March 20, SEAPORT GLOBAL ANNUAL TRANSPORTS 2019 ... › 875787111 › files › doc... · FY15 FY16...

Mark D. MorelliPresident and Chief Executive Officer

Gregory P. RustowiczVice President – Finance & Chief Financial Officer

SEAPORT GLOBAL ANNUAL TRANSPORTS &

INDUSTRIALS CONFERENCE

March 20,

2019

http://www.pfaff-silberblau2.co.uk/index.php

http://www.pfaff-silberblau2.co.uk/index.php

2© 2019 Columbus McKinnon Corporation

SAFE HARBOR STATEMENT

These slides, and the accompanying oral discussion, contain “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 the effectiveness of the Company’s 80/20 process to simplify operations, the ability of the

Company’s operational excellence initiatives to drive profitability, the success of the Company’s new products to

enhance revenue, the timing and success of the divestitures, 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 presentation.

This presentation will discuss some non-GAAP financial measures, which we believe are useful in evaluating

our performance. You should not consider the presentation of this additional information in isolation or as a

substitute for results compared in accordance with GAAP. We have provided reconciliations of comparable

GAAP to non-GAAP measures in tables found in the Supplemental Information portion of this presentation.


Leader in highly engineered lifting solutions and explosion-protected hoists

Premium, well respected brands

World’s 2nd largest hoist company with leading share in U.S.

Blueprint Strategy for Growth:

Transform into a high performing, industrial technology company

Increase earnings power with selective deployment of self-funded key initiatives

NASDAQ: CMCO

Leading global designer, manufacturer and marketer of

motion control products, technologies and services for material handling

Founded: 1875

Market Capitalization $830.5 Million

52-Week Price Range $27.66 - $45.85

Recent Price $35.56

Average Volume (3 mo.) 109,840

Common Shares Outstanding 23.4 Million

Ownership: Institutions 97%Insiders 3%

Market data as of 3/8/19 (Source: S&P Global IQ); shares outstanding as of 1/28/19; Institutional and insider ownership as of most recent filing


HIGHLY RELEVANT TO CUSTOMERS

Professional grade solutions for complex applications


THREE DISTINCT PRODUCT CATEGORIES

Customer Driven Solutions

Industrial Products

Crane Solutions

~45%

~45%

~10%

Manual Chain Hoist

Electric Chain Hoist

Rigging / Clamps

Industrial Winches

High Capacity Hooks

Cranes, Wire Rope Hoists

Drives and Controls

Crane Kits & Components

Jibs, Workstations

Linear & Mechanical Actuators

Lifting Tables

Rail & Road

Actuation Systems

Engineered

Products

$873.7 Million3Q FY19 TTM Revenue


DEFINED CHANNELS TO MARKET

US General Line Distributors

International General Line Distributors

Specialty Distributors

EPC

OEM/Government

Pfaff International Direct

Crane Builders

~29%

~23%~12%

~10%

~10%

~11%

~5%

Market channels provide access to end users



IndustrialEnd Users

General Distribution/Rental

Lifting Specialists (Direct Sales)

Rigging Specialists

Crane Builders

EPC

OEM

Motion Technology Distributors

Industrial Products

Crane Solutions & Kits

Engineered ProductsMotion Technology

Channel Partners: Product Categories:

Understanding the business from the “customer back”

Reorganized November 2017

MARKET DRIVES STRUCTURE


END MARKET AND GEOGRAPHIC DIVERSIFICATION

General Industrial

Metals Processing /

Steel / Concrete

Oil & Gas

Energy/Utilities

Automotive

Rail / Aerospace / Transport

Construction

Pulp Paper/Chemical/

Pharma

Heavy OEM

Elevators

Entertainment

MiningGovernment / Others

~25%

~10%

~10%~10%

~10%

~10%

~5%

~5%

~5%

~3%~3%

~3%~3%

U.S.

