Attached files
| file | filename |
|---|---|
| EX-99.2 - EXHIBIT 99.2 - COLUMBUS MCKINNON CORP | a20190131cmcoq319telecon.htm |
| 8-K - 8-K - COLUMBUS MCKINNON CORP | a8k1312019.htm |
EXHIBIT 99.1
News Release
Buffalo, NY 14068
Immediate Release
Columbus McKinnon Gross Profit Increased 7% on 4% Revenue Growth in Third Quarter Fiscal Year 2019
BUFFALO, NY, January 31, 2019 - 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 2019 third quarter, which ended December 31, 2018.
Third Quarter Highlights (compared with prior-year period)
• | Blueprint for Growth strategy working: 80/20 process delivered cost savings and improved earnings power |
• | Strong cash generation: Paid down more than $50 million in debt year-to-date; net leverage ratio now less than 2x |
• | Market share gains support revenue growth of 4%; adjusted for FX, revenue grew more than 6% |
• | Gross margin was 33.8%, up 90 bps; delivered 7th consecutive quarter of year-over-year expansion |
Mark Morelli, President and CEO of Columbus McKinnon, commented, “Our financial results are demonstrating that our Blueprint for Growth strategy is working. We have rapidly deployed our 80/20 process through approximately half of Columbus McKinnon and as a result are improving customer response time, reducing costs and streamlining processes. Our strong performance reflects our success in simplifying the business, improving operational efficiencies, ramping our growth engine and strengthening earnings power.”
The net loss on held for sale businesses of $15.6 million includes the gain on the sale of the Tire Shredder business and an additional impairment on the remaining businesses held for sale, reflecting management’s estimate of their fair market value.
Columbus McKinnon Gross Profit Increased 7% on 4% Revenue Growth in Third Quarter Fiscal Year 2019
Page 2 of 13
January 31, 2019
Third Quarter Fiscal 2019 Sales
($ in millions) | Q3 FY 19 | Q3 FY 18 | Change | % Change | ||||||||||
Net sales | $ | 217.4 | $ | 208.7 | $ | 8.7 | 4.2 | % | ||||||
U.S. sales | $ | 116.0 | $ | 108.1 | $ | 7.9 | 7.3 | % | ||||||
% of total | 53 | % | 52 | % | ||||||||||
Non-U.S. sales | $ | 101.4 | $ | 100.6 | $ | 0.8 | 0.8 | % | ||||||
% of total | 47 | % | 48 | % | ||||||||||
Higher sales were driven by strong volume in the U.S. and Canada and pricing in EMEA. Excluding the effect of foreign currency translation, sales increased 6.1%.
Third Quarter Fiscal 2019 Operating Results
($ in millions) | Q3 FY 19 | Q3 FY 18 | Change | % Change | ||||||||||
Gross profit | $ | 73.4 | $ | 68.7 | $ | 4.7 | 6.9 | % | ||||||
Gross margin | 33.8 | % | 32.9 | % | 90 bps | |||||||||
Income from operations | $ | 6.6 | $ | 13.7 | $ | (7.1 | ) | (51.5 | )% | |||||
Operating margin | 3.1 | % | 6.6 | % | (350) bps | |||||||||
Net income (loss) | $ | (0.8 | ) | $ | (10.6 | ) | $ | 9.8 | NM | |||||
Diluted EPS | $ | (0.03 | ) | $ | (0.46 | ) | $ | 0.43 | NM | |||||
Adjusted EBITDA * | $ | 30.8 | $ | 26.9 | $ | 3.9 | 14.6 | % | ||||||
Adjusted EBITDA margin | 14.2 | % | 12.9 | % | 130 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).
Gross profit and gross margin improvement were largely the result of higher volume and productivity improvements from operational excellence measures and lower medical costs. Pricing more than offset material cost inflation. For more information on changes in gross profit, please see the table on page 8 of this release. Adjusted income from operations was $22.9 million, up $5.1 million, or 28.9%, over the third quarter of fiscal 2018. Adjusted operating margin expanded 200 basis points from the effects of 80/20 simplification and lower selling expenses. Please see the reconciliation of GAAP income from operations to adjusted income from operations on page 11 of this release.
Adjusted net income for the quarter was $14.5 million, or $0.61 per diluted share, compared with $10.4 million, or $0.44 per diluted share, in the prior-year period. Adjusted EBITDA margin was 14.2%. Please see the reconciliation of GAAP net income and earnings per share to adjusted net income and earnings per share on page 12 of this release.
