AMHERST, N.Y., July 28, 2016 (GLOBE NEWSWIRE) -- Columbus McKinnon Corporation (NASDAQ:CMCO), a leading designer, manufacturer and marketer of material handling products, technologies and services, today announced financial results for its fiscal year 2017 first quarter, which ended June 30, 2016.  First quarter results include the Magnetek, Inc. ("Magnetek") acquisition completed on September 2, 2015.

First Quarter Summary (compared with prior year period, unless otherwise noted)

• Net sales were $149.0 million, up 9.4%; end markets appear to be stabilizing.
• Magnetek short-term integration and long-term smart technology continues to move forward with positive results.
• Gross margin was 32.2%, up 20 basis points; operating margin was 7.5%.
• Net income was $6.4 million compared with $6.9 million; includes additional $1.4 million, pre-tax, in interest and debt expense for acquisition borrowings; Earnings per diluted share were $0.32 and adjusted earnings were $0.34*.
• Cash provided by operating activities more than doubled over prior-year period to $7.2 million.
• Repaid $16.8 million of debt: ahead of $43 million target in Fiscal 2017.  Debt to total capitalization down 200 basis points from March 31, 2016 to 46.3%; goal is 30%.

*Please see the attached tables for a reconciliation of GAAP earnings per share to adjusted earnings per share.

Timothy T. Tevens, President and Chief Executive Officer, commented, "Sales growth in the quarter was driven by our Magnetek acquisition and solid revenue growth in Europe.  Our focus remains to drive sales initiatives and push for growth, regardless of the economic environment.  For example, during the quarter we enhanced our value proposition for our customers with the introduction of the Yale LodeKing LT wire rope hoist.  This new hoist is the first collaboration of Magnetek’s leading motion control technology with our best-in-class hoist designs.  The new product offers the added functionality of an integrated Magnetek drive system that enables a smaller packaged hoist.  We have also launched our digital platform, Compass™, which allows customers to quickly and easily design and specify their lifting systems.  And, we are testing ‘a Magnetek Drive in every hoist’ on two key platforms, our world-wide leading Lodestar and the well-regarded Global King wire rope hoist.”

Mr. Tevens added, “We continue to prove our ability to consistently generate cash and reduce debt.  With only one quarter completed, we expect to exceed our fiscal 2017 target of $43 million in debt reduction.  In fact, in the ten months since we acquired Magnetek, we have paid down approximately $54 million, or 27%, of the $195 million we borrowed for the acquisition." 

He concluded with his outlook for fiscal 2017, “We still believe the year will be challenging, but end markets appear to be stabilizing.  We continue to take market share in the U.S. with excellent customer service and the introduction of new and enhanced products.  Encouragingly, we believe that the North American market may have bottomed as oil prices and rig counts have stabilized and supporting industries seemed to have steadied.  However, even with our leading market positions, Latin America and Asia remain weak.  The Brexit move has caused heightened uncertainty in Europe, but nonetheless, we will remain focused on our efforts to gain new customers, increase market penetration, advance our offerings and deliver quality product in a timely manner.  Likewise, we continually pursue the reduction of our cost structure and improving productivity in all facets of our business.  We believe our high quality products and strong brands, the breadth of our market reach, our extensive channels to market and our leading efforts with smart hoist technology provide us competitive advantages in any market environment.”

First Quarter Review

Sales

($ in millions)	Q1 FY 2017				Q1 FY 2016				$ Change				% Change
Net sales	$	149.0			$	136.2			$	12.8			9.4	%
U.S. sales	$	93.9			$	81.6			$	12.3			15.1	%
% of total	63		%		60		%
Non-U.S. sales	$	55.1			$	54.6			$	0.5			0.9	%
% of total	37		%		40		%

Excluding a $1.4 million unfavorable impact of foreign currency exchange, sales increased $14.2 million, or 10.4%.  The Magnetek acquisition contributed $23.9 million to first quarter sales which, combined with very modest price improvement, more than offset lower volume.  For more information on changes in sales, please see the attached tables.

Magnetek contributed $20.9 million to U.S. sales, more than offsetting lower volume in the region.  Sales outside of the U.S. were up $2.0 million, or 3.6%, after excluding unfavorable foreign currency exchange.