Europe, Middle East & Africa

Canada

Latin America

APAC

33%

53%

4%4%

6%



KEY VERTICAL MARKETS

CONSTRUCTION MINING ENTERTAINMENT OIL & GAS

POWER / UTILITIES TRANSPORTATION AUTOMOTIVE HEAVY EQUIPMENT

MANUFACTURING


STRATEGY: EVOLUTION OF COLUMBUS MCKINNON

Today Future

Late stage

cyclical

industrial

Growth

oriented

Industrial

Technology

Phase IGet control

Achieve results

Phase IISimplify and drive

profitable growth

Phase IIIEvolve business

model

Create performance culture:• Tiger teams• E-PASTM

• Mission, vision, values

Simplify through 80/20 processOperational excellenceRamp growth engine:

• New product development• Digital platform

Further pivot:• Portfolio optimization • M&A

Further pivot from late stage industrial

to growth oriented industrial technology company

Phase II underway


BLUEPRINT PHASE I ACCOMPLISHMENTS

* Net Debt to Adjusted EBITDA

STAHL value creation

Achieved ~$11 million of synergies by Q2 FY19; $0.17 accretive in first full year

Leveraged Magnetek technology

Launched three variable-speed drive platforms to address the industrial automation trend

Strengthened the core

Improved product availability & reduced lead times to drive sales and market share gains

Paid down debt

Surpassed initial goal: Paid down $60 million in FY18; paid $50 million in 1st 9M FY19

Achieved net leverage ratio* below 2x as of December 31, 2018 – ahead of target

Established business operating system: E-PAS™

Driving performance culture

Early stages of Blueprint for Growth laying groundwork for transformation


TRACKING BLUEPRINT PHASE II PROGRESS

Simplify the Business

80/20 process driving results

• Expect ~$7 million savings in FY2019; $4.1 million savings year-to-date

Tire Shredder business sold in December

Crane Equipment & Service, Inc. and Stahlhammer Bommern GmbH sold in February

Improve Productivity

Operational excellence delivering savings through improved factory efficiencies

Expect $2 million in savings in FY2020 from Ohio consolidation

Ramp the Growth Engine

Center of Excellence opening April in Charlotte, NC

Realigning resources for greater results from R&D investments

Phase II driving EBITDA and ROIC improvements


OPERATING SYSTEM DEPLOYMENT CONTINUES

E-PAS™: Earnings Power Acceleration System

80/20 process: Centerpiece of operating system

Eliminates bleeders - Sharpens focus on growth

Key

Performance

Indicators

Strategy

Deployment

Monthly

Operating

Reviews

(MORs)

Risk &

Opportunity

(R&Os)

Mission

Vision

Values

80 / 20

ProcessM&A

Process

Lean

Tools

Talent

Development


Savings

• Expected to accelerate

• Realize a full year’s impact of actions in FY2020

PHASE II: SIMPLIFY THROUGH 80/20

80 / 20

Process

• Product Line Simplification

• Customer Focus

• Targeted Selling

• Core Business Segmentation

• Purchasing leverage

• Indirect cost reduction

• Sharper business focus

Roll-out

• 50% of CMCO using 80/20 process today

• Full roll out through all relevant businesses in FY 2020


High PerformanceStandard IndustrialBasic

Rationalize global platforms while maintaining brands

Wire Rope Hoist Platform

PHASE II: SIMPLIFY THROUGH 80/20Product Line Simplification


COMMONPARTSLEVER

TOOLCHAIN BLOCK

CHAIN BLOCK 1

CHAIN BLOCK 3

CHAIN BLOCK 2

LEVER TOOL

2

LEVER TOOL 1

LEVER TOOL

3

INDIVIDUAL PARTS

“The individual shell plus outside”

Common Component Utilization

Manual Chain Hoist Platform

PARTS ARE 100% SHARED

“Everything between the side plates”

PARTS ARE SHARED BETWEEN

PRODUCT TYPE

“Everything between the side plates and

the shell”

Shared platforms lead to common parts –

drives inventory efficiencies and purchasing power

PHASE II: OPERATIONAL EXCELLENCE


PHASE II: RAMP THE GROWTH ENGINE

Doubling R&D spend from FY2017 including STAHL R&D

FY17 FY18 FY21E

Product Engineering

Engineered to Order

Research

Sustaining Engineering

Investment (1)

R&D

~$14M

67%

R&D

~$21M

75%

$21

~$27

OPENING CENTER OF EXCELLENCE IN APRIL

($ in millions)

Increase R&D spend by ~$11M:

$5M coming from STAHL

Incremental $6M from FY17 baseline

1 Included in SG&A 2 Excludes impact of STAHL

R&D

~$10M

65%

$16

Baseline

(2)


PHASE II: SMART HOIST VISION

Megatrend movement to industrial automation

Source: University of Oxford, ARK Original Research

2017 20350

80

mill

ion

s

Projected full-time jobs

automated in the U.S.

