Columbus McKinnon Reports 21% Increase in Operating Income on 11% Growth in Revenue for Fourth Quarter Fiscal 2014 *Fourth quarter sales were up 11% to $160.5 million driven by 16% increase in non-U.S. sales and 7% increase in U.S. sales *Gross margin improved 70 basis points to 31.3% in the fourth quarter over the prior-year period; Fiscal 2014 gross margin improved 180 basis points to 31.0% *Generated $29.5 million of cash from operations in fiscal 2014. *Announced regular quarterly dividend of $0.04 per share during the quarter *Acquired Unified Industries in quarter and expanded product offerings AMHERST, N.Y., May 22, 2014 (GLOBE NEWSWIRE) -- Columbus McKinnon Corporation (Nasdaq:CMCO), a leading designer, manufacturer and marketer of material handling products and services, today announced financial results for its fiscal fourth quarter and full year ended March 31, 2014. Results include the acquisition of Unified Industries, Inc. on February 28, 2014. Unified Industries, Inc. designs, manufactures and markets overhead light rail workstations primarily used in automotive and industrial applications. Net sales for the fourth quarter of fiscal 2014 were $160.5million, up $15.9 million, or 11.0%, from the prior-year period. Sales volume was the largest driver of improved revenue; however price improvements and incremental revenue related to acquisitions also contributed to the growth. Foreign exchange translation had a positive impact on sales of $0.2 million in the quarter compared with the prior-year period. Timothy T. Tevens, President and Chief Executive Officer, commented, "We recognized strong demand in the fourth quarter which converted to revenue very quickly. We completed the installation of a large Rail & Road project in Canada and were excited to see Europe rebound rather nicely from its lows. Higher volume along with productivity improvements drove gross profits at a greater rate than sales as we realized the leverage inherent in our business. Additionally, our recent Unified acquisition was accretive in the quarter and will have a positive impact on sales and operating income in fiscal 2015." U.S. sales, which comprised 57% of total sales, were up by $6.2 million, or 7.3%, to $91.5 million compared with the fourth quarter of fiscal 2013. This growth was generated by higher volume on improved demand, price increases and $1.0 million in revenue associated with the Unified acquisition. Sales outside of the U.S. were up $9.7 million, or 16.3%, to $69.0 million. Higher demand, especially in EMEA, along with the Rail & Road project in Canada drove the increased volume. Additionally, price increases, $1.7 million of incremental revenue related to the first quarter Austrian acquisition and foreign exchange translation all benefited sales outside the U.S. The fluctuation in sales for the fourth quarter of fiscal 2014 compared with the fourth quarter of fiscal 2013 is summarized as follows: ($ in millions) $ Change % Change Volume 11.8 8.1% Acquisitions and divestitures 2.7 1.9% Pricing 1.2 0.9% Foreign currency translation 0.2 0.1% Total $15.9 11.0% Fourth Quarter Margin Growth Drives Bottom-line Expansion Gross profit was $50.3 million, up $6.1 million from the prior-year period.As a percentage of sales, gross margin improved 70 basis points to 31.3% compared with 30.6% for the prior-year period.Gross profit growth was driven by the following: Impact on Gross Profit Higher sales volume $3.3 million Productivity gains $1.4 million Improved pricing net of material cost inflation $1.0 million Acquisitions $0.7 million Product liability costs ($0.3 million) Selling expense was $18.7 million, up from $16.4 million in the same period of the prior year.As a percent of revenue, selling expense was 11.7% compared with 11.3% in the same period last year. General and administrative (G&A) expense was up $0.7 million to $13.5 million from the prior-year period.As a percent of sales, G&A declined to 8.4%, compared with 8.9% in the prior-year period. Operating income grew 21%, or $3.0 million, to $17.5 million over the prior-year period.Operating margin improved to 10.9% in the quarter compared with 10.0% in the prior-year period.Operating leverage was 19.1%. The effective tax rate in the quarter was 35.7%. The fourth quarter of fiscal 2013 included the benefit of a reversal of a deferred tax