Columbus Mckinnon Corp 10-Q for FY2023 Q2

Columbus Mckinnon Corp (CMCO)

10-Q 2022-10-27 For: 2022-09-30

Added on April 08, 2026

About this 10-Q

Columbus Mckinnon Corp filed this 10-Q on October 27, 2022, covering the quarter ended September 30, 2022 (FY2023 Q2).

Headline figures

Quarter ended September 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $231.74M; up 3.6% from $223.64M a year earlier
Net income: $14.11M; down 7.2% from net income of $15.2M a year earlier
Diluted EPS: $0.49; down 7.5% from $0.53 a year earlier

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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


		Page #
Part I. Financial Information

Item 1.	Condensed Consolidated Financial Statements (Unaudited)

	Condensed consolidated balance sheets - September 30, 2022 and March 31, 2022	3

	Condensed consolidated statements of operations - Three and six months ended September 30, 2022 and September 30, 2021	4

	Condensed consolidated statements of comprehensive income (loss) - Three and six months ended September 30, 2022 and September 30, 2021	5

	Condensed consolidated statements of shareholders' equity - Three and six months ended September 30, 2022 and September 30, 2021	6

	Condensed consolidated statements of cash flows - Three and six months ended September 30, 2022 and September 30, 2021	8

	Notes to condensed consolidated financial statements - September 30, 2022	9

Item 2.	Management's Discussion and Analysis of Results of Operations and Financial Condition	31

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38

Item 4.	Controls and Procedures	38

Part II. Other Information

Item 1.	Legal Proceedings – none.	39

Item 1A.	Risk Factors	39

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds – none.	39

Item 3.	Defaults upon Senior Securities – none.	39

Item 4.	Mine Safety Disclosures.	39

Item 5.	Other Information – none.	39

Item 6.	Exhibits	40


	September 30, 2022		March 31, 2022
	(unaudited)
ASSETS:	(In thousands)
Current assets:
Cash and cash equivalents	$	88,865	$	115,390
Trade accounts receivable, less allowance for doubtful accounts ($5,104 and $5,717, respectively)	140,298		147,515
Inventories	192,789		172,139
Prepaid expenses and other	37,537		31,545
Total current assets	459,489		466,589
Property, plant, and equipment, net	92,617		97,926
Goodwill	627,850		648,849
Other intangibles, net	365,206		390,788
Marketable securities	10,183		10,294
Deferred taxes on income	2,265		2,313
Other assets	71,685		68,948
Total assets	$	1,629,295	$	1,685,707

LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Trade accounts payable	$	76,584	$	90,881
Accrued liabilities	104,835		118,187
Current portion of long term debt and finance lease obligations	40,580		40,551
Total current liabilities	221,999		249,619
Term loan and finance lease obligations	450,840		470,675
Other non current liabilities	172,072		192,610
Total liabilities	844,911		912,904
Shareholders' equity:
Voting common stock; 50,000,000 shares authorized; 28,629,360 and 28,517,333 shares issued and outstanding	286		285
Additional paid in capital	508,948		506,074
Retained earnings	336,844		316,343
Accumulated other comprehensive loss	(61,694)		(49,899)
Total shareholders' equity	784,384		772,803
Total liabilities and shareholders' equity	$	1,629,295	$	1,685,707


	Three Months Ended				Six Months Ended
	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
	(In thousands, except per share data)
Net sales	$	231,740	$	223,635	$	452,027	$	437,099
Cost of products sold	145,430		142,500		283,191		281,901
Gross profit	86,310		81,135		168,836		155,198

Selling expenses	25,617		24,157		51,773		47,639
General and administrative expenses	21,413		23,208		43,299		53,351
Research and development expenses	5,461		3,825		10,591		7,408
Amortization of intangibles	6,447		6,285		12,982		12,394
	58,938		57,475		118,645		120,792

