Document
false0001005229 0001005229 2020-02-04 2020-02-04


SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT

Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 4, 2020

COLUMBUS MCKINNON CORPORATION
(Exact name of registrant as specified in its charter)

New York
(State or other jurisdiction of incorporation)

0-27618
 
16-0547600
(Commission File Number)
 
(IRS Employer Identification No.)
 
205 Crosspoint Parkway
Getzville
NY
14068
(Address of principal executive offices)
(Zip Code)

Registrant's telephone number including area code: (716) 689-5400
 
_________________________________________________

(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.01 par value per share
CMCO
NASDAQ Global Select Market

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

☐
Emerging Growth Company

☐
If an Emerging Growth Company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.





Item 2.02
RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On February 4, 2020, the registrant issued a press release announcing its financial results for the third quarter, which ended December 31, 2019. The press release is annexed as Exhibit 99.1 to this Current Report on Form 8-K. The slides used during the earnings call are annexed as Exhibit 99.2 to this Current Report on Form 8-K.

The information contained in this Form 8-K and the Exhibit annexed hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth in such filing.

Item 9.01
FINANCIAL STATEMENTS AND EXHIBITS.

(d)  Exhibits.

EXHIBIT
NUMBER
  
DESCRIPTION
  
  
  
99.1
  
Press Release dated February 4, 2020
99.2
 
Earnings call slides dated February 4, 2020




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

COLUMBUS McKINNON CORPORATION
  
  
By:
/s/ Gregory P. Rustowicz
Name:
Gregory P. Rustowicz
Title:
Vice President and Chief
  
Financial Officer (Principal Financial Officer)

Dated:  February 4, 2020




EXHIBIT INDEX

EXHIBIT
NUMBER
  
DESCRIPTION
  
  
  
  
Press Release dated February 4, 2020
 
Earnings call slides dated February 4, 2020
104
 
Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document)



cmcoa22.jpg 
EXHIBIT 99.1
News Release
 
205 Crosspoint Parkway
Buffalo, NY 14068
Immediate Release     
Columbus McKinnon Blueprint for Growth Strategy Drove Margin Expansion, Earnings Growth and Strong Cash Generation in Third Quarter Fiscal Year 2020

BUFFALO, NY, February 4, 2020 - 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 2020 third quarter, which ended December 31, 2019.
Third Quarter Highlights (compared with prior-year period)
•
Blueprint for Growth strategy delivers strong operating results overcoming weaker industrial environment
•
Gross margin expanded 20 basis points to 34.0%; Achieved 11th consecutive quarter of year-over-year expansion
•
Diluted earnings per share was $0.63; adjusted diluted earnings per share increased $0.03 to $0.64
•
Cash from operations increased 24% to $32.4 million for the quarter and was up 31% year-to-date to $70.3 million
Richard Fleming, Chairman and Interim CEO of Columbus McKinnon, commented, “The successful execution of our Blueprint for Growth strategy continues to deliver solid financial results. The Company demonstrated strengthened earnings power and cash generation during a weaker industrial environment. In fact, the 80/20 Process contributed approximately $5.7 million in operating income in the quarter and EBTIDA margin expanded by 100 basis points to 15.2%, even as revenue declined. This was our 12th consecutive quarter of EBTIDA margin expansion, keeping us on course to achieve our 19% EBTIDA margin goal in fiscal 2022. We also generated over $30 million in free cash flow in the quarter.”
The implementation of our business operating system E-PAS™ (“Earnings Power Acceleration System”) provides the tools needed during tougher markets to compete effectively and operate efficiently. We completed the closure of the facility in China ahead of schedule and are on track for the second facility closure in Ohio to be completed in the first quarter of fiscal 2021. Importantly, we continue to make focused investments in innovation and expand our engineering capabilities.”


Columbus McKinnon Blueprint for Growth Strategy Drove Margin Expansion, Earnings Growth and Strong Cash Generation in Third Quarter Fiscal Year 2020
Page 2 of 13
February 4, 2020

Third Quarter Fiscal 2020 Sales
($ in millions)
Q3 FY 20
 
Q3 FY 19
 
Change
 
% Change
Net sales
$
199.4

 
$
217.4

 
$
(18.1
)
 
(8.3
)%
 
 
 
 
 
 
 
 
U.S. sales
$
108.4

 
$
116.0

 
$
(7.6
)
 
(6.6
)%
     % of total
54
%
 
53
%
 
 
 
 
Non-U.S. sales
$
91.0

 
$
101.4

 
$
(10.4
)
 
(10.3
)%
     % of total
46
%
 
47
%
 
 
 
 
Of the $18.1 million decline in revenue, $9.0 million, or 50%, was related to divestitures from the prior-year period. Foreign currency translation also had a $1.7 million, or 0.8%, negative impact on sales. Sales in the U.S. were down $7.6 million, of which $4.9 million was related to divestitures in the prior-year period. Sales outside the U.S., adjusted for foreign currency translation, were down $8.7 million, of which $4.1 million was related to divestitures in the prior-year period. Improved pricing was offset by volume declines in all regions, except the Asia Pacific market, which had the benefit of a rail project in the period.
Third Quarter Fiscal 2020 Operating Results
($ in millions)
Q3 FY 20
 
Q3 FY 19
 
Change
 
% Change
Gross profit
$
67.9

 
$
73.4

 
$
(5.5
)
 
(7.5
)%
     Gross margin
34.0
%
 
33.8
%
 
20 bps

 
 
Income from operations
$
20.9

 
$
6.6

 
$
14.2

 
214.3
 %
     Operating margin
10.5
%
 
3.1
%
 
740 bps

 
 
Net income
$
15.3

 
$
(0.8
)
 
