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 2021 second quarter, which ended September 30, 2020.
Second Quarter Highlights
- Strong sequential improvement demonstrates effectiveness of cost saving and self-help improvement measures
- Revenue up 13.5% over trailing first fiscal quarter to $157.8 million; at high end of expected range
- Operating income of $15.8 million or 10.0% of sales; Adjusted operating income* of $14.0 million, or 8.9% of sales
- Cash from operations in the quarter was $37.4 million driven by a disciplined focus on reducing working capital requirements
- Advancing product launches and broadening offerings in Compass™ configurator
David Wilson, President and CEO of Columbus McKinnon, commented, “We delivered solid results in the quarter achieving the higher end of our expected revenue range and demonstrated our capabilities to drive profitability and strong cash generation in a challenging environment. In fact, the 80/20 Process, a key tool in our business system, contributed $3.4 million in operating income during the quarter, helping to offset headwinds caused by the pandemic. Our strong cash flow and excellent liquidity position enabled our repayment of the $25 million Revolver borrowing in early October.
“We are building momentum as we strengthen our business operating system, evolve the Blueprint for Growth strategy and pivot to growth. Our focus is on identifying opportunities to both deepen our market penetration and expand our addressable markets. We have the financial strength to continue to invest in prioritized growth initiatives even as we carefully manage our operations and ensure the safety and well-being of the Columbus McKinnon team.”
*Adjusted operating income is a non-GAAP measure. See accompanying discussion and reconciliation table in this release regarding adjusted operating income. |
Second Quarter Fiscal 2021 Sales
($ in millions) | Q2 FY 21 | Q2 FY 20 | Change | % Change | ||||||||||
Net sales | $ | 157.8 | $ | 207.6 | $ | (49.8) | (24.0) | % | ||||||
U.S. sales | $ | 84.7 | $ | 113.5 | $ | (28.8) | (25.4) | % | ||||||
% of total | 54 | % | 55 | % | ||||||||||
Non-U.S. sales | $ | 73.1 | $ | 94.1 | $ | (21.0) | (22.3) | % | ||||||
% of total | 46 | % | 45 | % | ||||||||||
Compared with the prior-year period, lower volume was due to the global economic impact of the COVID-19 pandemic. Lower U.S. sales volume more than offset a 1.1% price improvement while lower volume outside the U.S. was somewhat offset by a $2.2 million, or 2.3%, positive impact from foreign currency translation and price improvement of 1.2%.
Compared with the trailing first quarter, sales improved 13.5% with short cycle sales up 22.2% and project sales up 5.5%.
Second Quarter Fiscal 2021 Operating Results
($ in millions) | Q2 FY 21 | Q2 FY 20 | Change | % Change | ||||||||||
Gross profit | $ | 56.0 | $ | 73.5 | $ | (17.5) | (23.8) | % | ||||||
Gross margin | 35.5 | % | 35.4 | % | 10 bps | |||||||||
Income from operations | $ | 15.8 | $ | 25.2 | $ | (9.4) | (37.3) | % | ||||||
Operating margin | 10.0 | % | 12.2 | % | (220) bps | |||||||||
Net income (loss) | $ | (4.1) | $ | 16.6 | $ | (20.7) | NM | |||||||
Diluted EPS | $ | (0.17) | $ | 0.69 | $ | (0.86) | NM | |||||||
Adjusted EBITDA * | $ | 21.1 | $ | 33.7 | $ | (12.5) | (37.2) | % | ||||||
Adjusted EBITDA margin | 13.4 | % | 16.2 | % | (280) 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 $14.0 million, or 8.9% of sales. Decremental adjusted operating income leverage from the prior-year period was 25% which continues to demonstrate better than historic decremental leverage. (See the reconciliation of GAAP income from operations to adjusted income from operations on the attached tables.) Net loss for the quarter was $4.1 million, which included a $16.3 million non-cash pension settlement charge related to the termination of a U.S. pension plan.
