Columbus mckinnon reports third quarter fiscal year 2018 financial
results
Amherst, 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 2018 third quarter, which ended december 31, 2017. fiscal year 2018 third quarter and year to date results include the january 31, 2017 acquisition of stahl cranesystems (“stahl”). third quarter highlights (compared with prior-year period) sales for the quarter were up 36.9% to $208.7 million, including $42.6 million from stahl; after adjusting for fx impact, organic sales increased 6.6% stahl provided $0.02 earnings per share accretion in quarter; achieved $0.11 accretion year-to-date cash flow from operating activities was $16.5 million in quarter and $51.2 million in the first nine months debt repayment ahead of schedule: $45.1 million paid down through q3 fy2018 including $14.9 million in quarter; raising debt repayment expectations to $60 million from original goal of $45 million to $50 million mark d. morelli, president and ceo of columbus mckinnon commented, “we believe that strong execution of the first phase of our strategic plan, blueprint 2021, has contributed to our solid results in the quarter and first nine months of the fiscal year. prioritizing our efforts with our tiger teams and the deployment of our e-pas™ operating system enabled us to implement rapid improvements, such as product availability, which supported 8% organic growth in the u.s. for the quarter. we have also been helped with favorable global economic tailwinds which are creating demand in many of our key vertical markets. notably, 48% of the quarter’s sales came from outside of the u.s. as stahl continued to deliver solid results with its custom-engineered crane technologies.” sales stahl's u.s. and non-u.s. sales were $2.2 million and $40.3 million, respectively. volume improvement was realized in the u.s., emea, and asia pacific. sales in europe, excluding stahl, were up $5.4 million, including a $3.1 million benefit from foreign currency translation. stahl contributed $15.0 million to gross profit, which represented a 35.4% gross margin. for more information on changes in gross profit, please see the attached tables. income from operations was $14.2 million. adjusted income from operations was $18.2 million, which was up $9.8 million from the prior year. adjustments include $3.0 million in stahl integration costs and $1.0 million in legal costs related to litigation against previous insurance carriers. stahl contributed $4.5 million to adjusted income from operations, which was 10.5% of stahl sales. please see the attached tables for a reconciliation of gaap income from operations to adjusted income from operations. gregory p. rustowicz, vice president - finance and chief financial officer, commented, “we had a really strong quarter which reflected the timing of stahl shipments from their backlog. as a result, gross margin was stronger than we typically see in the fiscal third quarter. we would expect a similar level of sales from stahl in the fourth quarter along with similar gross margins for the entire business. we also benefited from lower operating expenses in the quarter related to medical costs, workers compensation and stock compensation costs totaling $750 thousand that we would not expect to repeat in the fourth quarter.” income tax expense in the quarter was impacted by the estimated impact of the enactment of the u.s. tax cuts and jobs act (the act). tax expense reflects the revaluation of deferred tax assets due to the reduction in the u.s. corporate tax rate as well as the transition tax resulting from the act. given this adjustment, the company expects the effective tax rate for fiscal 2018 to be in the 51% to 55% range. the company expects its effective tax rate for fiscal 2019 to be in the 20% to 22% range depending upon the mix of pre-tax earnings by tax jurisdiction. as a result of the deferred tax asset revaluation and the preliminary transition tax noted above, the company reported a net loss of $10.6 million. on an adjusted basis, net income was $10.4 million, which excludes stahl integration costs and costs for a legal action against prior product liability insurance carriers and includes a normalized tax rate. please see the attached tables for a reconciliation of gaap net income and earnings per share to adjusted net income and earnings per share. generating cash and reducing debt cash generated from operating activities in the third quarter was $16.5 million. working capital as a percentage of sales was down to 17.4% compared with 19.9% as of december 31, 2016. please see the attached additional data table for further details. total debt was $377.9 million at december 31, 2017 compared with $421.3 million at march 31, 2017. net debt to net total capitalization at december 31, 2017 was 44.9%, compared with 45.5% at september 30, 2017 and 50.2% at march 31, 2017. mr. rustowicz added, “with our strong free cash flow generation, we are raising our debt reduction goal for the year to $60 million. we have also achieved a net debt to adjusted ebitda ratio of 2.8 times which is well ahead of our goal to reach a net debt to adjusted ebitda ratio below 3 times by the end of the fiscal year. ” capital expenditures for the three and nine months ended december 31, 2017 were $3.3 million and $9.4 million, respectively. the company expects capital expenditures for fiscal 2018 to be approximately $15 million. fiscal year 2018 outlook backlog was $152.3 million as of december 31, 2017, a decrease of $10.4 million compared with september 30, 2017 due to the timing of certain stahl custom-engineered orders shipping in the third quarter. mr. morelli concluded, “given the timing of third quarter shipments and current order flow, we expect fourth quarter sales to be comparable with third quarter levels. this will represent organic sales growth of about 4% to 5% in our fourth quarter excluding the impact of two months of stahl sales in the prior year quarter. looking further out as we advance to phase ii of blueprint 2021, we are simplifying our business structure and product platforms while implementing improvements to drive operational excellence. we will self-fund initiatives and new product development as we seek to capitalize on the trend toward factory automation and build a business with greater earnings power.” teleconference/webcast columbus mckinnon will host a conference call and live webcast today at 11:00 am eastern time, at which mark d. morelli, president and chief executive officer, and gregory p. rustowicz, vice president - finance and chief financial officer, 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 and asking for the “columbus mckinnon conference call.” the webcast can be monitored at www.cmworks.com/investors. an audio recording will be available from 2:00 pm eastern time on the day of the call through tuesday, february 13, 2018 by dialing 412-317-6671 and entering the passcode 13675058. 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, cranes, 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 revenue 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 general 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 effect of operating leverage, the pace of bookings relative to shipments, the ability to expand into new markets and geographic regions, the success in acquiring new business, the speed at which shipments improve, the effectiveness of new products 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) december 31,2017 december 31,2016 cost of products sold columbus mckinnon corporation condensed consolidated income statements - unaudited (in thousands, except per share and percentage data) december 31,2017 december 31,2016 columbus mckinnon corporation condensed consolidated balance sheets (in thousands) columbus mckinnon corporation condensed consolidated statements of cash flows - unaudited (in thousands) december 31,2017 december 31,2016 columbus mckinnon corporation q3 fy 2018 sales bridge columbus mckinnon corporation q3 fy 2018 gross profit bridge columbus mckinnon corporation additional data - unaudited december 31,2017 march 31,2017 december 31,2016 q1 q2 q3 q4 columbus mckinnon corporation reconciliation of gaap gross profit to non-gaap adjusted gross profit and margin ($ in thousands) 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 to the measure 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 gross profit to the historical period’s gross profit, 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 income from operations to non-gaap adjusted income from operations and operating margin ($ in thousands, except per share data) adjusted income from operations is defined as income from operations as reported, adjusted for certain items and to apply a normalized tax rate. 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 to 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 net income and diluted eps 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 endeddecember 31, year to datedecember 31, adjusted net income and diluted eps are defined as net income and diluted eps as reported, adjusted for certain items and to apply 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.