asset valuation allowance, and as a result, the prior year tax rate is not meaningful for comparison with this quarter's tax rate. Fourth quarter fiscal 2014 net income was $9.6 million, or $0.48 per diluted share.This compares with $2.64 per diluted share, which included a $49.0 million tax valuation allowance reversal in the 2013 fourth quarter. On an adjusted basis, excluding the tax valuation allowance reversal and applying a more normalized tax rate of 30%, earnings per diluted share were $0.52 compared with $0.42 in the 2013 fourth quarter.Further details of the reconciliation of adjusted EPS to GAAP EPS are shown on page 11 of this release. Consistent Cash Generation Enables Financial Flexibility for Acquisitions and Dividend Cash provided by operations was $11.5 million in the fiscal 2014 fourth quarter.Working capital as a percentage of sales was 21.7% at the end of the fourth quarter of 2014, compared with 18.3% at the end of fiscal 2013's fourth quarter.This was driven by an increase in trade accounts receivable as a result of the 11% increase in quarterly sales compared with the previous year.The Company expects working capital as a percentage of sales to revert back to more normal levels in fiscal 2015. Capital expenditures for fiscal 2014 were $20.8 million compared with $14.9 million in the prior-year period.Capital expenditures for the expansion of the Company's production facilities in China were approximately $6.4 million of which $4.4 million was expended in fiscal 2014 with the remaining $2 million in accounts payable at fiscal year end.There were $2.7 million in capital investments during the year that were associated with the implementation of a new enterprise resource planning system.The Company expects fiscal 2015 capital spending to be in the range of $20 million to $25 million. Cash and cash equivalents were $112.3 million at March 31, 2014.Gross debt at March 31, 2014 was $152.3 million.Debt, net of cash, was $40.0 million, or 12.1% of net total capitalization. Mr. Tevens commented, "Our Company has demonstrated throughout business cycles that we can generate strong levels of cash.This provides us the opportunity to execute our strategic growth plans both organically and through acquisitions, while also rewarding our shareholders with the re-initiation of our quarterly dividend." Fiscal 2014 Review Net sales for fiscal 2014 were $583.3 million, down 2.3%, or $14.0 million, on lower volume which was somewhat offset by improved pricing, two additional shipping days and the net impact of acquisitions and divestitures. Foreign currency translation had a $0.6 million positive impact on sales in fiscal 2014.Sales to the U.S., which represented 57% of total sales, were down 3.7% to $331.4 million.Non-U.S. sales decreased by $1.4 million, or 0.5%.Emerging markets represented 9.9% of total sales. Gross profit in fiscal 2014 increased 3.9% despite lower sales while gross margin expanded 180 basis points to 31.0%.Gross margin expansion reflects productivity gains, the net effect of acquisitions and divestitures and pricing. Selling expenses increased $3.4 million, or 5.1%, to $69.0 million.As a percent of sales, selling expenses were 11.8% in fiscal 2014 compared with 11.0% in the prior year.G&A expenses were $55.8 million, up 6.7% from $52.3 million in fiscal 2013.G&A expenses as a percent of sales were 9.6% in fiscal 2014 compared with 8.8% in the prior-year period.G&A expenses in fiscal 2014 included $1.7 million of atypical merger and acquisition expenses. Operating income for fiscal 2014 was flat with the prior year at $54.4 million, despite lower sales. Operating margin of 9.3%, improved over the operating margin of 9.1% in the prior year. Net income for fiscal 2014 was $30.4 million.Net income for fiscal 2013 was $78.3 million and included the reversal of a deferred tax asset valuation allowance which created a $49.0 million tax benefit. Earnings per diluted share for fiscal 2014 were $1.52 compared with $1.49 per diluted share in 2013 when adjusted for the tax valuation allowance reversal of $2.49 per diluted share. Solid Growth Outlook as Strategic Investments Take Root and Global Economies Moderately Expand Backlog was $86.8 million at March 31, 2014, a decrease of $11.6 million, or 11.8%, from backlog of $98.4 million at December 31, 2013 due to strong fourth quarter shipment levels, a good portion of which was related to the large Rail & Road project installed in Canada and other project backlog that was shipped.