On a sequential basis, Adjusted EBITDA was up $9.1 million, or 74.9%, to $21.1 million on an $18.7 million increase in sales. Adjusted EBITDA margin expanded 470 basis points sequentially to 13.4% from the fiscal 2021 first quarter.
Third Quarter Fiscal 2021 Outlook
Orders were up nearly 26% compared with the trailing first quarter. Order growth was driven mostly by the recovery of the short cycle business, which improved 41% over the first quarter this fiscal year whereas the project business grew at a rate of 12%. Total backlog has recovered to pre-COVID levels and long-term backlog, which is expected to ship beyond the fiscal third quarter, grew to 41.5% of total backlog. As a result, the Company expects third quarter fiscal 2021 revenue to be within a range of approximately $150 million to $160 million at current exchange rates.
Mr. Wilson concluded, “I am really proud of the team and how we have executed in the first half of the fiscal year. Importantly, we are keeping our eye on the long term as we advance our strategic plan. In the second quarter, we launched several new products, expanded the capabilities of our Compass™ configurator and increased our focus on improving our customers’ experience. I am confident we will continue to execute well, and we will emerge from these challenging times a better company.”
Teleconference/webcast
Columbus McKinnon will host a conference call and live webcast Thursday, October 29, 2020 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 https://investors.columbusmckinnon.com. To listen to the archived call, dial 412-317-6671 and enter the passcode 13710950. The telephonic replay will be available from 1:00 PM Eastern Time on the day of the call through Thursday, November 5, 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 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, the Company’s ability to grow market share, the ability to achieve revenue expectations, 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 | |||||||||||
September 30, 2020 | September 30, 2019 | Change | |||||||||
Net sales | $ | 157,790 | $ | 207,609 | (24.0) | % | |||||
Cost of products sold | 101,765 | 134,116 | (24.1) | % | |||||||
Gross profit | 56,025 | 73,493 | (23.8) | % | |||||||
Gross profit margin | 35.5 | % | 35.4 | % | |||||||
Selling expenses | 18,563 | 22,877 | (18.9) | % | |||||||
% of net sales | 11.8 | % | 11.0 | % | |||||||
General and administrative expenses | 15,554 | 19,153 | (18.8) | % | |||||||
% of net sales | 9.9 | % | 9.2 | % | |||||||
Research and development expenses | 2,896 | 2,999 | (3.4) | % | |||||||
% of net sales | 1.8 | % | 1.4 | % | |||||||
Loss on sales of businesses | — | 7 | NM | ||||||||
Amortization of intangibles | 3,192 | 3,226 | (1.1) | % | |||||||
Income from operations | 15,820 | 25,231 | (37.3) | % | |||||||
Operating margin | 10.0 | % | 12.2 | % | |||||||
Interest and debt expense | 3,018 | 3,759 | (19.7) | % | |||||||
Investment (income) loss | (357) | (229) | 55.9 | % | |||||||
Foreign currency exchange (gain) loss | 397 | (296) | NM | ||||||||
Other (income) expense, net | 16,911 | 257 | 6,480.2 | % | |||||||
Income (loss) before income tax expense (benefit) | (4,149) | 21,740 | NM | ||||||||
Income tax expense (benefit) | (45) | 5,141 | NM | ||||||||
Net income (loss) | $ | (4,104) | $ | 16,599 | NM | ||||||
Average basic shares outstanding | 23,883 | 23,631 | 1.1 | % | |||||||