Opportunity to capitalize on automation megatrend


PHASE II: NEW PRODUCT DEVELOPMENT

Smart Hoists Capabilities

Leveraging technology and experience

to design “Smart Hoists”

Onboard diagnostics

Remote monitoring

Precision lifting

Load sensing

Preventative maintenance

Leads to improved safety and

reduced down time

Leveraging recent acquisitions to

deliver solution-based products


PHASE III: BUSINESS DEVELOPMENT

Portfolio assessment

Selective Investment



Fix / Exit

Fix / ExitDivest

Invest / Grow

Invest / Grow

Scale-Up

<~$5M

>~$5M

>~$10M

Portfolio Assessment

New

Indust.

Tech

EBITDA (to scale)

CM

CO

Business model

Profitability

Market position

Industry growth

Risk assessment


FINANCIAL PERFORMANCE

($ in millions)

$579.6 $597.1$637.1

$839.4$873.7

31.3% 31.4%30.3%

33.7%34.7%

FY15 FY16 FY17 FY18 TTM Q3FY19

Total Sales Gross Margin

Sales & Gross Margin Growth in revenue driven by

organic and acquired sales

Gross margin improvement

driven by Blueprint for Growth

Customer and operational focus enhancing strong market positions and margin


$54.6 $40.6 $26.0 $68.3 $60.8

$57.0 $53.6 $49.5

$78.7

$95.0

9.8% 9.0%7.8%

9.4%10.9%


Non-GAAP Adjustments Income from Operations

Adjusted OI Margin

$1.34 $0.96 $0.43 $0.95 $1.32

$1.53 $1.72

$1.47

$2.01

$2.56


Non-GAAP Adjustments GAAP Diluted EPS

FINANCIAL PERFORMANCE

Diluted EPS(1)Adjusted Operating Income(1)

(1) Adjusted figures are non-GAAP financial measures. Please see supplemental slides for a reconciliation from

GAAP to non-GAAP results and other important disclosures regarding the use of non-GAAP financial measures.

($ in millions)

Blueprint for Growth strategy driving increased earnings power


CAPITALIZATION

Dec 31,

2018

March 31,

2018

Cash and cash equivalents $ 58.1 $ 63.0

Total debt 314.8 363.3

Total net debt 256.8 300.3

Shareholders’ equity 420.4 408.2

Total capitalization $ 735.3 $ 771.5

Debt/total capitalization 42.8% 47.1%

Net debt/net total

capitalization37.9% 42.4%

DE-LEVERING BALANCE SHEET

Debt reduction continues

Paid down $25 million in debt in

quarter; $50 million year-to-date

Net Debt / Adjusted TTM EBITDA(1)

• Reduced to 1.99x and achieved target

Expect to further de-lever below

targeted net leverage ratio of 2.0x

Reduced debt by nearly

$120 million in two years

(1) Adjusted EBITDA is a non-GAAP financial measure. Please see supplemental slides for a reconciliation from GAAP net income to non-GAAP

adjusted EBITDA and other important disclosures regarding the use of non-GAAP financial measures.

On track to exceed $60 million debt reduction goal in FY2019


SIGNIFICANT FREE CASH FLOW1

GENERATION

Achieving net leverage of 2x in FY19 provides sufficient financial flexibility for pivot strategy

$21.0

$30.3

$46.1

$55.1

FY15 FY16 FY17 FY18 FY19E FY20E FY21E FY22E

$60 -

$65

$70 -

$75

$80 -

$85

FY19E and Beyond, FCF After: • Annual CapEx of approximately $15 million*

• Annual Pension contribution of ~$12 million

ENABLES MEASURABLE

ANNUAL DEBT PAYMENT

~$60 million in FY19

* Guidance provided October 30, 2018

(1) Free cash flow is defined as cash provided by operating activities minus capital expenditures

($ in millions)

$90 -

$95


FY15 FY16 FY17 FY18 Q3 FY19TTM

11.7%

8.7%

6.4%

8.7%10.5%

Return on Invested Capital

(ROIC)(2)

Creating Shareholder Value

GOAL: Adjusted EBITDA Margin of 19% and Adjusted ROIC in mid-teens

Adjusted EBITDA Margin(1)

(1) Adjusted EBITDA is a non-GAAP financial measures. Please see supplemental slides for a reconciliation from GAAP net income to non-GAAP

adjusted EBITDA and other important disclosures regarding the use of non-GAAP financial measures.