Income from operations	27,372		23,660		50,191		34,406
Interest and debt expense	6,768		4,587		12,971		10,399
Cost of debt refinancing	—		—		—		14,803
Investment (income) loss	312		(115)		742		(548)
Foreign currency exchange (gain) loss	1,003		441		2,206		535
Other (income) expense, net	222		(539)		(2,079)		(289)
Income (loss) before income tax expense (benefit)	19,067		19,286		36,351		9,506
Income tax expense (benefit)	4,953		4,083		13,846		1,566
Net income (loss)	$	14,114	$	15,203	$	22,505	$	7,940

Average basic shares outstanding	28,619		28,418		28,581		27,594
Average diluted shares outstanding	28,748		28,756		28,733		27,957

Basic income (loss) per share:	$	0.49	$	0.53	$	0.79	$	0.29

Diluted income (loss) per share:	$	0.49	$	0.53	$	0.78	$	0.28

Dividends declared per common share	$	0.07	$	0.06	$	0.07	$	0.06


	Three Months Ended				Six Months Ended
	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
	(In thousands)				(In thousands)
Net income (loss)	$	14,114	$	15,203	$	22,505	7,940
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	(10,781)		(4,226)		(19,482)		(2,150)
Change in derivatives qualifying as hedges, net of taxes of $(1,509), $986, $(2,375), $955	4,686		(2,995)		7,375		(2,899)
Change in pension liability and postretirement obligation, net of taxes of $(56), $(74), $(105), $(40)	166		212		312		115
Total other comprehensive income (loss)	(5,929)		(7,009)		(11,795)		(4,934)
Comprehensive income (loss)	$	8,185	$	8,194	$	10,710	$	3,006


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.


	(In thousands, except share data)
	Common Stock ($0.01 par value)		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Shareholders’ Equity
Balance at March 31, 2022	$	285	$	506,074	$	316,343	$	(49,899)	$	772,803
Net income (loss)	—		—		8,391		—		8,391
Change in foreign currency translation adjustment	—		—		—		(8,701)		(8,701)
Change in derivatives qualifying as hedges, net of tax of $(812)	—		—		—		2,689		2,689
Change in pension liability and postretirement obligations, net of tax of $(49)	—		—		—		146		146
Stock options exercised, 18,907 shares	—		415		—		—		415
Stock compensation expense	—		751		—		—		751
Restricted stock units released, 52,276 shares, net of shares withheld for minimum statutory tax obligation	1		(1,314)		—		—		(1,313)
Balance at June 30, 2022	$	286	$	505,926	$	324,734	$	(55,765)	$	775,181
Net income (loss)	—		—		14,114		—		14,114
Dividends declared	—		—		(2,004)		—		(2,004)
Change in foreign currency translation adjustment	—		—		—		(10,781)		(10,781)
Change in derivatives qualifying as hedges, net of tax of $(1,509)	—		—		—		4,686		4,686
Change in pension liability and postretirement obligations, net of tax of $(56)	—		—		—		166		166
Stock compensation - directors	—		537		—		—		537
Stock options exercised, 9,531 shares	—		206		—		—		206
Stock compensation expense	—		2,341		—		—		2,341
Restricted stock units released, 31,313 shares, net of shares withheld for minimum statutory tax obligation	—		(62)		—		—		(62)
Balance at September 30, 2022	$	286	$	508,948	$	336,844	$	(61,694)	$	784,384


Cash	$	8,058
Working Capital	20,218
Property, plant, and equipment, net	26,104
Intangible assets	190,000
Other assets	658
Other liabilities	(896)
Finance lease liabilities	(14,582)
Deferred and other taxes, net	(35,689)
Goodwill	287,141
Total	$	481,012


Cash	$	907
Working Capital	1,709
Property, plant, and equipment, net	3,072
Intangible assets	21,350
Other assets	1,382
Other liabilities	(1,905)
Goodwill	40,832
Total	$	67,347