$
16.0

 
NM

     Diluted EPS
$
0.63

 
$
(0.03
)
 
$
0.66

 
NM

Adjusted EBITDA *
$
30.4

 
$
30.8

 
$
(0.4
)
 
(1.3
)%
     Adjusted EBITDA margin
15.2
%
 
14.2
%
 
100 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).
Strategic pricing and other benefits from the 80/20 Process helped to offset headwinds, including lower volume and related under absorption of factory fixed costs, as well as higher medical costs. This contributed to the 20 basis point improvement in gross margin. For more information on changes in gross profit, please see the table on page 8 of this release. Adjusted income from operations was $23.1 million, up $0.2 million, or 1.1%, compared with the third quarter of fiscal 2019. Adjusted operating margin expanded 110 basis points from the impact of the 80/20 Process. (See the reconciliation of GAAP income from operations to adjusted income from operations on page 11 of this release.)
Adjusted EBITDA margin was 15.2% for the quarter, an expansion of 100 basis points over the prior-year period. (See the reconciliation of GAAP net income to adjusted EBITDA on page 13 of this release.)



Columbus McKinnon Blueprint for Growth Strategy Drove Margin Expansion, Earnings Growth and Strong Cash Generation in Third Quarter Fiscal Year 2020
Page 3 of 13
February 4, 2020

Fourth Quarter Fiscal 2020 Outlook
As has been well noted, macroeconomic conditions for industrial companies have slowed. While the Company’s third quarter orders and backlog were indicative of these conditions, the Company believes the Blueprint for Growth strategy is effective in all economic environments. Columbus McKinnon expects that the benefits from its Blueprint for Growth strategy can continue to offset headwinds, fund investments for growth, and drive margin and earnings expansion. The Company expects revenue in the fourth quarter of fiscal year 2020 to be approximately $196 million to $201 million, down about 5% to 7% compared with revenue of approximately $210 million in the prior-year period (excluding divestitures and adjusted for foreign currency translation at current rates).
Teleconference/webcast
Columbus McKinnon will host a conference call and live webcast Tuesday, February 4, 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 www.cmworks.com/investors. 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 www.cmworks.com/investors. To listen to the archived call, dial 412-317-6671 and enter the passcode 13697631. The telephonic replay will be available from 1:00 PM Eastern Time on the day of the call through Tuesday, February 11, 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 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 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 effectiveness of the Company’s 80/20 Process to simplify operations, the ability of the Company’s Operational Excellence initiatives to drive profitability, the success of the Company’s efforts to Ramp the Growth Engine, 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.
Contacts:
Gregory P. Rustowicz
Investor Relations:
Vice President - Finance and Chief Financial Officer
Deborah K. Pawlowski
Columbus McKinnon Corporation
Kei Advisors LLC
716-689-5442
716-843-3908
Financial tables follow.



Columbus McKinnon Blueprint for Growth Strategy Drove Margin Expansion, Earnings Growth and Strong Cash Generation in Third Quarter Fiscal Year 2020
Page 4 of 13
February 4, 2020

COLUMBUS McKINNON CORPORATION
Condensed Consolidated Income Statements - UNAUDITED
(In thousands, except per share and percentage data)
 


Three Months Ended


 

December 31, 2019

December 31, 2018

Change
Net sales

$
199,355


$
217,415


(8.3
)%
Cost of products sold

131,483


144,010


(8.7
)%
Gross profit

67,872


73,405


(7.5
)%
Gross profit margin

34.0
%

33.8
%

 

Selling expenses

23,169


23,858


(2.9
)%
% of net sales
 
11.6
%
 
11.0
%
 
 
General and administrative expenses

17,960


20,379


(11.9
)%
% of net sales
 
9.0
%
 
9.4
%
 
 
Research and development expenses
 
2,628

 
3,271

 
(19.7
)%
% of net sales
 
1.3
%
 
1.5
%
 
 
Net loss on sales of businesses, including impairment
 
—

 
15,550

 
NM

Amortization of intangibles

3,229


3,701


(12.8
)%
Income from operations

20,886


6,646


214.3
 %
Operating margin

10.5
%

3.1
%

 

Interest and debt expense

3,423


4,330


(20.9
)%
Investment (income) loss

(408
)

82


NM

Foreign currency exchange (gain) loss

188


(25
)

NM

Other (income) expense, net

199


(70
)

NM

Income before income tax expense

17,484


2,329


650.7
 %
Income tax expense

2,234


3,111


(28.2
)%
Net income (loss)

$
15,250


$
(782
)

NM











Average basic shares outstanding

23,679


23,348


1.4
 %
Basic income (loss) per share

$
0.64


$
(0.03
)

NM











Average diluted shares outstanding

24,031


23,348


2.9
 %
Diluted income (loss) per share

$
0.63


$
(0.03
)

NM

 
 
 
 
 
 
 
Dividends declared per common share
 
$
0.06

 
$
0.05

 
 




Columbus McKinnon Blueprint for Growth Strategy Drove Margin Expansion, Earnings Growth and Strong Cash Generation in Third Quarter Fiscal Year 2020
Page 5 of 13
February 4, 2020

COLUMBUS McKINNON CORPORATION
Condensed Consolidated Income Statements - UNAUDITED
(In thousands, except per share and percentage data)
 
 
 
Nine Months Ended
 
 
 
