Columbus mckinnon announces financial results for fourth quarter and fiscal year 2020
Buffalo, n.y.--(business wire)--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 fourth quarter, which ended march 31, 2020. fourth quarter highlights (compared with prior-year period) core values guided agile response to impact of covid-19 pandemic; focused on safety of associates, business continuity and conserving cash while continuing to invest in strategic growth initiatives success of blueprint for growth strategy validated with 34.9% gross margin, and record 36.1% adjusted gross margin, despite 12.6% decline in sales 80/20 process contributed $5.5 million in operating income in quarter helping to offset volume declines net income was $9.2 million, or $0.39 per diluted share; adjusted net income was $13.8 million, or $0.58 per diluted share generated $36.5 million in cash from operations in the quarter fiscal year highlights (compared with prior-year period) record annual gross margin was 35.0% despite 7.7% decline in sales operating income was $89.8 million, or 11.1% of sales; 80/20 process contributed $20.4 million net income was $59.7 million, or $2.50 per diluted share achieved 15.7% adjusted ebitda margin and roic of 11.5% strong working capital management and cash generation delivered record $106.8 million in cash from operations ended year with strong balance sheet that provides financial flexibility and significant liquidity richard fleming, chairman and interim ceo of columbus mckinnon, commented, “we demonstrated the power of our blueprint for growth strategy throughout fiscal 2020 with expanded margins despite slowing demand. however, in march the covid-19 pandemic required us to rapidly implement actions to flex production levels and reduce costs to address the significant decline in demand we are now experiencing. importantly, we have an excellent capital structure, strong cash generation and sufficient liquidity that will allow us to navigate these uncertain times while continuing to invest in select, strategic initiatives that we believe will enhance our competitive advantages and drive future growth.” fourth quarter fiscal 2020 sales ($ in millions) q4 fy 20 q4 fy 19 change % change net sales $ 189.5 $ 216.7 $ (27.2 ) (12.6 )% u.s. sales $ 104.1 $ 120.5 $ (16.4 ) (13.6 )% % of total 55 % 56 % non-u.s. sales $ 85.4 $ 96.2 $ (10.8 ) (11.2 )% % of total 45 % 44 % sales declined primarily on lower volume as improved pricing more than offset the negative impact of changes in foreign currency translation. sales in the u.s. were down $16.4 million, of which $2.4 million was related to divestitures in the prior-year period. sales outside the u.s. were down $10.8 million, of which $2.4 million was related to divestitures in the prior-year period and $2.3 million was related to foreign currency translation. fourth quarter fiscal 2020 operating results ($ in millions) q4 fy 20 q4 fy 19 change % change gross profit $ 66.2 $ 76.0 $ (9.8 ) (12.9 )% gross margin 34.9 % 35.1 % (20) bps income from operations $ 16.7 $ 24.5 $ (7.8 ) (31.9 )% operating margin 8.8 % 11.3 % (250) bps net income $ 9.2 $ 19.7 $ (10.5 ) (53.2 )% diluted eps $ 0.39 $ 0.83 $ (0.44 ) (53.0 )% adjusted ebitda * $ 27.3 $ 32.8 $ (5.5 ) (16.7 )% adjusted ebitda margin 14.4 % 15.1 % (70) 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). adjusted income from operations was $20.2 million, down $4.7 million, or 18.9%, compared with the fourth quarter of fiscal 2019. adjusted operating margin declined 80 basis points. (see the reconciliation of gaap income from operations to adjusted income from operations on page 11 of this release.) adjusted ebitda margin was 14.4% for the quarter, a decline of 70 basis points over the prior-year period. (see the reconciliation of gaap net income to adjusted ebitda on page 13 of this release.) first quarter fiscal 2021 outlook given the actions taken to reduce costs, the company expects income from operations would be at breakeven levels if revenue were to decline by 35% from the fourth quarter fiscal 2020. currently, columbus mckinnon expects first quarter fiscal 2021 revenue to be approximately $130 million