Basic income (loss) per share | $ | (0.17) | $ | 0.70 | NM | ||||||
Average diluted shares outstanding | 23,883 | 23,926 | (0.2) | % | |||||||
Diluted income (loss) per share | $ | (0.17) | $ | 0.69 | NM | ||||||
Dividends declared per common share | $ | 0.06 | $ | 0.06 | |||||||
| COLUMBUS McKINNON CORPORATION Condensed Consolidated Income Statements - UNAUDITED (In thousands, except per share and percentage data) | |||||||||||
Six Months Ended | |||||||||||
September 30, 2020 | September 30, 2019 | Change | |||||||||
Net sales | $ | 296,860 | $ | 420,321 | (29.4) | % | |||||
Cost of products sold | 196,038 | 271,216 | (27.7) | % | |||||||
Gross profit | 100,822 | 149,105 | (32.4) | % | |||||||
Gross profit margin | 34.0 | % | 35.5 | % | |||||||
Selling expenses | 37,258 | 45,632 | (18.4) | % | |||||||
% of net sales | 12.6 | % | 10.9 | % | |||||||
General and administrative expenses | 33,983 | 38,753 | (12.3) | % | |||||||
% of net sales | 11.4 | % | 9.2 | % | |||||||
Research and development expenses | 5,665 | 5,791 | (2.2) | % | |||||||
% of net sales | 1.9 | % | 1.4 | % | |||||||
Loss on sales of businesses | — | 176 | NM | ||||||||
Amortization of intangibles | 6,307 | 6,479 | (2.7) | % | |||||||
Income from operations | 17,609 | 52,274 | (66.3) | % | |||||||
Operating margin | 5.9 | % | 12.4 | % | |||||||
Interest and debt expense | 6,206 | 7,611 | (18.5) | % | |||||||
Investment (income) loss | (934) | (531) | 75.9 | % | |||||||
Foreign currency exchange (gain) loss | 481 | (706) | NM | ||||||||
Other (income) expense, net | 19,937 | 419 | 4,658.2 | % | |||||||
Income (loss) before income tax expense (benefit) | (8,081) | 45,481 | NM | ||||||||
Income tax expense (benefit) | (1,008) | 10,303 | NM | ||||||||
Net income (loss) | $ | (7,073) | $ | 35,178 | NM | ||||||
Average basic shares outstanding | 23,843 | 23,532 | 1.3 | % | |||||||
Basic income (loss) per share | $ | (0.30) | $ | 1.49 | NM | ||||||
Average diluted shares outstanding | 23,843 | 23,832 | — | % | |||||||
Diluted income (loss) per share | $ | (0.30) | $ | 1.48 | NM | ||||||
Dividends declared per common share | $ | 0.06 | $ | 0.06 | |||||||
| COLUMBUS McKINNON CORPORATION Condensed Consolidated Balance Sheets (In thousands) | ||||||||
September 30, 2020 | March 31, 2020 | |||||||
(unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 186,556 | $ | 114,450 | ||||
Trade accounts receivable | 92,540 | 123,743 | ||||||
Inventories | 112,095 | 127,373 | ||||||
Prepaid expenses and other | 18,124 | 17,180 | ||||||
Total current assets | 409,315 | 382,746 | ||||||
Property, plant, and equipment, net | 72,782 | 79,473 | ||||||
Goodwill | 330,859 | 319,679 | ||||||
Other intangibles, net | 219,434 | 217,962 | ||||||
Marketable securities | 8,534 | 7,322 | ||||||
Deferred taxes on income | 27,798 | 26,281 | ||||||
Other assets | 63,212 | 59,809 | ||||||
Total assets | $ | 1,131,934 | $ | 1,093,272 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Trade accounts payable | $ | 37,724 | $ | 57,289 | ||||
Accrued liabilities | 88,679 | 93,585 | ||||||
Current portion of long-term debt | 29,450 | 4,450 | ||||||
Total current liabilities | 155,853 | 155,324 | ||||||
Term loan and revolving credit facility | 245,680 | 246,856 | ||||||
Other non-current liabilities | 250,445 | 227,507 | ||||||
Total liabilities | 651,978 | 629,687 | ||||||
Shareholders’ equity: | ||||||||
