounts receivable 11,265 2,043 inventories (21,467 ) (10,802 ) prepaid expenses and other 359 (5,714 ) other assets (143 ) 35 trade accounts payable (15,720 ) (5,879 ) accrued liabilities (6,938 ) (5,945 ) non-current liabilities (2,451 ) (3,227 ) net cash provided by (used for) operating activities (11,177 ) (7,396 ) investing activities: proceeds from sales of marketable securities 650 2,181 purchases of marketable securities (1,226 ) (4,137 ) capital expenditures (2,953 ) (3,648 ) proceeds from insurance reimbursement — 482 purchases of businesses, net of cash acquired (1,616 ) (475,311 ) dividend received from equity method investment 313 — net cash provided by (used for) investing activities (4,832 ) (480,433 ) financing activities: proceeds from issuance of common stock 415 290 repayment of debt (10,128 ) (455,040 ) proceeds from issuance of long-term debt — 650,000 proceeds from equity offering — 207,000 fees related to debt and equity offering — (25,292 ) cash inflows from hedging activities 6,163 — cash outflows from hedging activities (6,022 ) — payment of dividends (1,996 ) (1,439 ) other (1,313 ) (1,764 ) net cash provided by (used for) financing activities (12,881 ) 373,755 effect of exchange rate changes on cash (840 ) 601 net change in cash and cash equivalents (29,730 ) (113,473 ) cash, cash equivalents, and restricted cash at beginning of year 115,640 202,377 cash, cash equivalents, and restricted cash at end of period $ 85,910 $ 88,904 columbus mckinnon corporation q1 fy 2023 sales bridge quarter ($ in millions) $ change % change fiscal 2022 sales $ 213.5 acquisition 8.5 4.0 % volume (4.3 ) (2.0 )% pricing 9.6 4.5 % foreign currency translation (7.0 ) (3.3 )% total change $ 6.8 3.2 % fiscal 2023 sales $ 220.3 columbus mckinnon corporation q1 fy 2023 gross profit bridge ($ in millions) quarter fiscal 2022 gross profit $ 74.1 acquisition 3.1 price, net of material cost inflation 3.1 prior year acquisition inventory step-up expense 3.0 sales volume and mix 1.0 prior year acquisition integration costs 0.5 tariffs 0.1 productivity, net of other cost changes 0.1 foreign currency translation (2.5 ) total change 8.4 fiscal 2023 gross profit $ 82.5 u.s. shipping days by quarter q1 q2 q3 q4 total fy 23 63 64 60 63 250 fy 22 63 64 61 63 251 columbus mckinnon corporation additional data - unaudited june 30, 2022 march 31, 2022 june 30, 2021 ($ in millions) backlog $ 351.6 $ 309.1 $ 247.4 long-term backlog expected to ship beyond 3 months $ 162.8 $ 135.2 $ 107.3 long-term backlog as % of total backlog 46.3 % 43.7 % 43.4 % trade accounts receivable days sales outstanding 54.9 days 53.0 days 52.5 days inventory turns per year (based on cost of products sold) 2.9 turns 3.9 turns 4.0 turns days' inventory 125.4 days 93.6 days 90.8 days trade accounts payable days payables outstanding 58.6 days 58.7 days 52.4 days working capital as a % of sales (2) 19.9 % 15.5 % 12.5 % net cash provided by (used for) operating activities $ (11.2 ) $ 25.2 $ (7.4 ) capital expenditures $ 3.0 $ 3.6 $ 3.6 free cash flow (1) $ (14.1 ) $ 21.6 $ (11.0 ) debt to total capitalization percentage 39.3 % 39.8 % 38.8 % debt, net of cash, to net total capitalization 34.9 % 33.9 % 33.8 % components may not add due to rounding. (2) june 30, 2022 and march 31, 2022 figures exclude the impact of the acquisition of garvey. june 30, 2021 figure excludes the impact of the acquisition of dorner. columbus mckinnon corporation reconciliation of gaap gross profit to non-gaap adjusted gross profit ($ in thousands) three months ended june 30, 2022 2021 gaap gross profit $ 82,519 $ 74,063 add back (deduct): acquisition inventory step-up expense — 2,981 acquisition integration costs — 521 non-gaap adjusted gross profit $ 82,519 $ 77,565 sales $ 220,287 $ 213,464 gross margin - gaap 37.5 % 34.7 % adjusted gross margin - non-gaap 37.5 % 36.3 % 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) three months ended june 30, 2022 2021 gaap income from operations $ 22,817 $ 10,746 add back (deduct): business realignment costs 1,657 623 acquisition deal and integration costs 86 9,242 acquisition inventory step-up expense — 2,981 non-gaap adjusted income from operations $ 24,560 $ 23,592 sales $ 220,287 $ 213,464 operating margin - gaap 10.4 % 5.0 % adjusted operating margin - non-gaap 11.1 % 11.1 % 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, 2022 2021 gaap net income (loss) $ 8,391 $ (7,263 ) add back (deduct): amortization of intangibles 6,535 6,109 business realignment costs 1,657 623 acquisition deal and integration costs 86 9,242 cost of debt refinancing — 14,803 acquisition inventory step-up expense — 2,981 normalize tax rate to 22% (1) 3,269 (7,792 ) non-gaap adjusted net income $ 19,938 $ 18,703 average diluted shares outstanding 28,699 27,159 diluted income (loss) per share - gaap $ 0.29 $ (0.27 ) diluted income per share - non-gaap $ 0.69 $ 0.69 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, 2022 2021 gaap net income (loss) $ 8,391 $ (7,263 ) add back (deduct): income tax expense (benefit) 8,893 (2,517 ) interest and debt expense 6,203 5,812 investment (income) loss 430 (433 ) foreign currency exchange (gain) loss 1,203 94 other (income) expense, net (2,303 ) 250 depreciation and amortization expense 10,469 10,467 business realignment costs 1,657 623 acquisition deal and integration costs 86 9,242 cost of debt refinancing — 14,803 acquisition inventory step-up expense — 2,981 non-gaap adjusted ebitda $ 35,029 $ 34,059 sales $ 220,287 $ 213,464 net income (loss) margin - gaap 3.8 % (3.4 )% adjusted ebitda margin - non-gaap 15.9 % 16.0 % 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.