 
December 31, 2019
 
December 31, 2018
 
Change
Net sales
 
$
619,676

 
$
659,549

 
(6.0
)%
Cost of products sold
 
402,699

 
430,597

 
(6.5
)%
Gross profit
 
216,977

 
228,952

 
(5.2
)%
Gross profit margin
 
35.0
%
 
34.7
%
 
 
Selling expenses
 
68,801

 
73,940

 
(7.0
)%
% of net sales
 
11.1
%
 
11.2
%
 
 
General and administrative expenses
 
56,713

 
61,893

 
(8.4
)%
% of net sales
 
9.2
%
 
9.4
%
 
 
Research and development expenses
 
8,419

 
10,137

 
(16.9
)%
% of net sales
 
1.4
%
 
1.5
%
 
 
Net loss on sales of businesses, including impairment
 
176

 
26,650

 
(99.3
)%
Amortization of intangibles
 
9,708

 
11,358

 
(14.5
)%
Income from operations
 
73,160

 
44,974

 
62.7
 %
Operating margin
 
11.8
%
 
6.8
%
 
 
Interest and debt expense
 
11,034

 
13,185

 
(16.3
)%
Investment (income) loss
 
(939
)
 
(297
)
 
216.2
 %
Foreign currency exchange (gain) loss
 
(518
)
 
206

 
NM

Other (income) expense, net
 
618

 
(417
)
 
NM

Income before income tax expense
 
62,965

 
32,297

 
95.0
 %
Income tax expense
 
12,537

 
9,461

 
32.5
 %
Net income
 
$
50,428

 
$
22,836

 
120.8
 %
 
 
 
 
 
 
 
Average basic shares outstanding
 
23,581

 
23,245

 
1.4
 %
Basic income per share
 
$
2.14

 
$
0.98

 
118.4
 %
 
 
 
 
 
 
 
Average diluted shares outstanding
 
23,925

 
23,647

 
1.2
 %
Diluted income per share
 
$
2.11

 
$
0.97

 
117.5
 %
 
 
 
 
 
 
 
Dividends declared per common share
 
$
0.12

 
$
0.10

 
 




Columbus McKinnon Blueprint for Growth Strategy Drove Margin Expansion, Earnings Growth and Strong Cash Generation in Third Quarter Fiscal Year 2020
Page 6 of 13
February 4, 2020

COLUMBUS McKINNON CORPORATION
Condensed Consolidated Balance Sheets
(In thousands)
 
 
December 31, 2019
 
March 31, 2019
 
 
(unaudited)
 
 
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
84,014

 
$
71,093

Trade accounts receivable
 
125,386

 
129,157

Inventories
 
135,449

 
146,263

Prepaid expenses and other
 
16,890

 
16,075

Total current assets
 
361,739

 
362,588

 
 
 
 
 
Property, plant, and equipment, net
 
81,117

 
87,303

Goodwill
 
322,766

 
322,816

Other intangibles, net
 
223,206

 
232,940

Marketable securities
 
7,370

 
7,028

Deferred taxes on income
 
25,117

 
27,707

Other assets
 
58,544

 
21,189

Total assets
 
$
1,079,859

 
$
1,061,571

 
 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 

 
 

Current liabilities:
 
 

 
 

Trade accounts payable
 
$
46,317

 
$
46,974

Accrued liabilities
 
94,205

 
99,304

Current portion of long-term debt
 
65,000

 
65,000

Total current liabilities
 
205,522

 
211,278

 
 
 
 
 
Term loan and revolving credit facility
 
186,893

 
235,320

Other non-current liabilities
 
203,078

 
183,814

Total liabilities
 
595,493

 
630,412

 
 
 
 
 
Shareholders’ equity:
 
 

 
 

Common stock
 
237

 
234

Additional paid-in capital
 
284,842

 
277,518

Retained earnings
 
284,047

 
236,459

Accumulated other comprehensive loss
 
(84,760
)
 
(83,052
)
Total shareholders’ equity
 
484,366

 
431,159

Total liabilities and shareholders’ equity
 
$
1,079,859

 
$
1,061,571





Columbus McKinnon Blueprint for Growth Strategy Drove Margin Expansion, Earnings Growth and Strong Cash Generation in Third Quarter Fiscal Year 2020
Page 7 of 13
February 4, 2020

COLUMBUS McKINNON CORPORATION
Condensed Consolidated Statements of Cash Flows - UNAUDITED
(In thousands)
 
 
Nine Months Ended
 
 
December 31, 2019
 
December 31, 2018
Operating activities:
 
 
 
 
Net income
 
$
50,428

 
$
22,836

Adjustments to reconcile net income to net cash provided by (used for) operating activities:
 
 

 
 

Depreciation and amortization
 
21,991

 
24,763

Deferred income taxes and related valuation allowance
 
1,247

 
(2,353
)
Net loss (gain) on sale of real estate, investments, and other
 
(602
)
 
109

Stock based compensation
 
3,510

 
4,625

Amortization of deferred financing costs
 
1,782

 
1,992

Net loss on sales of businesses, including impairment
 
176

 
26,650

Non-cash lease expense
 
6,136

 
—

Changes in operating assets and liabilities, net of effects of business acquisitions and divestitures:
 
 
 
 

Trade accounts receivable
 
3,989

 
(1,407
)
Inventories
 
10,870

 
(13,043
)
Prepaid expenses and other
 
(3,224
)
 
(103
)
Other assets
 
726

 
232

Trade accounts payable
 
(3,013
)
 
(5,330
)
Accrued liabilities
 
(11,458
)
 
3,558

Non-current liabilities
 
(12,306
)
 
(8,733
)
Net cash provided by (used for) operating activities
 
70,252

 
53,796

 
 
 
 
 
Investing activities:
 
 

 
 

Proceeds from sales of marketable securities
 
4,908

 
1,238

Purchases of marketable securities
 
(4,961
)
 
(835
)
Capital expenditures
 
(6,761
)
 
(7,236
)
Proceeds from sale of equipment and real estate
 
51

 
176

Net (payments) proceeds from sales of businesses
 
(214
)
 