Fourth Quarter Fiscal 2019 Outlook
Excluding the businesses expected to be divested, orders in the third quarter grew more than 5% and backlog increased at a similar rate. With the continued strength, the Company expects year-over-year sales growth in the fourth quarter of fiscal 2019 to be approximately 4% to 5%, excluding an approximate 3% to 4% anticipated headwind from foreign currency translation, the impact of the divestiture of the Tire Shredder business and the timing of remaining divestitures. Last year’s fiscal fourth quarter included $3.3 million in revenue related to the Tire Shredder business, which was divested December 28, 2018. The sale of Crane Equipment & Service, Inc. is expected to close by the end of February 2019. That business had $1.5 million in revenue in the month of March 2018. The sales process is ongoing for Stahlhammer Bommern GmbH.
Columbus McKinnon Gross Profit Increased 7% on 4% Revenue Growth in Third Quarter Fiscal Year 2019
Page 3 of 13
January 31, 2019
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 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. The listen-only audio webcast can be monitored at www.cmworks.com/investors. To listen to the archived call, dial 412-317-6671 and enter the passcode 13686186. The telephonic replay will be available from 1:00 PM Eastern Time on the day of the call through Thursday, February 7, 2019. 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 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 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 release.
Contacts:
Gregory P. Rustowicz | Investor Relations: |
Vice President - Finance and Chief Financial Officer | Deborah K. Pawlowski |
Columbus McKinnon Corporation | Kei Advisors LLC |
716-689-5442 | 716-843-3908 |
greg.rustowicz@cmworks.com | dpawlowski@keiadvisors.com |
Financial tables follow.
Columbus McKinnon Gross Profit Increased 7% on 4% Revenue Growth in Third Quarter Fiscal Year 2019
Page 4 of 13
January 31, 2019
COLUMBUS McKINNON CORPORATION
Condensed Consolidated Income Statements - UNAUDITED
(In thousands, except per share and percentage data)
Three Months Ended | |||||||||||
December 31, 2018 | December 31, 2017 | Change | |||||||||
Net sales | $ | 217,415 | $ | 208,725 | 4.2 | % | |||||
Cost of products sold | 144,010 | 140,029 | 2.8 | % | |||||||
Gross profit | 73,405 | 68,696 | 6.9 | % | |||||||
Gross profit margin | 33.8 | % | 32.9 | % | |||||||
Selling expenses | 23,858 | 25,467 | (6.3 | )% | |||||||
% of net sales | 11.0 | % | 12.2 | % | |||||||
General and administrative expenses | 20,379 | 22,318 | (8.7 | )% | |||||||
% of net sales | 9.4 | % | 10.7 | % | |||||||
Research and development expenses | 3,271 | 3,293 | (0.7 | )% | |||||||
% of net sales | 1.5 | % | 1.6 | % | |||||||
Net loss on held for sale businesses | 15,550 | — | NM | ||||||||
Amortization of intangibles | 3,701 | 3,908 | (5.3 | )% | |||||||
Income from operations | 6,646 | 13,710 | (51.5 | )% | |||||||
Operating margin | 3.1 | % | 6.6 | % | |||||||
Interest and debt expense | 4,330 | 4,864 | (11.0 | )% | |||||||
Investment (income) loss, net | 82 | (53 | ) | NM | |||||||
Foreign currency exchange (gain) loss | (25 | ) | 312 | NM | |||||||
Other (income) expense, net | (70 | ) | (725 | ) | (90.3 | )% | |||||
Income before income tax expense | 2,329 | 9,312 | (75.0 | )% | |||||||
Income tax expense | 3,111 | 19,877 | (84.3 | )% | |||||||
Net income (loss) | $ | (782 | ) | $ | (10,565 | ) | NM | ||||
Average basic shares outstanding | 23,348 | 23,007 | 1.5 | % | |||||||
Basic income (loss) per share | $ | (0.03 | ) | $ | (0.46 | ) | NM | ||||