to $140 million at current exchange rates, which is above breakeven. mr. fleming concluded, “we believe that columbus mckinnon will come out of these unprecedented times a stronger company and are excited to welcome david wilson to advance our blueprint for growth strategy and lead our future endeavors as our new ceo effective june 1, 2020.” teleconference/webcast columbus mckinnon will host a conference call and live webcast wednesday, may 27, 2020 at 8:00 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 https://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 https://investors.columbusmckinnon.com. to listen to the archived call, dial 412-317-6671 and enter the passcode 13700704. the telephonic replay will be available from 11:00 am eastern time on the day of the call through wednesday, june 3, 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 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 covid-19 and the company’s aggressive efforts to reduce costs, maintain liquidity and generate cash in the current pandemic, the effectiveness of the company’s 80/20 process to simplify operations, the ability of the company’s operational excellence initiatives to drive profitability, 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. financial tables follow. columbus mckinnon corporation condensed consolidated income statements - unaudited (in thousands, except per share and percentage data) three months ended march 31, 2020 march 31, 2019 change net sales $ 189,486 $ 216,733 (12.6 )% cost of products sold 123,277 140,688 (12.4 )% gross profit 66,209 76,045 (12.9 )% gross profit margin 34.9 % 35.1 % selling expenses 22,253 23,985 (7.2 )% % of net sales 11.7 % 11.1 % general and administrative expenses 21,167 21,674 (2.3 )% % of net sales 11.2 % 10.0 % research and development expenses 2,891 3,354 (13.8 )% % of net sales 1.5 % 1.5 % net loss (gain) on sales of businesses — (978 ) nm amortization of intangibles 3,234 3,542 (8.7 )% income from operations 16,664 24,468 (31.9 )% operating margin 8.8 % 11.3 % interest and debt expense 3,200 3,959 (19.2 )% investment (income) loss 48 (430 ) nm foreign currency exchange (gain) loss (996 ) 637 nm other (income) expense, net 221 (299 ) nm income before income tax expense 14,191 20,601 (31.1 )% income tax expense 4,947 860 475.2 % net income $ 9,244 $ 19,741 (53.2 )% average basic shares outstanding 23,735 23,368 1.6 % basic income (loss) per share $ 0.39 $ 0.84 (53.6 )% average diluted shares outstanding 23,938 23,714 0.9 % diluted income (loss) per share $ 0.39 $ 0.83 (53.0 )% dividends declared per common share $ 0.12 $ 0.11 columbus mckinnon corporation condensed consolidated income statements - unaudited (in thousands, except per share and percentage data) year ended march 31, 2020 march 31, 2019 change net sales $ 809,162 $ 876,282 (7.7 )% cost of products sold 525,976 571,285 (7.9 )% gross profit 283,186 304,997 (7.2 )% gross profit margin 35.0 % 34.8 % selling expenses 91,054 97,925 (7.0 )% % of net sales 11.3 % 11.2 % general and administrative expenses 77,880 83,567 (6.8 )% % of net sales 9.6 % 9.5 % research and development expenses 11,310 13,491 (16.2 )% % of net sales 1.4 % 1.5 % net loss on sales of businesses, including impairment 176 25,672 (99.3 )% amortization of intangibles 12,942 14,900 (13.1 )% income from operations 89,824 69,442 29.4 % operating margin 11.1 % 7.9 % interest and debt expense 14,234 17,144 (17.0 )% investment (income) loss (891 ) (727 ) 22.6 % foreign currency exchange (gain) loss (1,514 ) 843 nm other (income) expense, net 839 (716 ) nm income before income tax expense 77,156 52,898 45.9 % income tax expense 17,484 10,321 69.4 % net income $ 59,672 $ 42,577 40.2 % average basic shares outstanding 23,619 23,276 1.5 % basic income per share $ 2.53 $ 1.83 38.3 % average diluted shares outstanding 23,855 23,660 0.8 % diluted income per share $ 2.50 $ 1.80 38.9 % dividends declared per common share $ 0.24 $ 0.21 columbus mckinnon corporation condensed consolidated balance sheets (in thousands) march 31, 2020 march 31, 2019 (unaudited) assets current assets: cash and cash equivalents $ 114,450 $ 71,093 trade accounts receivable 