(2) ROIC is defined as adjusted income from operations, net of taxes, for the trailing 12 months divided by the average of debt plus equity less cash

(average capital) for the trailing 13 months. A 30% tax rate was used for fiscal years 2015, 2016, & 2017, and 22% for fiscal years 2018 & 2019.

FY15 FY16 FY17 FY18 Q3 FY19TTM

12.4% 12.4%11.7%

13.7%14.8%


KEY TAKEAWAYS

Pivot from late stage industrial to higher growth, industrial

technology company

Cost savings through simplification and operational excellence

Opportunity to capitalize on automation megatrend

Raising expectations over next three years:

>19% EBITDA margins and ROIC in mid-teens

Drive sales and margins by ramping the growth engine


SUPPLEMENTAL INFORMATION


ADJUSTED INCOME FROM OPERATIONS RECONCILIATION($ in thousands)

Fiscal Year

FY 2015 FY 2016 FY 2017 FY 2018 TTM Q3 FY19

Income from operations $ 54,648 $ 40,570 $ 25,973 $ 68,331 $ 60,781

Add back:

Impairment on held for sale businesses — 429 — — 27,753

Gain on sale of business — — — — (1,103)

Acquisition deal, integration, and severance costs — 8,046 8,815 8,763 5,823

Insurance recovery legal costs — — 1,359 2,948 1,506

Insurance settlement — — — (2,362) (621)

Debt repricing fees — — — 619 619

Ohio plant closure — — — — 200

Magnetek litigation — — — 400 —

Acquisition inventory step-up expense and real estate transfer taxes 659 1,446 8,852 — —

CEO retirement pay and search costs — — 3,085 — —

Impairment of intangible asset — — 1,125 — —

Canadian pension lump sum settlements — — 247 — —

Product liability costs for legal settlement — 1,100 — — —

Facility consolidation costs 1,726 1,444 — — —

Magnetek acquisition amortization of backlog — 581 — — —

Non-GAAP adjusted income from operations $ 57,033 $ 53,616 $ 49,456 $ 78,699 $ 94,958

Sales $ 579,643 $ 597,103 $ 637,123 $ 839,419 $ 873,689

Adjusted operating margin 9.8% 9.0% 7.8% 9.4% 10.9%

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


ADJUSTED NET INCOME RECONCILIATION($ in thousands, except per share data)

Fiscal Year

FY 2015 FY 2016 FY 2017 FY 2018 TTM Q3 FY19

Net income $ 27,190 $ 19,579 $ 8,984 $ 22,065 $ 31,302

Add back:

Acquisition inventory step-up expense and real estate transfer taxes 659 1,446 8,852 — —





Loss on extinguishment of debt — — 1,303 — —

(Gain) loss on foreign exchange option for acquisition — — 1,590 — —


Product liability costs for legal settlement — 1,100 — — —

Impairment on held for sale businesses — 429 — — 27,753

Facility consolidation costs 1,726 1,444 — — —

Magnetek acquisition amortization of backlog — 581 — — —

Debt refinancing costs 8,567 — — 619 619




Normalize tax rate (1) (1,508) 2,218 (4,626) 14,408 4,799

Non-GAAP adjusted net income $ 36,634 $ 34,843 $ 30,734 $ 46,841 $ 60,480

Average diluted shares outstanding 20,224 20,315 20,888 23,335 23,660

Diluted income per share - GAAP $1.34 $0.96 $0.43 $0.95 $1.32

Diluted income per share - Non-GAAP $1.81 $1.72 $1.47 $2.01 $2.56

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 measure 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.

(1) Applies normalized tax rate of 22% to GAAP pre-tax income and non-GAAP adjustments above, which are each pre-tax.