Average diluted shares outstanding | 23,348 | 23,007 | 1.5 | % | |||||||
Diluted income (loss) per share | $ | (0.03 | ) | $ | (0.46 | ) | NM | ||||
Dividends declared per common share | $ | 0.05 | $ | 0.04 | |||||||
Columbus McKinnon Gross Profit Increased 7% on 4% Revenue Growth in Third Quarter Fiscal Year 2019
Page 5 of 13
January 31, 2019
COLUMBUS McKINNON CORPORATION
Condensed Consolidated Income Statements - UNAUDITED
(In thousands, except per share and percentage data)
Nine Months Ended | |||||||||||
December 31, 2018 | December 31, 2017 | Change | |||||||||
Net sales | $ | 659,549 | $ | 625,279 | 5.5 | % | |||||
Cost of products sold | 430,597 | 416,257 | 3.4 | % | |||||||
Gross profit | 228,952 | 209,022 | 9.5 | % | |||||||
Gross profit margin | 34.7 | % | 33.4 | % | |||||||
Selling expenses | 73,940 | 74,309 | (0.5 | )% | |||||||
% of net sales | 11.2 | % | 11.9 | % | |||||||
General and administrative expenses | 61,893 | 60,704 | 2.0 | % | |||||||
% of net sales | 9.4 | % | 9.7 | % | |||||||
Research and development expenses | 10,137 | 9,938 | 2.0 | % | |||||||
% of net sales | 1.5 | % | 1.6 | % | |||||||
Net loss on held for sale businesses | 26,650 | — | NM | ||||||||
Amortization of intangibles | 11,358 | 11,547 | (1.6 | )% | |||||||
Income from operations | 44,974 | 52,524 | (14.4 | )% | |||||||
Operating margin | 6.8 | % | 8.4 | % | |||||||
Interest and debt expense | 13,185 | 15,072 | (12.5 | )% | |||||||
Investment (income) loss, net | (297 | ) | (161 | ) | 84.5 | % | |||||
Foreign currency exchange (gain) loss | 206 | 705 | (70.8 | )% | |||||||
Other (income) expense, net | (417 | ) | (1,713 | ) | (75.7 | )% | |||||
Income before income tax expense | 32,297 | 38,621 | (16.4 | )% | |||||||
Income tax expense | 9,461 | 25,022 | (62.2 | )% | |||||||
Net income | $ | 22,836 | $ | 13,599 | 67.9 | % | |||||
Average basic shares outstanding | 23,245 | 22,778 | 2.1 | % | |||||||
Basic income per share | $ | 0.98 | $ | 0.60 | 63.3 | % | |||||
Average diluted shares outstanding | 23,647 | 23,203 | 1.9 | % | |||||||
Diluted income per share | $ | 0.97 | $ | 0.59 | 64.4 | % | |||||
Dividends declared per common share | $ | 0.10 | $ | 0.08 | |||||||
Columbus McKinnon Gross Profit Increased 7% on 4% Revenue Growth in Third Quarter Fiscal Year 2019
Page 6 of 13
January 31, 2019
COLUMBUS McKINNON CORPORATION
Condensed Consolidated Balance Sheets
(In thousands)
December 31, 2018 | March 31, 2018 | |||||||
(unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 58,079 | $ | 63,021 | ||||
Trade accounts receivable | 123,411 | 127,806 | ||||||
Inventories | 149,716 | 152,886 | ||||||
Prepaid expenses and other | 16,577 | 16,582 | ||||||
Total current assets | 347,783 | 360,295 | ||||||
Property, plant, and equipment, net | 88,656 | 113,079 | ||||||
Goodwill | 326,851 | 347,434 | ||||||
Other intangibles, net | 239,452 | 263,764 | ||||||
Marketable securities | 6,951 | 7,673 | ||||||
Deferred taxes on income | 32,668 | 32,442 | ||||||
Other assets | 20,163 | 17,759 | ||||||
Total assets | $ | 1,062,524 | $ | 1,142,446 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Trade accounts payable | $ | 39,725 | $ | 46,970 | ||||
Accrued liabilities | 95,494 | 99,963 | ||||||
Current portion of long-term debt | 60,038 | 60,064 | ||||||
Total current liabilities | 195,257 | 206,997 | ||||||
Senior debt, less current portion | — | 33 | ||||||
Term loan and revolving credit facility | 254,795 | 303,221 | ||||||
Other non-current liabilities | 192,041 | 223,966 | ||||||
Total liabilities | 642,093 | 734,217 | ||||||
Shareholders’ equity: | ||||||||
Common stock | 234 | 230 | ||||||
Additional paid-in capital | 275,750 | 269,360 | ||||||