123,743 129,157 inventories 127,373 146,263 prepaid expenses and other 17,180 16,075 total current assets 382,746 362,588 property, plant, and equipment, net 79,473 87,303 goodwill 319,679 322,816 other intangibles, net 217,962 232,940 marketable securities 7,322 7,028 deferred taxes on income 26,281 27,707 other assets 59,809 21,189 total assets $ 1,093,272 $ 1,061,571 liabilities and shareholders’ equity current liabilities: trade accounts payable $ 57,289 $ 46,974 accrued liabilities 93,585 99,304 current portion of long-term debt 4,450 65,000 total current liabilities 155,324 211,278 term loan and revolving credit facility 246,856 235,320 other non-current liabilities 227,507 183,814 total liabilities 629,687 630,412 shareholders’ equity: common stock 238 234 additional paid-in capital 287,256 277,518 retained earnings 290,441 236,459 accumulated other comprehensive loss (114,350 ) (83,052 ) total shareholders’ equity 463,585 431,159 total liabilities and shareholders’ equity $ 1,093,272 $ 1,061,571 columbus mckinnon corporation condensed consolidated statements of cash flows - unaudited (in thousands) year ended march 31, 2020 march 31, 2019 operating activities: net income $ 59,672 $ 42,577 adjustments to reconcile net income to net cash provided by (used for) operating activities: depreciation and amortization 29,126 32,675 deferred income taxes and related valuation allowance 7,364 (958 ) net loss (gain) on sale of real estate, investments, and other (563 ) 194 stock based compensation 4,507 6,198 amortization of deferred financing costs 2,655 2,655 net loss on sales of businesses, including impairment 176 25,672 non-cash lease expense 7,923 — changes in operating assets and liabilities, net of effects of business acquisitions and divestitures: trade accounts receivable 2,899 (11,328 ) inventories 15,752 (15,411 ) prepaid expenses and other (3,857 ) (128 ) other assets 724 231 trade accounts payable 8,110 3,881 accrued liabilities (14,304 ) 6,397 non-current liabilities (13,389 ) (13,156 ) net cash provided by (used for) operating activities 106,795 79,499 investing activities: proceeds from sales of marketable securities 5,380 3,266 purchases of marketable securities (5,747 ) (2,604 ) capital expenditures (9,432 ) (12,288 ) proceeds from sale of equipment and real estate 51 176 net (payments) proceeds from sales of businesses (214 ) 14,230 payment of restricted cash to former owner — (294 ) net cash provided by (used for) investing activities (9,962 ) 2,486 financing activities: proceeds from issuance of common stock 6,000 4,152 repayment of debt (51,113 ) (65,088 ) payment of dividends (5,670 ) (4,652 ) other (768 ) (2,190 ) net cash provided by (used for) financing activities (51,551 ) (67,778 ) effect of exchange rate changes on cash (1,925 ) (6,429 ) net change in cash and cash equivalents 43,357 7,778 cash, cash equivalents, and restricted cash at beginning of year 71,343 63,565 cash, cash equivalents, and restricted cash at end of period $ 114,700 $ 71,343 columbus mckinnon corporation q4 fy 2020 sales bridge quarter year to date ($ in millions) $ change % change $ change % change fiscal 2019 sales $ 216.7 $ 876.3 divestitures (4.8 ) (34.2 ) fiscal 2019 sales adjusted for divestitures $ 211.9 $ 842.1 volume (22.9 ) (10.8 )% (33.0 ) (3.9 )% pricing 2.8 1.3 % 13.2 1.6 % foreign currency translation (2.3 ) (1.1 )% (13.1 ) (1.6 )% total change adjusted for divestitures $ (22.4 ) (10.6 )% $ (32.9 ) (3.9 )% fiscal 2020 sales $ 189.5 $ 809.2 columbus mckinnon corporation q4 fy 2020 gross profit bridge ($ in millions) quarter year to date fiscal 2019 gross profit $ 76.0 $ 305.0 divestitures (0.9 ) (7.1 ) fiscal 2019 gross profit adjusted for divestitures 75.1 297.9 pricing, net of material cost inflation 2.5 10.3 insurance settlement — 0.4 product liability (0.3 ) (0.6 ) business realignment costs (0.8 ) (0.7 ) tariffs 0.4 (0.8 ) factory closures — (1.3 ) productivity, net of other cost changes (1.6 ) (3.4 ) foreign currency translation (0.8 ) (4.5 ) sales volume and mix (8.3 ) (14.1 ) total change adjusted for divestitures $ (8.9 ) $ (14.7 ) fiscal 2020 gross profit $ 66.2 $ 283.2 columbus mckinnon