5,103

Payment of restricted cash to former owner
 
—

 
(294
)
Net cash provided by (used for) investing activities
 
(6,977
)
 
(1,848
)
 
 
 
 
 
Financing activities:
 
 

 
 

Proceeds from the issuance of common stock
 
4,457

 
3,708

Repayment of debt
 
(50,000
)
 
(50,051
)
Payment of dividends
 
(4,245
)
 
(3,484
)
Other
 
(643
)
 
(1,941
)
Net cash provided by (used for) financing activities
 
(50,431
)
 
(51,768
)
 
 
 
 
 
Effect of exchange rate changes on cash
 
77

 
(5,416
)
 
 
 
 
 
Net change in cash and cash equivalents
 
12,921

 
(5,236
)
Cash, cash equivalents, and restricted cash at beginning of year
 
71,343

 
63,565

Cash, cash equivalents, and restricted cash at end of period
 
$
84,264

 
$
58,329





Columbus McKinnon Blueprint for Growth Strategy Drove Margin Expansion, Earnings Growth and Strong Cash Generation in Third Quarter Fiscal Year 2020
Page 8 of 13
February 4, 2020

COLUMBUS McKINNON CORPORATION
Q3 FY 2020 Sales Bridge
 
 
Quarter
 
Year To Date
($ in millions)
 
$ Change
 
% Change
 
$ Change
 
% Change
Fiscal 2019 Sales
 
$
217.4

 
 
 
$
659.5

 
 
Divestitures
 
(9.0
)
 
 
 
(29.3
)
 
 
Fiscal 2019 Sales adjusted for divestitures
 
$
208.4

 
 
 
$
630.2

 
 
 
 
 
 
 
 
 
 
 
Volume
 
(10.6
)
 
(5.2
)%
 
(10.0
)
 
(1.6
)%
Pricing
 
3.3

 
1.6
 %
 
10.3

 
1.6
 %
Foreign currency translation
 
(1.7
)
 
(0.8
)%
 
(10.8
)
 
(1.7
)%
Total change adjusted for divestitures
 
$
(9.0
)
 
(4.4
)%
 
$
(10.5
)
 
(1.7
)%
Fiscal 2020 Sales
 
$
199.4

 


 
$
619.7

 
 


COLUMBUS McKINNON CORPORATION
Q3 FY 2020 Gross Profit Bridge
($ in millions)
Quarter
 
Year To Date
Fiscal 2019 Gross Profit
$
73.4

 
$
229.0

Divestitures
(2.0
)
 
(6.1
)
Fiscal 2019 Gross Profit adjusted for divestitures
71.4

 
222.9

Pricing, net of material cost inflation
2.8

 
7.9

Insurance settlement
0.1

 
0.4

Business realignment costs
(0.1
)
 
—

Product liability
(0.1
)
 
(0.3
)
Tariffs
0.1

 
(1.2
)
Factory closures
(0.5
)
 
(1.3
)
Productivity, net of other cost changes
(2.2
)
 
(1.9
)
Foreign currency translation
(0.6
)
 
(3.7
)
Sales volume and mix
(3.0
)
 
(5.8
)
Total change adjusted for divestitures
$
(3.5
)
 
$
(5.9
)
Fiscal 2020 Gross Profit
$
67.9

 
$
217.0








Columbus McKinnon Blueprint for Growth Strategy Drove Margin Expansion, Earnings Growth and Strong Cash Generation in Third Quarter Fiscal Year 2020
Page 9 of 13
February 4, 2020

COLUMBUS McKINNON CORPORATION
Additional Data - UNAUDITED
 
 
December 31, 2019
 
September 30, 2019
 
December 31, 2018
($ in millions)
 
 
 
 
 
 
 
 
 
Backlog
 
$
125.3

 
 
$
143.1

 
 
$
159.9

 
Backlog excluding divestitures
 
$
125.3

 
 
$
143.1

 
 
$
154.4

 
Long-term backlog
 
 
 
 
 
 
 
 
 
  Expected to ship beyond 3 months
 
$
51.3

 
 
$
53.9

 
 
$
55.1

 
Long-term backlog as % of total backlog
 
40.9

%
 
37.7

%
 
34.5

%
 
 
 
 
 
 
 
 
 
 
Trade accounts receivable
 
 

 
 
 

 
 
 

      
Days sales outstanding
 
57.2

days
 
57.0

days
 
52.3

days
 
 
 
 
 
 
 
 
 
 
Inventory turns per year
 
 

 
 
 

 
 
 

      
(based on cost of products sold)
 
3.9

turns
 
3.8

turns
 
3.8

turns
Days' inventory
 
94.0

days
 
96.9

days
 
96.1

days
 
 
 
 
 
 
 
 
 
 
Trade accounts payable
 
 

 
 
 

 
 
 

      
Days payables outstanding
 
32.1

days
 
33.2

days
 
25.4

days
 
 
 
 
 
 
 
 
 
 
Working capital as a % of sales (1)
 
16.5

%
 
17.2

%
 
17.9

%
 
 
 
 
 
 
 
 
 
 
Debt to total capitalization percentage
 
34.2

%
 
36.9

%
 
42.8

%
 
 
 
 
 
 
 
 
 
 
Debt, net of cash, to net total capitalization
 
25.7

%
 
30.1

%
 
37.9

%
(1) December 31, 2019 figure excludes Crane Equipment & Service, Inc. (CES) and Stahlhammer Bommern GmbH (STB), each of which were divested on February 28, 2019. September 30, 2019 figure excludes CES, STB, and the Tire Shredder business, which was divested on December 28, 2018. December 31, 2018 figure excludes the Tire Shredder business.