Common stock | 239 | 238 | ||||||
Additional paid-in capital | 290,690 | 287,256 | ||||||
Retained earnings | 281,935 | 290,441 | ||||||
Accumulated other comprehensive loss | (92,908) | (114,350) | ||||||
Total shareholders’ equity | 479,956 | 463,585 | ||||||
Total liabilities and shareholders’ equity | $ | 1,131,934 | $ | 1,093,272 | ||||
| COLUMBUS McKINNON CORPORATION Condensed Consolidated Statements of Cash Flows - UNAUDITED (In thousands) | ||||||||
Six Months Ended | ||||||||
September 30, 2020 | September 30, 2019 | |||||||
Operating activities: | ||||||||
Net income (loss) | $ | (7,073) | $ | 35,178 | ||||
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: | ||||||||
Depreciation and amortization | 14,210 | 14,747 | ||||||
Deferred income taxes and related valuation allowance | (6,745) | 748 | ||||||
Net loss (gain) on sale of real estate, investments, and other | (557) | (446) | ||||||
Stock based compensation | 3,989 | 3,511 | ||||||
Amortization of deferred financing costs | 1,327 | 1,327 | ||||||
Loss on sales of businesses | — | 176 | ||||||
Non-cash pension settlement expense | 19,046 | — | ||||||
Gain on sale of building | (2,638) | — | ||||||
Non-cash lease expense | 3,785 | 4,223 | ||||||
Changes in operating assets and liabilities, net of effects of business acquisitions and divestitures: | ||||||||
Trade accounts receivable | 33,594 | (2,648) | ||||||
Inventories | 18,987 | 1,400 | ||||||
Prepaid expenses and other | (1,627) | (2,883) | ||||||
Other assets | 570 | (171) | ||||||
Trade accounts payable | (20,078) | 332 | ||||||
Accrued liabilities | (7,895) | (8,230) | ||||||
Non-current liabilities | (1,952) | (9,384) | ||||||
Net cash provided by (used for) operating activities | 46,943 | 37,880 | ||||||
Investing activities: | ||||||||
Proceeds from sales of marketable securities | 1,034 | 1,928 | ||||||
Purchases of marketable securities | (1,759) | (2,581) | ||||||
Capital expenditures | (2,779) | (4,843) | ||||||
Proceeds from sale of building, net of transaction costs | 5,453 | — | ||||||
Dividend received from equity method investment | 587 | — | ||||||
Proceeds from sale of equipment | — | 51 | ||||||
Net (payments) proceeds from sales of businesses | — | (214) | ||||||
Net cash provided by (used for) investing activities | 2,536 | (5,659) | ||||||
Financing activities: | ||||||||
Proceeds from issuance of common stock | 429 | 3,784 | ||||||
Borrowings under line-of-credit agreements | 25,000 | — | ||||||
Repayment of debt | (2,225) | (30,000) | ||||||
Fees paid for revolver extension | (826) | — | ||||||
Payment of dividends | (2,860) | (2,824) | ||||||
Other | (982) | (544) | ||||||
Net cash provided by (used for) financing activities | 18,536 | (29,584) | ||||||
Effect of exchange rate changes on cash | 4,091 | (1,751) | ||||||
Net change in cash and cash equivalents | 72,106 | 886 | ||||||
Cash, cash equivalents, and restricted cash at beginning of year | 114,700 | 71,343 | ||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 186,806 | $ | 72,229 | ||||
| COLUMBUS McKINNON CORPORATION Q2 FY 2021 Sales Bridge | ||||||||||||||
Quarter | Year To Date | |||||||||||||
($ in millions) | $ Change | % Change | $ Change | % Change | ||||||||||
Fiscal 2020 Sales | $ | 207.6 | $ | 420.3 | ||||||||||
Volume | (54.3) | (26.2) | % | (128.4) | (30.5) | % | ||||||||
Pricing | 2.3 | 1.1 | % | 4.8 | 1.1 | % | ||||||||
