Columbus McKinnon Reports Record Gross Margin of 37.5% for First Quarter Fiscal Year 2023

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		%

(1) Free cash flow is defined as cash from operations less capital expenditures. Free cash flow 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 free cash flow, is important for investors and other readers of the Company’s financial statements.

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

(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, 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.

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