Columbus McKinnon Fiscal 2014 Q1 Gross Margin Expanded to 31.3%

  Columbus McKinnon Fiscal 2014 Q1 Gross Margin Expanded to 31.3%

  *Gross margin improved by 270 basis points over the prior-year period
    despite lower sales
  *Operating income increased to $13.4 million
  *Sales to emerging markets represented 10.4% of sales, up 18.6%

Business Wire

AMHERST, N.Y. -- July 26, 2013

Columbus McKinnon Corporation (NASDAQ: CMCO), a leading designer, manufacturer
and marketer of material handling products, today announced financial results
for its fiscal 2014 first quarter which ended June 30, 2013.

Timothy T. Tevens, President and Chief Executive Officer, commented, “We
achieved great success in driving margin expansion in the quarter as we
realized one of the highest gross margin levels in our recent history. We are
making solid headway in increasing our sales volumes in emerging markets,
specifically Asia, the Middle East, Latin America and Eastern Europe. These
gains have helped to offset the recessionary industrial economy in Europe. Our
Lean Business System has also been successful in driving out waste and
therefore cost from our operating structure, which has improved our margins on
a lower sales base.”

Net sales for the first quarter of fiscal 2014 were $138.9  million, down
$14.1 million, or 9.2%, from the prior-year period as one additional shipping
day and improved pricing were more than offset by the decline in volume,
particularly in Europe. Excluding the effects of acquisitions and divestitures
and foreign currency translation, sales declined by $10.1 million, or 6.6%, in
the quarter.

U.S. sales, which comprised 59% of total sales, were down by $7.9 million, or
8.8%, to $82.0 million compared with $90.0 million for the first quarter of
fiscal 2013. Lower volume and the $4.5 million impact of the crane business
divestiture in August 2012 more than offset improved pricing and one
additional shipping day. Sales outside of the U.S. were down $6.2 million, or
9.8%, to $56.9 million, primarily on lower sales volume. The additional
shipping day, improved pricing and the effect of a small acquisition in
Austria with approximately $10 million in annual revenue somewhat offset the
volume decline. The Austrian acquisition, which was completed on June 1, 2013,
has been a value-added partner of the Company in the lifting industry in the
Austrian market for over 20 years. This acquisition enables the Company to
better leverage sales in this and other regions of the world and does not have
a material effect on earnings. Foreign currency translation had a negative
impact of $0.2 million on sales during the quarter.

The fluctuation in sales for the first quarter of fiscal 2014 compared with
the first quarter of fiscal 2013 is summarized as follows:


($ in millions)                  $ Change    % Change
                                                   
                                                   
Volume                                 (15.9 )     (10.4 ) %
                                                         
Acquisitions & divestitures            (3.8  )     (2.5  ) %
                                                         
Foreign currency translation           (0.2  )     (0.1  ) %
                                                         
Additional shipping day                2.4         1.6   %
                                                         
Pricing                               3.4        2.2   %
                                                         
Total                                $ (14.1 )     (9.2  ) %


Pricing and productivity drove margin improvements

Gross profit in the first quarter of fiscal 2014 declined slightly to $43.5
million, down just $0.3 million from the prior-year period. As a percentage of
sales, gross margin expanded 270 basis points to 31.3% compared with 28.6% for
the prior-year period. Productivity improvements and pricing drove margin
expansion, more than offsetting the impact of lower volume. The prior-year’s
first quarter had the benefit of a $1.8 million brokerage fee, or 80 basis
points, that was accounted for on a net revenue basis with no associated cost
of sales.

Selling expense was $16.7 million, up 2.3%, or $0.4 million, from the same
period of the prior year. Increased selling expense was related to the
Austrian acquisition that was completed during the quarter and investments in
emerging markets. As a percent of revenue, selling expense was 12.1% on
measurably lower revenue compared with 10.7% in the same period last year.

General and administrative (G&A) expense was $12.8 million, down from $14.2
million in the prior-year period, which included approximately $0.8 million of
one-time costs. As a percent of sales, G&A was 9.3%, flat when compared with
the prior-year period.