U.S. Shipping Days by Quarter 
 
 
Q1
 
Q2
 
Q3
 
Q4
 
Total
FY 20
 
63
 
63
 
61
 
64
 
251
 
 
 
 
 
 
 
 
 
 
 
FY 19
 
64
 
63
 
60
 
63
 
250





Columbus McKinnon Blueprint for Growth Strategy Drove Margin Expansion, Earnings Growth and Strong Cash Generation in Third Quarter Fiscal Year 2020
Page 10 of 13
February 4, 2020

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 December 31,
 
Year To Date December 31,
 
2019
 
2018
 
2019
 
2018
Gross profit
$
67,872

 
$
73,405

 
$
216,977

 
$
228,952

Add back (deduct):
 
 
 
 
 
 
 
Factory closures
696

 
200

 
1,451

 
200

Business realignment costs
123

 
—

 
263

 
—

     Insurance settlement
(77
)
 
—

 
(367
)
 
—

Non-GAAP adjusted gross profit
$
68,614

 
$
73,605

 
$
218,324

 
$
229,152

 
 
 
 
 
 
 
 
Sales
$
199,355

 
$
217,415

 
$
619,676

 
$
659,549

Adjusted gross margin
34.4
%
 
33.9
%
 
35.2
%
 
34.7
%

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 Blueprint for Growth Strategy Drove Margin Expansion, Earnings Growth and Strong Cash Generation in Third Quarter Fiscal Year 2020
Page 11 of 13
February 4, 2020

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 December 31,
 
Year To Date December 31,
 
2019
 
2018
 
2019
 
2018
Income from operations
$
20,886

 
$
6,646

 
$
73,160

 
$
44,974

Add back (deduct):
 
 
 
 
 
 
 
Factory closures
1,592

 
200

 
3,089

 
200

Business realignment costs
662

 
—

 
1,075

 
1,906

Insurance recovery legal costs
66

 
491

 
425

 
1,150

Net loss on sales of businesses, including impairment
—

 
15,550

 
176

 
26,650

Insurance settlement
(77
)
 
—

 
(367
)
 
—

Non-GAAP adjusted income from operations
$
23,129

 
$
22,887

 
$
77,558

 
$
74,880

 
 
 
 
 
 
 
 
Sales
$
199,355

 
$
217,415

 
$
619,676

 
$
659,549

Adjusted operating margin
11.6
%
 
10.5
%
 
12.5
%
 
11.4
%

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 Blueprint for Growth Strategy Drove Margin Expansion, Earnings Growth and Strong Cash Generation in Third Quarter Fiscal Year 2020
Page 12 of 13
February 4, 2020

COLUMBUS McKINNON CORPORATION
Reconciliation of GAAP Net Income (Loss) 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 December 31,
 
Year To Date December 31,
 
2019
 
2018
 
2019
 
2018
Net income (loss)
$
15,250

 
$
(782
)
 
$
50,428

 
$
22,836

Add back (deduct):
 
 
 
 
 
 
 
Factory closures
1,592

 
200

 
3,089

 
200

Business realignment costs
662

 
—

 
1,075

 
1,906

Insurance recovery legal costs
66

 
491

 
425

 
1,150

Net loss on sales of businesses, including impairment
—

 
15,550

 
176

 
26,650

Insurance settlement
(77
)
 
—

 
(367
)
 
—

     Normalize tax rate to 22% (1)
(2,106
)
 
(974
)
 
(2,283
)
 
(4,224
)
Non-GAAP adjusted net income
$
15,387

 
$
14,485

 
$
52,543

 
$
48,518

 
 
 
 
 
 
 
 
Average diluted shares outstanding
24,031

 
23,681

 
23,925

 
23,647

 
 
 
 
 
 
 
 
Diluted income per share - GAAP
$
0.63

 
$
(0.03
)
 
$
2.11

 
$
0.97

 
 
 
 
 
 
 
 
Diluted income per share - Non-GAAP
$
0.64

 
$
0.61

 
$
2.20

 
$
2.05

(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 Blueprint for Growth Strategy Drove Margin Expansion, Earnings Growth and Strong Cash Generation in Third Quarter Fiscal Year 2020
Page 13 of 13
February 4, 2020

COLUMBUS McKINNON CORPORATION
Reconciliation of GAAP Net Income (Loss) to Non-GAAP Adjusted EBITDA
($ in thousands)

 
Three Months Ended December 31,
 
Year To Date December 31,
 
2019
 
2018
 
2019
 
2018
Net income (loss)
$
15,250

 
$
(782
)
 
$
50,428

 
$
22,836

Add back (deduct):
 
 
 
 
 
 
 
     Income tax expense
2,234

 
3,111

 
12,537

 
9,461

     Interest and debt expense
3,423

 
4,330

 
11,034

 
13,185

Investment (income) loss
(408
)
 
82

 
(939
)
 
(297
)
Foreign currency exchange (gain) loss
188

 
(25
)
 
(518
)
 
206

Other (income) expense, net
199

 
(70
)
 
618

 
(417
)
Depreciation and amortization expense
7,244

 
7,901

 
21,991

 
24,763

Factory closures
1,592

 
200

 
3,089

 
200

Business realignment costs
662

 
—

 
1,075

 
1,906

Insurance recovery legal costs
66

 
491

 
425

 
1,150

Net loss on sales of businesses, including impairment
—

 
15,550

 
176

 
26,650

Insurance settlement
(77
)
 
—

 
(367
)
 
—

Non-GAAP adjusted EBITDA
$
30,373

 
$
30,788

 
$
99,549

 
$
99,643

 
 
 
 
 
 
 
 
Sales
$
199,355

 
$
217,415

 
$
619,676

 
$
659,549

Adjusted EBITDA margin
15.2
%
 
14.2
%
 
16.1
%
 
15.1
%

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 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.