Retained earnings | 219,289 | 197,897 | ||||||
Accumulated other comprehensive loss | (74,842 | ) | (59,258 | ) | ||||
Total shareholders’ equity | 420,431 | 408,229 | ||||||
Total liabilities and shareholders’ equity | $ | 1,062,524 | $ | 1,142,446 | ||||
Columbus McKinnon Gross Profit Increased 7% on 4% Revenue Growth in Third Quarter Fiscal Year 2019
Page 7 of 13
January 31, 2019
COLUMBUS McKINNON CORPORATION
Condensed Consolidated Statements of Cash Flows - UNAUDITED
(In thousands)
Nine Months Ended | ||||||||
December 31, 2018 | December 31, 2017 | |||||||
Operating activities: | ||||||||
Net income | $ | 22,836 | $ | 13,599 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 24,763 | 26,873 | ||||||
Deferred income taxes and related valuation allowance | (2,353 | ) | 20,141 | |||||
Net loss (gain) on sale of real estate, investments, and other | 109 | (10 | ) | |||||
Stock based compensation | 4,625 | 4,267 | ||||||
Amortization of deferred financing costs and discount on debt | 1,992 | 2,009 | ||||||
Net loss on held for sale businesses | 26,650 | — | ||||||
Changes in operating assets and liabilities, net of effects of business acquisitions and divestitures: | ||||||||
Trade accounts receivable | (1,407 | ) | (6,516 | ) | ||||
Inventories | (13,043 | ) | (6,456 | ) | ||||
Prepaid expenses and other | (103 | ) | (130 | ) | ||||
Other assets | 232 | 2,803 | ||||||
Trade accounts payable | (5,330 | ) | 389 | |||||
Accrued liabilities | 3,558 | 5,388 | ||||||
Non-current liabilities | (8,733 | ) | (11,114 | ) | ||||
Net cash provided by operating activities | 53,796 | 51,243 | ||||||
Investing activities: | ||||||||
Proceeds from sales of marketable securities | 1,238 | 653 | ||||||
Purchases of marketable securities | (835 | ) | (109 | ) | ||||
Capital expenditures | (7,236 | ) | (9,384 | ) | ||||
Proceeds from sale of real estate | 176 | — | ||||||
Net proceeds from sale of business | 5,103 | — | ||||||
Net payments to former STAHL owner | — | (14,750 | ) | |||||
Payment of restricted cash to former owner | (294 | ) | (294 | ) | ||||
Cash paid for purchase of equity investment | — | (3,359 | ) | |||||
Net cash used for investing activities | (1,848 | ) | (27,243 | ) | ||||
Financing activities: | ||||||||
Proceeds from the issuance of common stock | 3,708 | 5,961 | ||||||
Repayment of debt | (50,051 | ) | (45,050 | ) | ||||
Payment of dividends | (3,484 | ) | (2,737 | ) | ||||
Other | (1,941 | ) | (1,255 | ) | ||||
Net cash used for financing activities | (51,768 | ) | (43,081 | ) | ||||
Effect of exchange rate changes on cash | (5,416 | ) | 5,795 | |||||
Net change in cash and cash equivalents | (5,236 | ) | (13,286 | ) | ||||
Cash, cash equivalents, and restricted cash at beginning of year | 63,565 | 78,428 | ||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 58,329 | $ | 65,142 | ||||
Columbus McKinnon Gross Profit Increased 7% on 4% Revenue Growth in Third Quarter Fiscal Year 2019
Page 8 of 13
January 31, 2019
COLUMBUS McKINNON CORPORATION
Q3 FY 2019 Sales Bridge
Third Quarter | Year to Date | |||||||||||||
($ in millions) | $ Change | % Change | $ Change | % Change | ||||||||||
Fiscal 2018 Sales | $ | 208.7 | $ | 625.3 | ||||||||||
Volume | 9.9 | 4.8 | % | 28.2 | 4.5 | % | ||||||||
Pricing | 2.8 | 1.3 | % | 6.9 | 1.1 | % | ||||||||
Foreign currency translation | (4.0 | ) | (1.9 | )% | (0.9 | ) | (0.1 | )% | ||||||
Total change | $ | 8.7 | 4.2 | % | $ | 34.2 | 5.5 | % | ||||||
Fiscal 2019 Sales | $ | 217.4 | $ | 659.5 | ||||||||||
COLUMBUS McKINNON CORPORATION
Q3 FY 2019 Gross Profit Bridge
($ in millions) | Third Quarter | Year to Date | |||||
Fiscal 2018 Gross Profit | $ | 68.7 | $ | 209.0 | |||