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.Backlog at March 31, 2014 available for shipment in the quarter ended June 30, 2014 totaled $57.2 million.As of March 31, 2014, project-type backlog of $29.6 million, or 34.1% of total backlog, was scheduled for shipment beyond June 30, 2014.This compares with project-type backlog of $31.1 million at the end of the trailing third quarter and $33.0 million at March 31, 2013. Both U.S. and Eurozone capacity utilization are leading market indicators for the Company.In March 2014, U.S. industrial capacity utilization improved to 77.6%, compared with 76.8% in March 2013, and 77.1% in December 2013.Eurozone capacity utilization was up measurably to 80.1% in the quarter ended March 31, 2014, compared with 77.6% during the quarter ended March 31, 2013, and 78.4% in the quarter ended December 31, 2013.The Company's sales tend to lag changes in these indicators by one to two quarters. Mr. Tevens commented, "We are making great strides in our targeted vertical market expansion such as the oil & gas, entertainment, automotive and aerospace industries. In addition, we expect to benefit from our leading market position in developed markets and the investments we have made in emerging markets." Mr. Tevens concluded, "We believe that our continuous improvement activities have created greater earnings power in the organization which is readily apparent with higher volume and profits, as evidenced by this quarter." 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 June 22, 2014 by dialing 203-369-1850.Alternatively, an archived webcast of the call will be on Columbus McKinnon's web site at: http://www.cmworks.com/investorsuntil June 22, 2014.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. Financial Tables follow. COLUMBUS McKINNON CORPORATION Condensed Consolidated Income Statements (Unaudited) (In thousands, except per share and percentage data) Three Months Ended March 31, 2014 March 31, 2013 Change Net sales $160,475 $144,553 11.0% Cost of products sold 110,175 100,345 9.8% Gross profit 50,300 44,208 13.8% Gross profit margin 31.3% 30.6% Selling expense 18,747 16,404 14.3% General and administrative expense 13,507 12,823 5.3% Amortization 518 500 3.6% Income from operations 17,528 14,481 21.0% Operating margin 10.9% 10.0% Interest and debt expense 3,354 3,339 0.4% Investment income (849) (529) 60.5% Foreign currency exchange loss (gain) 136 (192) NM Other (income) expense, net (74) 12 NM Income before income tax expense 14,961 11,851 26.2% (benefit) Income tax expense (benefit) 5,346 (40,178) NM Net income $9,615 $52,029 -81.5% Average basic shares outstanding 19,755 19,464 1.5% Basic income per share: Basic income per share $0.49 $2.67 -81.6% Average diluted shares outstanding 20,075 19,730 1.7% Diluted income per share: Diluted income per share $0.48 $2.64 -81.8% COLUMBUS McKINNON CORPORATION Condensed Consolidated Income Statements (Unaudited) (In thousands, except per share and percentage data) Year Ended March 31, 2014 March 31, 2013 Change Net sales $583,290 $597,263 -2.3% Cost of products sold 402,242 423,032 -4.9% Gross profit 181,048 174,231 3.9% Gross profit margin 31.0% 29.2% Selling expense 68,963 65,608 5.1% General and administrative expense 55,754 52,271 6.7% Amortization 1,981 1,981 0.0% Income from operations 54,350 54,371 0.0% Operating margin 9.3% 9.1% Interest and debt expense 13,492 13,757 -1.9% Investment income (1,595) (1,546) 3.2% Foreign currency exchange loss (gain) 1,124 (45) NM Other (income) expense, net (1,393) (417) 234.1% Income before income tax expense 42,722 42,622 0.2% (benefit) Income tax expense (benefit) 12,301 (35,674) NM Net income $30,421 $78,296 -61.1% Average basic shares outstanding 19,655 19,425 1.2% Basic income per share: Basic income per share $1.55 $4.03 -61.5% Average diluted shares outstanding 19,950 19,687 1.3% Diluted income per share: Diluted income per share $1.52 $3.98 -61.8% COLUMBUS McKINNON CORPORATION Condensed Consolidated Balance Sheets (Unaudited) (In thousands) March 31, 2014 March 31, 2013 ASSETS Current assets: Cash and cash equivalents $112,309 $121,660 Trade accounts receivable 93,223 80,224 Inventories 97,576 94,189 