February 4, Q3 FISCAL YEAR 2020 2020 FINANCIAL RESULTS CONFERENCE CALL Richard H. Fleming Chairman & Interim Chief Executive Officer Gregory P. Rustowicz Vice President – Finance & Chief Financial Officer PARTNERS IN MOTION CONTROL

 
SAFE HARBOR STATEMENT These slides, and the accompanying oral discussion, contain “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 effectiveness of the Company’s 80/20 Process to simplify operations, the ability of the Company’s operational excellence initiatives to drive profitability, the success of the Company’s efforts to ramp its growth engine, 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 presentation. Non-GAAP Financial Measures This presentation will discuss some non-GAAP (“adjusted”) financial measures which we believe are useful in evaluating our performance. You should not consider the presentation of this additional information in isolation or as a substitute for results compared in accordance with GAAP. The non-GAAP (“adjusted”) measures are notated and we have provided reconciliations of comparable GAAP to non-GAAP measures in tables found in the Supplemental Information portion of this presentation. Adoption of ASU No. 2017-07 and impact to historical information In accordance with the ASU, historical cost of good sold and RSG&A have been adjusted for the adoption and implementation on a retrospective basis of ASU No. 2017-07 “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. All relevant financial data impacted by the changes has been adjusted. © 2020 Columbus McKinnon Corporation 2

 
EXECUTION OF STRATEGY DRIVES EARNINGS Blueprint for Growth strategy drove margin expansion and earnings growth Gross margin increased 20 basis points to 34.0% on lower volume • Achieved 11th consecutive quarter of year-over year margin expansion Diluted earnings per share were $0.63; 80/20 Process contributed ~$5.7 million to operating income driving 5% increase in adjusted earnings per share to $0.64 Adjusted EBITDA margin expanded 100 bps to 15.2%; up 100 bps year-to-date to 16.1% ROIC was 11.9%, up 140 bps over prior-year period Strong cash from operations and free cash flow Generated $32.4 million in cash from operations in quarter; $70.3 million year-to-date Free cash flow year-to-date: $63.5 million Debt leverage ratio(1) at 1.3x: financial flexibility for investing in growth Self-help strategy overcomes headwinds and strengthens earnings power (1)Debt leverage ratio is defined as Net Debt / Adjusted TTM EBITDA © 2020 Columbus McKinnon Corporation 3

 
BLUEPRINT STRATEGY PHASE II DELIVERING RESULTS ($, in millions contribution to operating income) 80/20 Process: ~$5.7 million contribution to operating income in Q3 FY20 Customer simplification (strategic pricing) FY 2019 Actual $8.5 Priority customer account program (incremental volume from sharpened customer focus) FY 2020 Estimate ~$14.8 $18 Product simplification $12 ^Original Goal (indirect overhead reduction and material productivity) Closures: Salem (OH), Lisbon (OH), and China Q3 FY2020 YTD FY 2019 & 2020 Revised Goal 80/20 Process more than offsets current headwinds: Industrial market macroeconomic weakness Increased medical costs Continued investment in product development, marketing and digital initiatives Strong performance with 80/20 Process © 2020 Columbus McKinnon Corporation 4

 
RAMPING THE GROWTH ENGINE Created Automation Division Center of Excellence Integrating Lifting Specialist with Smart Movement Intelli-Crane™ Systems improve safety & productivity Utility lever hoist detects accidental release of loads Innovation expands addressable markets © 2020 Columbus McKinnon Corporation 5

 
NET SALES ($ in millions) Q3 sales down 8.3%, or $18.1 million; Q3 FY20 Sales Bridge Divestiture represented $9.0 million of decline Quarter U.S.: Pricing of 1.7% partially offset 4.2% volume decline Q3 FY19 Sales $ 217.4 Non-U.S: 6.5% decline. Pricing of 1.4% partially Divestitures (9.0) offset 6.2% volume decline and 1.7% FX Q3 FY19 Sales excluding divestitures $ 208.4 $217.4 $216.7 Volume (10.6) (5.2)% $212.7 $207.6 $9.0 $199.4 Pricing 3.3 1.6% $4.9 Foreign currency translation (1.7) (0.8)% Total change after divestitures $ (9.0) (4.4)% Q3 FY20 Sales $ 199.4 $208.4 $211.8 $212.7 $207.6 $199.4 Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Sales Divestitures Strong market position mitigated weakness in industrial markets © 2020 Columbus McKinnon Corporation 6

 
GROSS PROFIT & GROSS MARGIN ($ in millions) Quarter Gross Profit Bridge 11th consecutive Quarter quarter of year/year Q3 FY2019 Gross Profit $ 73.4 gross margin expansion Divestitures (2.0) Q3 FY2019 Gross Profit adjusted for divestitures $ 71.4 Pricing, net of material cost inflation 2.8 Tariffs 0.1 $73.4 $76.0 $75.6 $73.5 $67.9 Insurance settlement 0.1 Product liability (0.1) Business realignment costs (0.1) Factory closures (0.5) Foreign currency translation (0.6) Productivity, net of other cost changes (2.2) Sales volume and mix (3.0) 33.8% 35.1% 35.5% 35.4% 34.0% Total Change adjusted for divestitures $ (3.5) Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Q3 FY2020 Gross Profit $ 67.9 80/20 Process drove gross margin expansion © 2020 Columbus McKinnon Corporation 7