Operating Results

($ in millions)	Q1 FY 2017				Q1 FY 2016				$ Change				% Change
Gross profit	$	48.0			$	43.6			$	4.5			10.2	%
Gross margin	32.2		%		32.0		%		20 bps
Income from operations	$	11.2			$	11.3			$	(0.1	)		(0.8	)%
Operating margin	7.5		%		8.3		%		(80) bps
Net income	$	6.4			$	6.9			$	(0.5	)		(7.4	)%
Diluted EPS	$	0.32			$	0.34			$	(0.02	)		(5.9	)%

Higher gross profit reflects incremental gross profit of $8.4 million from Magnetek and $1.4 million of productivity gains.  This more than offset the unfavorable impact of lower sales volume, mix and foreign currency translation.  Product liability costs were higher as a result of a $1.0 million legal settlement this quarter.  For more information on changes in gross profit, please see the attached tables.

Income from operations decreased 0.8% as incremental gross profit from higher sales was offset by higher selling, general and administrative costs and amortization from the acquisition.  Magnetek added an incremental $4.6 million in selling, general and administrative expenses.

Net income declined just $0.5 million despite a $1.4 million increase in interest and debt expense from the higher levels of debt associated with the acquisition.  Net income also benefitted from a slightly lower tax rate due to the mix of pre-tax income by geographic jurisdiction.  Adjusted net income, a non-GAAP financial measure, was $6.8 million, compared with $7.8 million in the prior-year period.  The decline in adjusted net income was largely the result of lower sales volume.  Please see the attached tables for a reconciliation of GAAP net income and earnings per share to adjusted net income and earnings per share.

Ahead of Target: Paying Down Debt with Strong Cash Generation

Cash provided by operating activities in the first quarter more than doubled to $7.2 million over the prior-year period.  Excluding the impact of the Magnetek acquisition, working capital as a percent of sales increased 90 basis points during the quarter.  The variation, beyond the typical impact of timing of receivables and payables, was due to higher inventory levels required for an approximately $8 million increase in project backlog over March 31, 2016 levels.  Project backlog increased to $49.4 million, or 48% of total backlog, as more Rail & Road projects were booked.  These are longer-lead time projects that will not be shipped within the typical three-months-or-less timeframe.  Approximately $11 million of these Rail & Road projects are scheduled for shipment in fiscal 2018 and beyond.

During the quarter, $16.8 million of debt repayments resulted in a decline in gross debt to $250.5 million. 

Teleconference/webcast

Columbus McKinnon will host a conference call and live webcast today at 10:00 AM Eastern Time, at which Timothy T. Tevens, President and Chief Executive Officer, and Gregory P. Rustowicz, Vice President - Finance and Chief Financial Officer, will review the Company’s financial results and strategy.  The review will be accompanied by a slide presentation, which will be available on Columbus McKinnon’s website at http://www.cmworks.com/investors.  A question and answer session will follow the formal discussion.

Columbus McKinnon’s conference call can be accessed by calling 201-493-6780 and asking for the “Columbus McKinnon conference call.”  The webcast can be monitored on Columbus McKinnon’s website at www.cmworks.com/investors.  An audio recording of the call will be available two hours after its completion through Thursday, August 4, 2016 by dialing 858-384-5517 and entering the passcode 13640537.  Alternatively, an archived webcast of the call will be on Columbus McKinnon’s web site at: www.cmworks.com/investors.  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 material handling products, technologies, systems and services, which efficiently and ergonomically move, lift, position and secure materials.  Key products include hoists, cranes, actuators, rigging tools, light rail work stations and digital power and motion control systems.  The Company is focused on commercial and industrial applications that require the safety and quality provided by its superior design and engineering know-how.  Comprehensive information on Columbus McKinnon is available on its website at http://www.cmworks.com.