Foreign currency translation | 2.2 | 1.1 | % | 0.2 | — | % | ||||||||
Total change | $ | (49.8) | (24.0) | % | $ | (123.4) | (29.4) | % | ||||||
Fiscal 2021 Sales | $ | 157.8 | $ | 296.9 | ||||||||||
| COLUMBUS McKINNON CORPORATION Q2 FY 2021 Gross Profit Bridge | |||||||
($ in millions) | Quarter | Year To Date | |||||
Fiscal 2020 Gross Profit | $ | 73.5 | $ | 149.1 | |||
Pricing, net of material cost inflation | 2.3 | 4.7 | |||||
Gain on sale of building | 2.2 | 2.2 | |||||
Tariffs | 0.6 | 1.4 | |||||
Foreign currency translation | 0.8 | 0.2 | |||||
Business realignment costs | 0.1 | (0.2 | ) | ||||
Insurance settlement | — | (0.3 | ) | ||||
Factory closures | (0.3 | ) | (1.6 | ) | |||
Productivity, net of other cost changes | (3.8 | ) | (8.3 | ) | |||
Sales volume and mix | (19.4 | ) | (46.4 | ) | |||
Total change | $ | (17.5 | ) | $ | (48.3 | ) | |
Fiscal 2021 Gross Profit | $ | 56.0 | $ | 100.8 | |||
| COLUMBUS McKINNON CORPORATION Additional Data – UNAUDITED | ||||||||||||||||||||
September 30, 2020 | June 30, 2020 | March 31, 2020 | September 30, 2019 | |||||||||||||||||
($ in millions) | ||||||||||||||||||||
Backlog | $ | 146.6 | $ | 130.7 | $ | 131.0 | $ | 143.1 | ||||||||||||
Long-term backlog | ||||||||||||||||||||
Expected to ship beyond 3 months | $ | 60.8 | $ | 52.8 | $ | 49.1 | $ | 53.9 | ||||||||||||
Long-term backlog as % of total backlog | 41.5 | % | 40.4 | % | 37.5 | % | 37.7 | % | ||||||||||||
Trade accounts receivable | ||||||||||||||||||||
Days sales outstanding | 53.4 | days | 63.1 | days | 59.4 | days | 57.0 | days | ||||||||||||
Inventory turns per year | ||||||||||||||||||||
(based on cost of products sold) | 3.6 | turns | 3.0 | turns | 3.9 | turns | 3.8 | turns | ||||||||||||
Days' inventory | 100.5 | days | 120.6 | days | 94.3 | days | 96.9 | days | ||||||||||||
Trade accounts payable | ||||||||||||||||||||
Days payables outstanding | 33.7 | days | 37.6 | days | 42.3 | days | 33.2 | days | ||||||||||||
Working capital as a % of sales (1) | 14.1 | % | 14.9 | % | 14.5 | % | 17.2 | % | ||||||||||||
Debt to total capitalization percentage | 36.4 | % | 37.1 | % | 35.2 | % | 36.9 | % | ||||||||||||
Debt, net of cash, to net total capitalization | 15.6 | % | 20.9 | % | 22.8 | % | 30.1 | % | ||||||||||||
(1) | September 30, 2019 figure excludes 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. |
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 | |||||
| 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 September 30, | Six Months Ended September 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Gross profit | $ | 56,025 | $ | 73,493 | $ | 100,822 | $ | 149,105 | |||||||
Add back (deduct): | |||||||||||||||
Factory closures | 493 | 249 | 2,421 | 755 | |||||||||||
Business realignment costs | — | 140 | 329 | 140 | |||||||||||
Insurance settlement | — | — | — | (290) | |||||||||||
Gain on sale of building | (2,189) | — | (2,189) | — | |||||||||||
Non-GAAP adjusted gross profit | $ | 54,329 | $ | 73,882 | $ | 101,383 | $ | 149,710 | |||||||
Sales | $ | 157,790 | $ | 207,609 | $ | 296,860 | $ | 420,321 | |||||||
Adjusted gross margin | 34.4 | % | 35.6 | % | 34.2 | % | 35.6 | % | |||||||
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 September 30, | Six Months Ended September 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Income from operations | $ | 15,820 | $ | 25,231 | $ | 17,609 | $ | 52,274 | |||||||