Operating income in the fiscal 2014 first quarter was up $0.7 million, or
5.1%, to $13.4 million when compared with the first quarter of fiscal 2013.
Operating margin expanded 130 basis points to 9.7% of sales.

Income before tax expense was negatively impacted by approximately $1.0
million as a result of the realized change in foreign currency exchange when
compared with the prior year. The effective tax rate in the 2014 first quarter
was 29.6% compared with 17.4% in the prior-year period. The prior-year period
effective tax rate was impacted by a valuation allowance on deferred tax
assets, primarily in the U.S.

First quarter fiscal 2014 net income was $7.0 million, or $0.35 per diluted
share, down from $8.4 million or $0.43 per diluted share in the prior-year
period. Adjusted for the current quarter’s tax rate, fiscal 2013’s first
quarter earnings per diluted share were $0.37. Further details of the
reconciliation of GAAP EPS to adjusted EPS are shown on page 9 of this
release.

Balance sheet provides significant financial flexibility

Cash used in operations was $1.9 million. This was primarily due to an
increase in inventories as a result of a higher level of project type orders,
as well as an increase in prepaid expenses due to the timing of insurance
renewals, offset by lower trade receivables. Net cash used for investing
activities included $5.8 million for the Austrian acquisition previously
mentioned as well as normal capital expenditures. As a result, cash and cash
equivalents decreased by $11.3 million to $110.4 million at the end of fiscal
2014’s first quarter, from $121.7 million at March 31, 2013. Working capital
as a percentage of sales was 20.2% at the end of the first quarter of 2014, up
from 19.8% at the end of the first quarter of 2013 and 18.3% at the end of the
trailing fourth quarter of fiscal 2013.

Capital expenditures for the first quarter of fiscal 2014 were $3.6 million
compared with $1.7 million in the prior-year period. Approximately $0.7
million was associated with the implementation of a new enterprise management
system. The Company continues to expect fiscal 2014 capital spending to be in
the range of $20 million to $25 million.

Gross debt at June 30, 2013 was $151.9 million. Debt, net of cash, was $41.5
million, or 14.4% of net total capitalization, compared with $30.4 million, or
11.2% of net total capitalization, at March 31, 2013.

Continued growth in emerging economies and strong performance in key vertical
markets expected to offset slow economic growth

Backlog was $92.0 million at June 30, 2013 compared with $99.0 million at
March 31, 2013. Although the time to convert the majority of backlog to sales
typically ranges from one day to a few weeks, backlog can include project-type
orders from customers that have defined deliveries that may extend out 12 to
24 months. As of June 30, 2013, approximately $34.6 million of backlog, or
37.6%, was scheduled for shipment beyond September 30, 2013.

Both U.S. and Eurozone capacity utilization are leading market indicators for
the Company. U.S. industrial capacity utilization was 76.8% in June 2013,
compared with 76.5% a year ago, and 77.0% in March 2013. Eurozone capacity
utilization was 77.5% in the quarter ended June 30, 2013, down from 80.0%
during the quarter ended June 30, 2012, but unchanged from the quarter ended
March 31, 2013. The European indicator reflects the recessionary environment
in the Eurozone, while the U.S. remains flat. The Company’s sales tend to lag
changes in these indicators by one to two quarters.

Mr. Tevens concluded, "We remain committed to improving and sustaining our
earnings and have made great strides over this past year to enable strong
margins. Additionally, there are early signs that our industrial markets are
improving in Europe. For example, we have seen early indications of increasing
bidding activity in our European project business, which is a positive sign in
this uncertain economy. And, we expect the U.S. to grow modestly during the
remainder of the fiscal year. We continue to realize growth in emerging
economies, despite concerns of China’s slowed growth, as we take market share
in that region.”