 
RSG&A ($ in millions) RSG&A at 21.9% of sales RSG&A as % of 21.9% 22.6% 21.2% 21.7% 21.9% Reduced by: sales $1.0 million for divestitures $0.4 million for FX $47.5 $49.0 $45.1 $45.0 $43.8 Benefited by: $3.3 $3.4 $2.8 $3.0 $2.6 $2.0 million reduction in stock compensation expense $20.4 $21.7 $18.0 $19.6 $19.2 Investing in growth: Continued to invest in new talent and innovation efforts $23.9 $24.0 $22.8 $22.9 $23.2 Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 FY20 Q4 RSG&A estimate of Selling G&A R & D approximately $45.0 to $45.5 million* Note: Components may not add to totals due to rounding Realigning and reinvesting costs for innovation and growth *RSG&A guidance provided February 4, 2020 excludes factory closures and business realignment costs © 2020 Columbus McKinnon Corporation 8

 
OPERATING INCOME & ADJUSTED OI MARGIN ($ in millions) Q3 FY20 operating income of $20.9 million Prior year included $15.6 million net loss $28.1 related to divestitures $26.3 $24.9 $23.1 $22.9 $27.0 Adjusted operating income grew 1.1%, $24.5 $25.2 or 5.7% normalized for divestitures $20.9 Adjusted operating margin of 11.6% $6.6 expanded 110 bps 10.5% 11.5% 13.2% 12.7% 11.6% Margin expansion driven by (1) (2) Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 80/20 Process Income from Operations Non-GAAP Adjustments (1)Includes $1.0 million of operating income from divestitures (2)Includes $0.5 million of operating income from divestitures Blueprint for Growth Strategy delivering strong operating results © 2020 Columbus McKinnon Corporation 9

 
QUARTERLY EARNINGS PER SHARE GAAP Diluted EPS Net income: $0.83 $0.78 $15.3 million $0.69 $0.63 $0.63 per diluted share ($0.03) Adjusted net income: Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 $15.4 million, 6.2% increase Y/Y Adjusted EPS $0.64 per diluted share, up 4.9% Y/Y $0.81 $0.61 $0.69 $0.74 $0.64 FY20 expected tax rate: 21% to 22% Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Solid Adjusted EPS growth driven by operating margin expansion Tax rate guidance provided February 4, 2020 © 2020 Columbus McKinnon Corporation 10

 
ADJUSTED EBITDA & ROIC Adjusted EBITDA Margin Strong adjusted EBITDA margin 15.2% in Q3 FY20, expanded 100 bps Y/Y 15.1% 15.2% 13.7% YTD EBITDA margin of 16.1% On track to achieve 19% goal in FY 2022 FY18 FY19 Q3 FY20 Return on Invested Capital Adjusted ROIC net of cash increased (1) (ROIC) 11.9% in Q3 FY20, expanded 140 bps Y/Y 11.2% 11.9% 8.7% FY18 FY19 Q3 FY20 TTM Improving performance during weak industrial environment (1)ROIC is defined as adjusted income from operations, net of taxes, for the trailing 12 months divided by the average of debt plus equity less cash (average capital) for the trailing 13 months. A 22% tax rate was used for fiscal years 2018, 2019 & 2020. © 2020 Columbus McKinnon Corporation 11

 
CASH FLOW ($ in millions) Free Cash Flow(1) Three Months Ended YTD 12/31/19 12/31/18 12/31/19 $90 - $95 $80 - $85 Net cash $75 - $80 provided by $32.4 $26.2 $70.3 $67.2 operating $55.1 activities $46.1 CapEx (1.9) (2.4) (6.8) Free cash flow $30.5 $23.8 $63.5 (FCF) Note: Components may not add to totals due to rounding FY17 FY18 FY19 FY20E FY21E FY22E Year-to-date FCF up 36% year-over-year FY21E to FY22E Assumptions: Raised FCF expectation for FY20 to Annual CapEx of ~$20 million $75 million to $80 million Annual pension contribution of ~$12 million FY20 expected CapEx: approximately $10 million to $12 million Outstanding free cash flow generation Capital expenditure guidance provided February 4, 2020 (1)Free cash flow is defined as cash provided by operating activities minus capital expenditures © 2020 Columbus McKinnon Corporation 12

 
STRONG BALANCE SHEET ($ in millions) CAPITALIZATION Debt leverage ratio(1) of 1.3x Dec. 31, March 31, Paid down $20 million of debt in 2019 2019 Q3 FY20 Cash and cash equivalents $ 84.0 $ 71.1 YTD paid $50 million of debt Total debt 251.9 300.3 Net debt to net total capital 25.7% Total net debt 167.9 229.2 Expect debt leverage ratio of 1.1x to Shareholders’ equity 484.4 431.2 1.2x at fiscal year end Total capitalization $ 736.3 $ 731.5 Strong financial flexibility enables Debt/total capitalization 34.2% 41.1% Phase III of Blueprint for Growth Net debt/net total 25.7% 34.7% strategy capitalization Plan to pay down $65 million of debt in FY2020 (1)Debt leverage ratio is defined as Net Debt / Adjusted TTM EBITDA © 2020 Columbus McKinnon Corporation 13

 
CAPITAL DEPLOYMENT PRIORITIES Organic Growth New product development Investing in growth initiatives and CapEx De-lever the balance sheet Achieved net leverage target In-organic Growth M&A Fund M&A Decreasing Priority Decreasing Return of Capital Regular dividend Adhere to dividend policy Share repurchase Consider opportunistically Capital deployment priorities remain unchanged © 2020 Columbus McKinnon Corporation 14