Prepaid expenses and other 23,444 17,905 Total current assets 326,552 313,978 Net property, plant, and equipment 78,687 65,698 Goodwill 119,303 105,354 Other intangibles, net 20,842 13,395 Marketable securities 21,941 23,951 Deferred taxes on income 23,406 37,205 Other assets 7,943 7,286 Total assets $598,674 $566,867 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Trade accounts payable $35,359 $34,329 Accrued liabilities 52,348 48,884 Current portion of long-term debt 1,588 1,024 Total current liabilities 89,295 84,237 Senior debt, less current portion 2,020 2,641 Subordinated debt 148,685 148,412 Other non-current liabilities 67,388 91,590 Total liabilities 307,388 326,880 Shareholders' equity: Common stock 198 195 Additional paid-in capital 198,546 192,308 Retained earnings 133,820 104,191 ESOP debt guarantee (142) (552) Accumulated other comprehensive loss (41,136) (56,155) Total shareholders' equity 291,286 239,987 Total liabilities and shareholders' equity $598,674 $566,867 COLUMBUS McKINNON CORPORATION Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands) Year Ended March 31, 2014 March 31, 2013 Operating activities: Net income $30,421 $78,296 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 13,380 12,115 Deferred income taxes and related valuation 5,031 (42,047) allowance Gain on sale of real estate, investments, and (2,332) (827) other Stock based compensation 3,633 3,334 Amortization of deferred financing costs and 870 592 discount on debt Changes in operating assets and liabilities, net of effects of business acquisition and divestiture: Trade accounts receivable (9,318) 6,712 Inventories 1,312 10,106 Prepaid expenses (3,750) (1,283) Other assets (273) (354) Trade accounts payable (2,821) (5,465) Accrued liabilities 1,081 (12,268) Non-current liabilities (7,727) (6,533) Net cash provided by operating activities 29,507 42,378 Investing activities: Proceeds from sale of marketable securities 6,689 6,573 Purchases of marketable securities (4,099) (4,138) Capital expenditures (20,846) (14,879) Purchases of businesses, net of cash acquired (22,169) -- Proceeds from sale of assets -- 2,357 Net cash used for investing activities (40,425) (10,087) Financing activities: Proceeds from stock options exercised 2,194 295 Net payments under lines-of-credit (7) (54) Repayment of debt (858) (1,066) Payment of deferred financing costs -- (684) Change in ESOP guarantee 410 423 Net cash provided by (used for) financing 1,739 (1,086) activities Effect of exchange rate changes on cash (172) 982 Net change in cash and cash equivalents (9,351) 32,187 Cash and cash equivalents at beginning of year 121,660 89,473 Cash and cash equivalents at end of period $112,309 $121,660 COLUMBUS McKINNON CORPORATION Additional Data (Unaudited) March 31, 2014 December 31, 2013 March 31, 2013 Backlog (in millions) $86.8 $98.4 $99.0 Trade accounts receivable days sales outstanding 52.9 days 47.4 days 50.5 days Inventory turns per year (based on cost of products sold) 4.5 turns 3.9 turns 4.3 turns Days' inventory 81.1 days 93.6 days 84.9 days Trade accounts payable days payables outstanding 29.2 days 26.9 days 31.1 days Working capital as a % of sales 21.7% 19.9% 18.3% Debt to total capitalization 34.3% 36.2% 38.8% percentage Debt, net of cash, to net total 12.1% 9.4% 11.2% capitalization Shipping Days by Quarter Q1 Q2 Q3 Q4 Total FY 15 63 64 60 63 250 FY 14 64 63 61 62 250 FY 13 63 63 60 62 248 COLUMBUS McKINNON CORPORATION Reconciliation GAAP Diluted EPS to Adjusted Diluted EPS Three Months Ended March 31, 2014 March 31, 2013 GAAP diluted EPS $0.48 $2.64 Adjustment to reflect normalized 30% tax rate $0.04 ($2.22) Adjusted diluted EPS $0.52 $0.42 Adjusted diluted EPS is defined as diluted EPS as reported, adjusted to apply a normalized 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 and may not be comparable to the measure as used by other companies.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: Gregory P. Rustowicz Vice President - Finance and Chief Financial Officer Columbus McKinnon Corporation 716-689-5442 firstname.lastname@example.org Investor Relations: Deborah K. Pawlowski Kei Advisors LLC 716-843-3908 email@example.com
Columbus McKinnon Reports 21% Increase in Operating Income on 11% Growth in Revenue for Fourth Quarter Fiscal 2014
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