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 210-234-7695
and asking for the “Columbus McKinnon conference call.” The webcast can be
monitored on Columbus McKinnon’s website at http://www.cmworks.com/investors.
An audio recording of the call will be available two hours after its
completion through August 30, 2013 by dialing 203-369-3724. Alternatively, an
archived webcast of the call will be on Columbus McKinnon’s web site at:
http://www.cmworks.com/investors until August 30, 2013. 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, systems and services, which efficiently and
ergonomically move, lift, position and secure materials. Key products include
hoists, cranes, actuators and rigging tools. 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.

                                                            
COLUMBUS McKINNON CORPORATION
Condensed Consolidated Income Statements - UNAUDITED
                                                                       
(In thousands, except
per share and
percentage data)
                             Three Months Ended
                             June 30, 2013       June 30, 2012         Change
                                                                       
Net sales                    $  138,891          $  153,013            -9.2  %
Cost of products sold          95,400         109,189           -12.6 %
Gross profit                    43,491              43,824             -0.8  %
Gross profit margin             31.3     %          28.6     % 
Selling expense                 16,747              16,366             2.3   %
General and                     12,849              14,177             -9.4  %
administrative expense
Amortization                   459            499               -8.0  %
Income from operations         13,436         12,782            5.1   %
Operating margin                9.7      %          8.4      % 
Interest and debt               3,371               3,499              -3.7  %
expense
Investment income               (216     )          (280     )         -22.9 %
Foreign currency                226                 (336     )         NM
exchange loss (gain)
Other expense                  89             (320     )         NM
(income), net
Income before
Income tax expense              9,966               10,219             -2.5  %
Income tax expense             2,946          1,783             65.2  %
Net income                   $  7,020        $  8,436             -16.8 %
                                                                       
Average basic shares            19,520              19,347             0.9   %
outstanding
Basic income per                             
share:
Basic income per share       $  0.36         $  0.44              -18.2 %
                                                                       
Average diluted shares          19,779              19,507             1.4   %
outstanding
Diluted income per                           
share:
Diluted income per           $  0.35         $  0.43              -18.6 %
share
                                                                             

                                                         
COLUMBUS McKINNON CORPORATION
Condensed Consolidated Balance Sheets - UNAUDITED
(In thousands)
                                            June 30, 2013       March 31, 2013
                                                                
ASSETS
Current assets:
Cash and cash equivalents                   $  110,399          $  121,660
Trade accounts receivable                      76,034              80,224
Inventories                                    101,451             94,189
Prepaid expenses and other                    21,005         17,905   
Total current assets                          308,889        313,978  
                                                                
Net property, plant, and equipment             67,091              65,698
Goodwill                                       110,961             105,354
Other intangibles, net                         12,878              13,395
Marketable securities                          24,166              23,951
Deferred taxes on income                       38,711              37,205
Other assets                                  6,458          7,286    
Total assets                                $  569,154      $  566,867  
                                                                
                                                                
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Notes payable to banks                      $  -                $  -
Trade accounts payable                         30,133              34,329
Accrued liabilities                            50,706              48,884
Current portion of long-term debt             1,043          1,024    
Total current liabilities                     81,882         84,237   
                                                                
Senior debt, less current portion              2,376               2,641
Subordinated debt                              148,480             148,412
Other non-current liabilities                 89,248         91,590   
Total liabilities                             321,986        326,880  
                                                                
Shareholders’ equity:
Common stock                                   196                 195
Additional paid-in capital                     193,083             192,308
Retained earnings                              111,211             104,191
ESOP debt guarantee                            (449     )          (552     )
Accumulated other comprehensive loss          (56,873  )      (56,155  )
Total shareholders’ equity                    247,168        239,987  
Total liabilities and shareholders’         $  569,154      $  566,867  
equity
                                                                

                                                          
COLUMBUS McKINNON CORPORATION
Condensed Consolidated Statements of Cash Flows - UNAUDITED
                                                                 
(In thousands)
                                             Three Months Ended
                                             June 30, 2013       June 30, 2012
                                                                 