corporation additional data - unaudited march 31, 2020 december 31, 2019 march 31, 2019 ($ in millions) backlog $ 131.0 $ 125.3 $ 161.5 long-term backlog expected to ship beyond 3 months $ 49.1 $ 51.3 $ 61.7 long-term backlog as % of total backlog 37.5 % 40.9 % 38.2 % trade accounts receivable days sales outstanding (1) 59.4 days 57.2 days 55.5 days inventory turns per year (1) (based on cost of products sold) 3.9 turns 3.9 turns 3.7 turns days' inventory (1) 94.3 days 94.0 days 97.6 days trade accounts payable days payables outstanding (1) 42.3 days 32.1 days 31.3 days working capital as a % of sales (1), (2) 14.5 % 16.5 % 17.2 % debt to total capitalization percentage 35.2 % 34.2 % 41.1 % debt, net of cash, to net total capitalization 22.8 % 25.7 % 34.7 % (1) march 31, 2019 figures exclude the tire shredder business, which was divested on december 28, 2018, and crane equipment & service, inc. (ces) and stahlhammer bommern gmbh (stb), each of which were divested on february 28, 2019. (2) december 31, 2019 figure excludes ces and stb. u.s. shipping days by quarter q1 q2 q3 q4 total fy 21 63 64 61 63 251 fy 20 63 63 61 64 251 fy 19 64 63 60 63 250 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 march 31, year ended march 31, 2020 2019 2020 2019 gross profit $ 66,209 $ 76,045 $ 283,186 $ 304,997 add back (deduct): factory closures 1,349 1,273 2,800 1,473 business realignment costs 774 — 1,037 286 insurance settlement (15 ) — (382 ) — non-gaap adjusted gross profit $ 68,317 $ 77,318 $ 286,641 $ 306,756 sales $ 189,486 $ 216,733 $ 809,162 $ 876,282 adjusted gross margin 36.1 % 35.7 % 35.4 % 35.0 % 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 and adjusted operating margin ($ in thousands, except per share data) three months ended march 31, year ended march 31, 2020 2019 2020 2019 income from operations $ 16,664 $ 24,468 $ 89,824 $ 69,442 add back (deduct): factory closures 1,621 1,273 4,709 1,473 business realignment costs 1,755 — 2,831 1,906 insurance recovery legal costs 160 132 585 1,282 net loss (gain) on sales of businesses, including impairment — (978 ) 176 25,672 insurance settlement (15 ) — (382 ) — non-gaap adjusted income from operations $ 20,185 $ 24,895 $ 97,743 $ 99,775 sales $ 189,486 $ 216,733 $ 809,162 $ 876,282 adjusted operating margin 10.7 % 11.5 % 12.1 % 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 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 march 31, year ended march 31, 2020 2019 2020 2019 net income $ 9,244 $ 19,741 $ 59,672 $ 42,577 add back (deduct): factory closures 1,621 1,273 4,709 1,473 business realignment costs 1,755 — 2,831 1,906 insurance recovery legal costs 160 132 585 1,282 net loss (gain) on sales of businesses, including impairment — (978 ) 176 25,672 insurance settlement (15 ) — (382 ) — normalize tax rate to 22% (1) 1,050 (3,766 ) (1,232) (7,990 ) non-gaap adjusted net income $ 13,815 $ 16,402 $ 66,359 $ 64,920 average diluted shares outstanding 23,938 23,714 23,855 23,660 diluted income per share - gaap $ 0.39 $ 0.83 $ 2.50 $ 1.80 diluted income per share - non-gaap $ 0.58 $ 0.69 $ 2.78 $ 2.74 (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 corporation reconciliation of gaap net income to non-gaap adjusted ebitda ($ in thousands) three months ended march 31, year ended march 31, 2020 2019 2020 2019 net income $ 9,244 $ 19,741 $ 59,672 $ 42,577 add back (deduct): income tax expense 4,947 860 17,484 10,321 interest and debt expense 3,200 3,959 14,234 17,144 investment (income) loss 48 (430 ) (891 ) (727 ) foreign currency exchange (gain) loss (996 ) 637 (1,514 ) 843 other (income) expense, net 221 (299 ) 839 (716 ) depreciation and amortization expense 7,135 7,912 29,126 32,675 factory closures 1,621 1,273 4,709 1,473 business realignment costs 1,755 — 2,831 1,906 insurance recovery legal costs 160 132 585 1,282 net loss (gain) on sales of businesses, including impairment — (978 ) 176 25,672 insurance settlement (15 ) — (382 ) — non-gaap adjusted ebitda $ 27,320 $ 32,807 $ 126,869 $ 132,450 sales $ 189,486 $ 216,733 $ 809,162 $ 876,282 adjusted ebitda margin 14.4 % 15.1 % 15.7 % 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.