Add back (deduct): | |||||||||||||||
Factory closures | 747 | 470 | 3,003 | 1,497 | |||||||||||
Business realignment costs | — | 413 | 821 | 413 | |||||||||||
Insurance recovery legal costs | 88 | 220 | 229 | 359 | |||||||||||
Loss on sales of businesses | — | 7 | — | 176 | |||||||||||
Insurance settlement | — | — | — | (290) | |||||||||||
Gain on sale of building | (2,638) | — | (2,638) | — | |||||||||||
Non-GAAP adjusted income from operations | $ | 14,017 | $ | 26,341 | $ | 19,024 | $ | 54,429 | |||||||
Sales | $ | 157,790 | $ | 207,609 | $ | 296,860 | $ | 420,321 | |||||||
Adjusted operating margin | 8.9 | % | 12.7 | % | 6.4 | % | 12.9 | % | |||||||
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 September 30, | Six Months Ended September 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Net income (loss) | $ | (4,104) | $ | 16,599 | $ | (7,073) | $ | 35,178 | |||||||
Add back (deduct): | |||||||||||||||
Non-cash pension settlement expense | 16,324 | — | 19,046 | — | |||||||||||
Factory closures | 747 | 470 | 3,003 | 1,497 | |||||||||||
Business realignment costs | — | 413 | 821 | 413 | |||||||||||
Insurance recovery legal costs | 88 | 220 | 229 | 359 | |||||||||||
Loss on sales of businesses | — | 7 | — | 176 | |||||||||||
Insurance settlement | — | — | — | (290) | |||||||||||
Gain on sale of building | (2,638) | — | (2,638) | — | |||||||||||
Normalize tax rate to 22% (1) | (2,327) | 114 | (3,732) | (177) | |||||||||||
Non-GAAP adjusted net income | $ | 8,090 | $ | 17,823 | $ | 9,656 | $ | 37,156 | |||||||
Average diluted shares outstanding | 24,123 | 23,926 | 24,030 | 23,832 | |||||||||||
Diluted income (loss) per share - GAAP | $ | (0.17) | $ | 0.69 | $ | (0.30) | $ | 1.48 | |||||||
Diluted income per share - Non-GAAP | $ | 0.34 | $ | 0.74 | $ | 0.40 | $ | 1.56 | |||||||
(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 September 30, | Six Months Ended September 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Net income (loss) | $ | (4,104) | $ | 16,599 | $ | (7,073) | $ | 35,178 | |||||||
Add back (deduct): | |||||||||||||||
Income tax expense (benefit) | (45) | 5,141 | (1,008) | 10,303 | |||||||||||
Interest and debt expense | 3,018 | 3,759 | 6,206 | 7,611 | |||||||||||
Investment (income) loss | (357) | (229) | (934) | (531) | |||||||||||
Foreign currency exchange (gain) loss | 397 | (296) | 481 | (706) | |||||||||||
Other (income) expense, net | 16,911 | 257 | 19,937 | 419 | |||||||||||
Depreciation and amortization expense | 7,129 | 7,344 | 14,210 | 14,747 | |||||||||||
Factory closures | 747 | 470 | 3,003 | 1,497 | |||||||||||
Business realignment costs | — | 413 | 821 | 413 | |||||||||||
Insurance recovery legal costs | 88 | 220 | 229 | 359 | |||||||||||
Loss on sales of businesses | — | 7 | — | 176 | |||||||||||
Insurance settlement | — | — | — | (290) | |||||||||||
Gain on sale of building | (2,638) | — | (2,638) | — | |||||||||||
Non-GAAP adjusted EBITDA | $ | 21,146 | $ | 33,685 | $ | 33,234 | $ | 69,176 | |||||||
Sales | $ | 157,790 | $ | 207,609 | $ | 296,860 | $ | 420,321 | |||||||
Adjusted EBITDA margin | 13.4 | % | 16.2 | % | 11.2 | % | 16.5 | % | |||||||
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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Contacts:
Vice President - Finance and Chief Financial Officer
Columbus McKinnon Corporation
716-689-5442
greg.rustowicz@cmworks.com