Sales volume and mix | 2.0 | 8.9 | |||||
Productivity, net of other cost changes | 1.6 | 7.9 | |||||
Pricing, net of material cost inflation | 1.6 | 4.4 | |||||
Product liability | 0.6 | 0.8 | |||||
Prior year STAHL integration costs | 0.1 | 0.3 | |||||
Foreign currency translation | (1.0 | ) | (0.1 | ) | |||
Ohio plant closure | (0.2 | ) | (0.2 | ) | |||
Current year STAHL integration costs | — | (0.3 | ) | ||||
Prior year insurance settlement | — | (1.7 | ) | ||||
Total change | $ | 4.7 | $ | 20.0 | |||
Fiscal 2019 Gross Profit | $ | 73.4 | $ | 229.0 | |||
Columbus McKinnon Gross Profit Increased 7% on 4% Revenue Growth in Third Quarter Fiscal Year 2019
Page 9 of 13
January 31, 2019
COLUMBUS McKINNON CORPORATION
Additional Data - UNAUDITED
December 31, 2018 | March 31, 2018 | December 31, 2017 | |||||||||||||
($ in millions) | |||||||||||||||
Backlog | $ | 159.9 | $ | 177.4 | $ | 152.3 | |||||||||
Long-term backlog (expected to ship beyond 3 months) | $ | 55.1 | $ | 59.5 | $ | 50.9 | |||||||||
Long-term backlog as % of total backlog | 34.5 | % | 33.5 | % | 33.4 | % | |||||||||
Trade accounts receivable | |||||||||||||||
Days sales outstanding (2) | 52.3 | days | 54.3 | days | 53.8 | days | |||||||||
Inventory turns per year (2) | |||||||||||||||
(based on cost of products sold) | 3.8 | turns | 3.7 | turns | 3.9 | turns | |||||||||
Days' inventory (2) | 96.1 | days | 100.0 | days | 93.6 | days | |||||||||
Trade accounts payable | |||||||||||||||
Days payables outstanding (2) | 25.4 | days | 30.6 | days | 28.0 | days | |||||||||
Working capital as a % of sales (1), (2) | 17.9 | % | 17.9 | % | 17.4 | % | |||||||||
Debt to total capitalization percentage | 42.8 | % | 47.1 | % | 49.6 | % | |||||||||
Debt, net of cash, to net total capitalization | 37.9 | % | 42.4 | % | 44.9 | % | |||||||||
(1) December 31, 2017 figure excludes the impact of the acquisition of STAHL.
(2) December 31, 2018 figures exclude the Tire Shredder business, which was divested on December 28, 2018.
U.S. Shipping Days by Quarter | ||||||||||
Q1 | Q2 | Q3 | Q4 | Total | ||||||
FY 20 | 63 | 63 | 61 | 64 | 251 | |||||
FY 19 | 64 | 63 | 60 | 63 | 250 | |||||
FY 18 | 63 | 62 | 60 | 63 | 248 | |||||
Columbus McKinnon Gross Profit Increased 7% on 4% Revenue Growth in Third Quarter Fiscal Year 2019
Page 10 of 13
January 31, 2019
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 December 31, | Year to Date Ended December 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Gross profit | $ | 73,405 | $ | 68,696 | $ | 228,952 | $ | 209,022 | |||||||
Add back (deduct): | |||||||||||||||
Ohio plant closure | 200 | — | 200 | — | |||||||||||
STAHL integration costs | — | 50 | — | 271 | |||||||||||
Insurance settlement | — | — | — | (1,741 | ) | ||||||||||
Non-GAAP adjusted gross profit | $ | 73,605 | $ | 68,746 | $ | 229,152 | $ | 207,552 | |||||||
Sales | $ | 217,415 | $ | 208,725 | $ | 659,549 | $ | 625,279 | |||||||
Adjusted gross margin | 33.9 | % | 32.9 | % | 34.7 | % | 33.2 | % | |||||||
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 Gross Profit Increased 7% on 4% Revenue Growth in Third Quarter Fiscal Year 2019
Page 11 of 13
January 31, 2019
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 December 31, | Year to Date Ended December 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Income from operations | $ | 6,646 | $ | 13,710 | $ | 44,974 | $ | 52,524 | |||||||
Add back (deduct): | |||||||||||||||
Impairment on held for sale business | 16,653 | — | 27,753 | — | |||||||||||
Gain on sale of business | (1,103 | ) | — | (1,103 | ) | — | |||||||||
Insurance recovery legal costs | 491 | 1,040 | 1,150 | 2,592 | |||||||||||