Safe Harbor Statement
This news release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements concerning future revenue and earnings, involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to differ materially from the results expressed or implied by such statements, including general economic and business conditions, conditions affecting the industries served by the Company and its subsidiaries, conditions affecting the Company's customers and suppliers, competitor responses to the Company's products and services, the overall market acceptance of such products and services, the effect of operating leverage, the pace of bookings relative to shipments, the ability to expand into new markets and geographic regions, the success in acquiring new business, the speed at which shipments improve, 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
		June 30, 2016				June 30, 2015				Change
Net sales		$	149,013			$	136,236			9.4	%
Cost of products sold		100,966				92,652				9.0	%
Gross profit		48,047				43,584				10.2	%
Gross profit margin		32.2		%		32.0		%
Selling expenses		18,814				16,598				13.4	%
% of net sales		12.6		%		12.2		%
General and administrative expenses		16,282				15,102				7.8	%
% of net sales		10.9		%		11.1		%
Amortization of intangibles		1,750				593				195.1	%
Income from operations		11,201				11,291				(0.8	)%
Operating margin		7.5		%		8.3		%
Interest and debt expense		2,574				1,156				122.7	%
Investment (income) loss		(217		)		(128		)		69.5	%
Foreign currency exchange (gain) loss		(563		)		(185		)		204.3	%
Other (income) expense, net		(80		)		(5		)		1,500.0	%
Income before income tax expense		9,487				10,453				(9.2	)%
Income tax expense		3,086				3,542				(12.9	)%
Net income		$	6,401			$	6,911			(7.4	)%
Average basic shares outstanding		20,135				20,022				0.6	%
Basic income per share		$	0.32			$	0.35			(8.6	)%
Average diluted shares outstanding		20,266				20,229				0.2	%
Diluted income per share		$	0.32			$	0.34			(5.9	)%

COLUMBUS McKINNON CORPORATION
Condensed Consolidated Balance Sheets
(In thousands)
		June 30, 2016				March 31,  2016
		(unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	43,163			$	51,603
Trade accounts receivable		79,063				83,812
Inventories		118,875				118,049
Prepaid expenses and other		16,243				19,265
Total current assets		257,344				272,729
Property, plant, and equipment, net		101,948				104,790
Goodwill		170,003				170,716
Other intangibles, net		120,149				122,129
Marketable securities		10,706				18,186
Deferred taxes on income		72,201				73,158
Other assets		11,089				11,143
Total assets		$	743,440			$	772,851
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Trade accounts payable		$	31,699			$	36,061
Accrued liabilities		48,546				53,210
Current portion of long-term debt		44,279				43,246
Total current liabilities		124,524				132,517
Senior debt, less current portion		457				844
Term loan and revolving credit facility		205,760				223,542
Other non-current liabilities		122,585				129,639
Total liabilities		453,326				486,542
Shareholders’ equity:
Common stock		202				201
Additional paid-in capital		207,462				206,682
Retained earnings		180,574				174,173
Accumulated other comprehensive loss		(98,124		)		(94,747		)
Total shareholders’ equity		290,114				286,309
Total liabilities and shareholders’ equity		$	743,440			$	772,851

COLUMBUS McKINNON CORPORATION
Condensed Consolidated Statements of Cash Flows - UNAUDITED
(In thousands)
		Three Months Ended
		June 30, 2016						June 30, 2015
Operating activities:
Net income		$		6,401				$	6,911
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			6,001					3,972
Deferred income taxes and related valuation allowance			969					(916		)
Net gain on sale of real estate, investments, and other			(93		)			(150		)
Stock based compensation			1,147					911
Amortization of deferred financing costs and discount on debt			172					119
Changes in operating assets and liabilities, net of effects of business acquisition:
Trade accounts receivable			4,018					9,621
Inventories			(1,896		)			(6,027		)
Prepaid expenses and other			3,049					2,164
Other assets			(25		)			3,286
Trade accounts payable			(2,557		)			(5,575		)
Accrued liabilities			(3,485		)			(902		)
Non-current liabilities			(6,496		)			(10,212		)
Net cash provided by (used for) operating activities			7,205					3,202
Investing activities:
Proceeds from sale of marketable securities			7,772					57
Purchases of marketable securities			(105		)			(7		)
Capital expenditures			(4,301		)			(4,079		)
Net cash provided by (used for) investing activities			3,366					(4,029		)
Financing activities:
Net borrowings (payments) under line-of-credit agreements			(13,500		)			—
Repayment of debt			(3,274		)			(3,236		)
Dividends paid			(804		)			(800		)
Other			(367		)			(847		)
Net cash provided by (used for) financing activities			(17,945		)			(4,883		)
Effect of exchange rate changes on cash			(1,066		)			718
Net change in cash and cash equivalents			(8,440		)			(4,992		)
Cash and cash equivalents at beginning of year			51,603					63,056
Cash and cash equivalents at end of period		$		43,163				$	58,064