Operating activities:
Net income                                   $  7,020            $  8,436
Adjustments to reconcile net income to
net cash used for operating
activities:
Depreciation and amortization                   2,992               3,110
Deferred income taxes and related               (786     )          13
valuation allowance
Gain on sale of real estate,                    (347     )          (114    )
investments, and other
Stock based compensation                        717                 664
Amortization of deferred financing              171                 95
costs and discount on debt
Changes in operating assets and
liabilities, net of effects of
business acquisition:
Trade accounts receivable                       4,854               (2,090  )
Inventories                                     (6,961   )          (4,204  )
Prepaid expenses                                (3,724   )          (2,336  )
Other assets                                    865                 448
Trade accounts payable                          (4,550   )          (2,964  )
Accrued and non-current liabilities            (2,159   )      (4,947  )
Net cash used for operating activities         (1,908   )      (3,889  )
                                                                 
Investing activities:
Proceeds from sale of marketable                952                 1,196
securities
Purchases of marketable securities              (1,613   )          (962    )
Capital expenditures                            (3,614   )          (1,716  )
Purchase of business, net of cash              (5,847   )      -       
acquired
Net cash used for investing activities         (10,122  )      (1,482  )
                                                                 
Financing activities:
Proceeds from stock options exercised           412                 -
Net payments under lines-of-credit              -                   (13     )
Repayment of debt                               (266     )          (211    )
Change in ESOP guarantee                       104            107     
Net cash provided by (used for)                250            (117    )
financing activities
                                                                 
Effect of exchange rate changes on             519            (1,819  )
cash
                                                                 
Net change in cash and cash                     (11,261  )          (7,307  )
equivalents
Cash and cash equivalents at beginning         121,660        89,473  
of year
Cash and cash equivalents at end of          $  110,399      $  82,166  
period
                                                                 

                                                            
COLUMBUS McKINNON CORPORATION
Additional Data - UNAUDITED
                                                                         
                      June                 June                  March
                      30,                  30,                   31,
                      2013                 2012                  2013
                                                                         
Backlog (in           $92.0                $109.9                $99.0
millions)
                                                                         
Trade accounts
receivable
days sales            49.8     days        52.9      days        50.5    days
outstanding
                                                                         
Inventory turns
per year
(based on cost
of products           3.8      turns       4.0       turns       4.3     turns
sold)
Days' inventory       96.1     days        91.3      days        84.9    days
                                                                         
Trade accounts
payable
days payables         28.7     days        30.4      days        31.1    days
outstanding
                                                                         
Working capital       20.2     %           19.8      %           18.3    %
as a % of sales
                                                                         
Debt to total
capitalization        38.1     %           48.2      %           38.8    %
percentage
Debt, net of
cash, to net          14.4     %           30.0      %           11.2    %
total
capitalization
                                                                         
                                                                         
                                                                         
                                                             
Shipping Days by Quarter
                                                                         
                      Q1       Q2          Q3        Q4          Total
                                                                         
FY 14                 64       63          61        62          250
                                                                         
FY 13                 63       63          60        62          248



COLUMBUS McKINNON CORPORATION

Reconciliation Adjusted Diluted EPS to GAAP Diluted EPS

                                                        Three Months Ended
                                                           June 30,2012
                                                           
GAAP diluted EPS                                           $0.43
Adjusted to reflect current quarter’s 29.6% tax rate    ($0.06)
Adjusted diluted EPS                                       $0.37


Adjusted diluted EPS is defined diluted EPS as reported, adjusted to apply the
current quarter’s tax rate. Adjusted diluted EPS is not a measure determined
in accordance with generally accepted accounting principles in the United
States, commonly known as GAAP. Nevertheless, Columbus McKinnon believes that
providing non-GAAP information such as adjusted 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 diluted EPS to the
historical period’s diluted EPS.

Contact:

Columbus McKinnon Corporation
Gregory P. Rustowicz, 716-689-5442
Vice President - Finance and Chief Financial Officer
greg.rustowicz@cmworks.com
or
Investor Relations:
Kei Advisors LLC
Deborah K. Pawlowski, 716-843-3908
dpawlowski@keiadvisors.com
 
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