Ohio plant closure | 200 | — | 200 | — | |||||||||||
STAHL integration costs | — | 3,006 | 1,906 | 4,846 | |||||||||||
Magnetek litigation | — | — | — | 400 | |||||||||||
Insurance settlement | — | — | — | (1,741 | ) | ||||||||||
Non-GAAP adjusted income from operations | $ | 22,887 | $ | 17,756 | $ | 74,880 | $ | 58,621 | |||||||
Sales | $ | 217,415 | $ | 208,725 | $ | 659,549 | $ | 625,279 | |||||||
Adjusted operating margin | 10.5 | % | 8.5 | % | 11.4 | % | 9.4 | % | |||||||
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 Gross Profit Increased 7% on 4% Revenue Growth in Third Quarter Fiscal Year 2019
Page 12 of 13
January 31, 2019
COLUMBUS McKINNON CORPORATION
Reconciliation of GAAP Net Income (Loss) 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 December 31, | Year to Date December 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income (loss) | $ | (782 | ) | $ | (10,565 | ) | $ | 22,836 | $ | 13,599 | |||||
Add back (deduct): | |||||||||||||||
Impairment on held for sale business | 16,653 | — | 27,753 | — | |||||||||||
Gain on sale of business | (1,103 | ) | — | (1,103 | ) | — | |||||||||
Insurance recovery legal costs | 491 | 1,040 | 1,150 | 2,592 | |||||||||||
Ohio plant closure | 200 | — | 200 | — | |||||||||||
STAHL integration costs | — | 3,006 | 1,906 | 4,846 | |||||||||||
Magnetek litigation | — | — | — | 400 | |||||||||||
Insurance settlement | — | — | — | (1,741 | ) | ||||||||||
Normalize tax rate to 22% (1) | (974 | ) | 16,938 | (4,224 | ) | 15,184 | |||||||||
Non-GAAP adjusted net income | $ | 14,485 | $ | 10,419 | $ | 48,518 | $ | 34,880 | |||||||
Average diluted shares outstanding | 23,681 | 23,577 | 23,647 | 23,203 | |||||||||||
Diluted income (loss) per share - GAAP | $ | (0.03 | ) | $ | (0.46 | ) | $ | 0.97 | $ | 0.59 | |||||
Diluted income per share - Non-GAAP | $ | 0.61 | $ | 0.44 | $ | 2.05 | $ | 1.50 | |||||||
(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 Gross Profit Increased 7% on 4% Revenue Growth in Third Quarter Fiscal Year 2019
Page 13 of 13
January 31, 2019
COLUMBUS McKINNON CORPORATION
Reconciliation of GAAP Net Income (Loss) to Non-GAAP Adjusted EBITDA
($ in thousands)
Three Months Ended December 31, | Year to Date December 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income (loss) | $ | (782 | ) | $ | (10,565 | ) | $ | 22,836 | $ | 13,599 | |||||
Add back (deduct): | |||||||||||||||
Income tax expense | 3,111 | 19,877 | 9,461 | 25,022 | |||||||||||
Interest and debt expense | 4,330 | 4,864 | 13,185 | 15,072 | |||||||||||
Investment loss (income) | 82 | (53 | ) | (297 | ) | (161 | ) | ||||||||
Foreign currency exchange (gain) loss | (25 | ) | 312 | 206 | 705 | ||||||||||
Other (income) expense, net | (70 | ) | (725 | ) | (417 | ) | (1,713 | ) | |||||||
Depreciation and amortization expense | 7,901 | 9,118 | 24,763 | 26,873 | |||||||||||
Impairment on held for sale business | 16,653 | — | 27,753 | — | |||||||||||
Gain on sale of business | (1,103 | ) | — | (1,103 | ) | — | |||||||||
Insurance recovery legal costs | 491 | 1,040 | 1,150 | 2,592 | |||||||||||
Ohio plant closure | 200 | — | 200 | — | |||||||||||
STAHL integration costs | — | 3,006 | 1,906 | 4,846 | |||||||||||
Magnetek litigation | — | — | — | 400 | |||||||||||
Insurance settlement | — | — | — | (1,741 | ) | ||||||||||
Non-GAAP adjusted EBITDA | $ | 30,788 | $ | 26,874 | $ | 99,643 | $ | 85,494 | |||||||
Sales | $ | 217,415 | $ | 208,725 | $ | 659,549 | $ | 625,279 | |||||||
Adjusted EBITDA margin | 14.2 | % | 12.9 | % | 15.1 | % | 13.7 | % | |||||||
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 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.