COLUMBUS McKINNON CORPORATION
Q1 FY 2016 to Q1 FY 2017 Sales Bridge
		First Quarter
($ in millions)		$ Change				% Change
Q1 Fiscal 2016 Sales		$	136.2
Magnetek acquisition			23.9				17.5	%
Pricing			0.3				0.2	%
Volume			(10.0	)			(7.3	)%
Subtotal of change			14.2				10.4	%
Foreign currency translation			(1.4	)			(1.0	)%
Total change		$	12.8				9.4	%
Q1 Fiscal 2017 Sales		$	149.0

COLUMBUS McKINNON CORPORATION
Q1 FY 2016 to Q1 FY 2017 Gross Profit Bridge
($ in millions)	First Quarter
Q1 Fiscal 2016 Gross Profit	$	43.6
Magnetek acquisition		8.4
Productivity, net of other cost changes		1.4
Prior year purchase accounting & restructuring costs		0.6
Pricing, net of material cost inflation		(0.1	)
Product liability		(0.8	)
Sales volume and mix		(4.6	)
Subtotal of change		4.9
Foreign currency translation		(0.5	)
Total change	$	4.4
Q1 Fiscal 2017 Gross Profit	$	48.0

COLUMBUS McKINNON CORPORATION
Additional Data - UNAUDITED
($ in millions)		June 30, 2016							March 31, 2016								June 30,  2015
Backlog		$	102.4							$	98.6							$	84.9
Backlog (excluding Magnetek)		$	88.1							$	85.2							$	84.9
Project backlog (expected to ship >3 months)		$	49.4							$	41.2							$	32.4
Project backlog as % of total backlog		48.2		%						41.8		%						38.2		%
Trade accounts receivable
days sales outstanding		48.3				days				49.2				days				48.1				days
Inventory turns per year
(based on cost of products sold)		3.4				turns				3.6				turns				3.3				turns
Days' inventory		107.4				days				101.0				days				110.6				days
Trade accounts payable
days payables outstanding		28.6				days				30.8				days				27.4				days
Working capital as a % of sales (1)		22.4		%						21.5		%						21.9		%
Debt to total capitalization percentage		46.3		%						48.3		%						30.6		%
Debt, net of cash, to net total capitalization		41.7		%						43.0		%						18.9		%

(1) June 30, 2016 and March 31, 2016 figures exclude the impact of the acquisition of Magnetek; June 30, 2015 figure excludes the impact of the acquisition of STB

Shipping Days by Quarter
		Q1		Q2		Q3		Q4		Total
FY 17		64		63		60		64		251
FY 16		63		64		60		63		250

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,
		2016				2015
	$				$
Net income	$	6,401			$	6,911
Add back:
Canadian pension lump sum settlements		247			—
Acquisition inventory step-up expense	—					374
European facility consolidation costs	—					297
Normalize tax rate to 30% (1)		166				205
Non-GAAP adjusted net income	$	6,814			$	7,787
Average diluted shares outstanding		20,266				20,229
Diluted income per share - GAAP	$	0.32			$	0.34
Adjusted Diluted income per share - Non-GAAP	$	0.34			$	0.38

(1)  Applies a normalized tax rate of 30% 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 to apply a normalized tax rate. Adjusted net income and diluted EPS are not measures determined in accordance with generally accepted accounting principles in the United States, commonly known as GAAP and may not be comparable to the measures as used by other companies. Nevertheless, Columbus McKinnon believes that providing non-GAAP information, such as adjusted net income and diluted EPS, is important for investors and other readers of the Company’s financial statements and assists in understanding the comparison of the current quarter’s and current year's net income and diluted EPS to the historical periods' net income and diluted EPS.

 

Contacts:
Gregory P. Rustowicz
Vice President - Finance and Chief Financial Officer
Columbus McKinnon Corporation
716-689-5442
greg.rustowicz@cmworks.com

Investor Relations:
Deborah K. Pawlowski
Kei Advisors LLC
716-843-3908
dpawlowski@keiadvisors.com