 
OUTLOOK Q4 FY20 outlook: Slowing macroeconomic and other headwinds expected to continue in Q4 FY20 Expect Q4 FY20 sales to be down 5% to 7% from Q4 FY19, which was ~$210 million* Team working to offset headwinds, both top and bottom lines Blueprint for Growth progress: Completed closure of China facility ($1 million annualized savings) and on track with Lisbon, OH in Q1 FY21 ($5 million annualized savings) 80/20 Process on track to achieve $18 million in contributions to operating income for FY20 Further business realignment efforts underway Self-funding realignment, restructurings and innovation to Ramp the Growth Engine Tracking toward 19% EBITDA margin in FY2022 Active search for CEO in process: Focused on maintaining Phase II momentum and advancing Phase III Blueprint for Growth strategy driving earnings in tougher macro environment *Q4 FY19 revenue was ~$210 million when excluding divestitures and FX at current rates © 2020 Columbus McKinnon Corporation 15

 
Supplemental Information © 2020 Columbus McKinnon Corporation 16

 
BLUEPRINT FOR GROWTH STRATEGY Growth Phase III Oriented Evolve business model Industrial • Portfolio optimization Technology • Mergers & acquisitions Phase II Simplify the business Drive profitable growth • 80/20 Process • Operational Excellence • Ramp the Growth Engine Phase I Get control Achieve results Cyclical • New organization Industrial • Operating system Today Future Further pivot to growth oriented Industrial Technology company © 2020 Columbus McKinnon Corporation 17

 
BUSINESSES SOLD Q1 Q2 Q3 Q4 ($ in thousands) FY19 FY19 FY19 FY19 FY19 Sales 11,104 9,233 8,983 4,875 34,195 Income from operations 665 1,461 1,007 532 3,665 1. The Tire Shredder business was divested December 28, 2018. 2. Crane Equipment & Service, Inc. was divested February 28, 2019. 3. Stahlhammer Bommern GmbH was divested February 28, 2019. © 2020 Columbus McKinnon Corporation 18

 
ADJUSTED INCOME FROM OPERATIONS RECONCILIATION ($ in thousands) Quarter Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Income from operations $ 6,646 $ 24,468 $ 27,043 $ 25,231 $ 20,886 Add back (deduct): Factory closures 200 1,273 1,027 470 1,592 Business realignment costs — — — 413 662 Insurance recovery legal costs 491 132 139 220 66 Net (gain) loss on sales of businesses 15,550 (978) 169 7 — Insurance settlement — — (290) — (77) Non-GAAP adjusted income from operations $ 22,887 $ 24,895 $ 28,088 $ 26,341 $ 23,129 Sales 217,415 216,733 212,712 207,609 199,355 Adjusted operating margin 10.5% 11.5% 13.2% 12.7% 11.6% 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. © 2020 Columbus McKinnon Corporation 19

 
ADJUSTED NET INCOME RECONCILIATION ($ in thousands, except per share data) Quarter Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Net income (loss) $ (782) $ 19,741 $ 18,579 $ 16,599 $ 15,250 Add back (deduct): Factory closures 200 1,273 1,027 470 1,592 Business realignment costs — — — 413 662 Insurance recovery legal costs 491 132 139 220 66 Net (gain) loss on sales of businesses 15,550 (978) 169 7 — Insurance settlement — — (290) — (77) Normalize tax rate (1) (974) (3,766) (291) 114 (2,106) Non-GAAP adjusted net income $ 14,485 $ 16,402 $ 19,333 $ 17,823 $ 15,387 Average diluted shares outstanding 23,681 23,714 23,777 23,926 24,031 Diluted income per share – GAAP $(0.03) $0.83 $0.78 $0.69 $0.63 Diluted income per share - Non-GAAP $0.61 $0.69 $0.81 $0.74 $0.64 (1) Applies 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. © 2020 Columbus McKinnon Corporation 20

 
ADJUSTED EBITDA RECONCILIATION ($ in thousands) Quarter Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Net income (loss) $ (782) $ 19,741 $ 18,579 $ 16,599 $ 15,250 Add back (deduct): Income tax expense 3,111 860 5,162 5,141 2,234 Interest and debt expense 4,330 3,959 3,852 3,759 3,423 Investment (income) loss 82 (430) (302) (229) (408) Foreign currency exchange (gain) loss (25) 637 (410) (296) (188) Other (income) expense, net (70) (299) 162 257 199 Depreciation and amortization expense 7,901 7,912 7,403 7,344 7,244 Factory closures 200 1,273 1,027 470 1,592 Business realignment costs — — — 413 662 Insurance recovery legal costs 491 132 139 220 66 Net (gain) loss on sales of businesses 15,550 (978) 169 7 — Insurance settlement — — (290) — (77) Non-GAAP adjusted EBITDA $ 30,788 $ 32,807 $ 35,491 $ 33,685 $ 30,373 Sales $ 217,415 $ 216,733 $ 212,712 $ 207,609 $ 199,355 Adjusted EBITDA margin 14.2% 15.1% 16.7% 16.2% 15.2% 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 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. © 2020 Columbus McKinnon Corporation 21

 
INDUSTRIAL CAPACITY UTILIZATION U.S. Capacity Utilization Eurozone Capacity Utilization Source: The Federal Reserve Board Source: European Commission 82% 85% 75.2% (Manufacturing) & 81% 77.0% (Total) December 2019(1) 84% 80% 79% 83% 78% 82% 77% 81.3% December 2019 76% 81% 75% 80% 74% 73% 79% Manufacturing Total (1)December2019 numbers are preliminary © 2020 Columbus McKinnon Corporation 22

 
CONFERENCE CALL PLAYBACK INFO Replay Number: 412-317-6671 passcode: 13697631 Telephone replay available through February 11, 2020 Webcast / PowerPoint / Replay available at www.cmworks.com/investors Transcript, when available, at www.cmworks.com/investors © 2020 Columbus McKinnon Corporation 23

 
February 4, Q3 FISCAL YEAR 2020 2020 FINANCIAL RESULTS CONFERENCE CALL PARTNERS IN MOTION CONTROL