Fiscal Year

FY 2015 FY 2016 FY 2017 FY 2018 TTM Q3 FY19

Net income (loss) $ 27,190 $ 19,579 $ 8,984 $ 22,065 $ 31,302

Add back (deduct):

Income tax expense/(benefit) 8,825 12,045 4,043 27,620 12,059

Interest and debt expense 12,390 7,904 10,966 19,733 17,846

Cost of debt refinancing — — 1,303 — —

Cost of bond redemption 8,567 — — — —

Investment (income) loss (2,725) (796) (462) (157) (293)

Foreign currency exchange loss 863 2,215 1,232 1,539 1,040

Other (income)/expense (462) (377) (93) (2,469) (1,173)

Depreciation and amortization expense 14,562 20,531 25,162 36,136 34,026

Held for sale impairment — — — — 27,753



Debt repricing fees — — — 619 619

Ohio plant closure — — — — 200




Acquisition inventory step-up expense 659 1,446 8,852 — —




Product liability cost for legal settlement — 1,100 — — —

Building held for sale impairment charge — 429 — — —

North America facility consolidation and reduction in force — 859 — — —

Acquisition amortization of backlog — 581 — — —

European facility consolidation costs and reduction in force 1,726 585 — — —

Non-GAAP adjusted EBITDA $ 71,595 $ 74,147 $ 74,618 $ 114,835 $ 128,984

Sales $ 579,643 $ 597,103 $ 637,123 $ 839,419 $ 873,689

Adjusted EBITDA margin 12.4% 12.4% 11.7% 13.7% 14.8%

ADJUSTED EBITDA RECONCILIATION

Adjusted EBITDA represents net income adjusted for income taxes, interest, depreciation and amortization and other items as noted in the reconciliation table.

The Company believes Adjusted EBITDA is an important supplemental measure of operating performance and uses it to assess performance and inform

operating decisions. However, Adjusted EBITDA is not a GAAP financial measure. The Company’s calculation of Adjusted EBITDA should not be used as a

substitute for GAAP measures of performance, including net cash provided by operations, operating income and net income. The Company’s method of

calculating Adjusted EBITDA may vary substantially from the methods used by other companies and investors are cautioned not to rely unduly on it.

($ in thousands)


INDUSTRIAL CAPACITY UTILIZATION

74%

75%

76%

77%

78%

79%

80%

Manufacturing Total

76.6% (Manufacturing) &

78.7% (Total) December 2018

Source: The Federal Reserve Board

U.S. Capacity Utilization

79%

80%

81%

82%

83%

84%

85%

Eurozone Capacity Utilization

Source: European Commission

83.9%

December 2018


Strengthen the core

Ramp new product engine

Create end-user pull

Become easy to do business with

STAHL value creation

Portfolio Analysis

Pivot strategy: Value creating acquisitions

Best in class safety & quality

Continuous improvement

Optimize supply chain

& global footprint

Simplify product platform

Simplify business structure

Become the leading Industrial Technology Company

in safe & productive motion control

STRATEGY: PARTNERS IN MOTION CONTROL

ProfitableGrowth

Business Development

OperationalExcellence


GLOBAL PRESENCE

United States

Apodaca N.L., Mexico

Santiago Tianguistenco, Mexico

Panama City, Panama

Brampton, Ontario

Sao Paulo, Brazil

Montevideo, Uruguay

Ambacht, Netherlands

Newtownabbey, N. Ireland

Chester, UK

Vierzon, France

Sevilla, Spain

St. Petersburg, Russia

Wuppertal, Germany

Plewiska, Poland

Kissing, Germany

Pfaffstatten, Austria

Szekesfehervar, Hungary

Cerro Maggiore, Italy

Buchs, Switzerland

Magaliesburg, South Africa

Westmead, South Africa

Wuhan, China

Shanghai, China

Shenyang, China

Hangzhou, China

Bangkok, Thailand

Corporate Headquarters

Manufacturing Facility (17 locations)

Warehouse Facility (6 locations)

Getzville, New York • USA

Honeydew, South Africa

Dubai, UAE

Romeny-sur-Marne, France

Istanbul, Turkey

Sales & Service Office (39 locations)

Prenton, UK

Singapore, Singapore

Hamm, Germany

EXTERNAL (rev. 5/25/18)

Budapest, Hungary

Carlow, Ireland

Bedford, UK

Middleberg, South Africa

Chennai, India

Madrid, Spain

Argenteuil, France

Lisboa, Portugal

Künzelsau, Germany

Coleshill, UK

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