Customer advances (contract liabilities)	September 30, 2022		September 30, 2021
March 31, beginning balance	$	22,453	$	15,373
Additional customer advances received	36,729		29,240
Revenue recognized from customer advances included in beginning of period	(22,453)		(15,373)
Other revenue recognized from customer advances	(13,125)		(16,881)
Customer advances recorded from acquisitions	—		4,144
Other (1)	(1,353)		73
September 30, ending balance	$	22,251	$	16,576


	Three Months Ended				Six Months Ended
Net Sales by Product Grouping	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Industrial Products	$	81,096	$	84,230	$	162,942	$	163,841
Crane Solutions	90,087		83,911		169,418		163,578
Engineered Products	21,504		21,933		39,774		41,925
Precision Conveyor Products	39,010		33,539		79,809		67,718
All other	43		22		84		37
Total	$	231,740	$	223,635	$	452,027	$	437,099


Allowance for doubtful accounts	September 30, 2022		September 30, 2021
March 31, beginning balance	$	5,717	$	5,686
Bad debt expense	493		291
Less uncollectible accounts written off, net of recoveries	(811)		(1,003)
Allowance recorded from acquisitions	—		152
Other (1)	(295)		84
September 30, ending balance	$	5,104	$	5,210


	Fair value measurements at reporting date using
	September 30,		Quoted prices in active markets for identical assets		Significant other observable inputs		Significant unobservable inputs
Description	2022		(Level 1)		(Level 2)		(Level 3)
Assets/(Liabilities) measured at fair value:
Marketable securities	$	10,183	$	10,183	$	—	$	—
Annuity contract	1,588		—		1,588		—

Derivative Assets (Liabilities):
Foreign exchange contracts	(116)		—		(116)		—
Interest rate swap	13,060		—		13,060		—
Cross currency swap	6,786		—		6,786		—


Disclosed at fair value:
Term Loan B	$	(472,909)	$	—	$	(472,909)	$	—


	Fair value measurements at reporting date using
	March 31,		Quoted prices in active markets for identical assets		Significant other observable inputs		Significant unobservable inputs
Description	2022		(Level 1)		(Level 2)		(Level 3)
Assets/(Liabilities) measured at fair value:
Marketable securities	$	10,294	$	10,294	$	—	$	—
Annuity contract	1,884		—		1,884		—
Derivative assets (liabilities):
Foreign exchange contracts	(217)		—		(217)		—

Interest rate swap	3,613		—		3,613		—
Cross currency swap	(8,713)		—		(8,713)		—

Disclosed at fair value:
Term loan	$	(497,534)	$	—	$	(497,534)	$	—


	Six Months Ended
	September 30, 2022	September 30, 2021
OPERATING ACTIVITIES:	(In thousands)
Net income (loss)	22,505	7,940
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:
Depreciation and amortization	20,893	20,969
Deferred income taxes and related valuation allowance	(698)	(1,235)
Net loss (gain) on sale of real estate, investments and other	852	(462)
Stock-based compensation	3,629	5,504
Amortization of deferred financing costs	860	867
Cost of debt refinancing	—	14,803
Loss (gain) on hedging instruments	(714)	672
Gain on sale of building	(232)	(375)
Loss on retirement of fixed asset	175	—
Non-cash lease expense	3,843	3,939
Changes in operating assets and liabilities, net of effects of business acquisitions:
Trade accounts receivable	381	(1,709)
Inventories	(30,754)	(21,959)
Prepaid expenses and other	2,321	(2,779)
Other assets	24	42
Trade accounts payable	(11,267)	(6,274)
Accrued liabilities	(3,124)	1,908
Non-current liabilities	(2,545)	(3,909)
Net cash provided by (used for) operating activities	6,149	17,942

INVESTING ACTIVITIES:
Proceeds from sales of marketable securities	1,900	2,734
Purchases of marketable securities	(2,709)	(4,768)
Capital expenditures	(5,288)	(6,752)
Proceeds from sale of building, net of transaction costs	373	461
Dividend received from equity method investment	313	—
Proceeds from insurance reimbursement	—	482
Purchase of businesses, net of cash acquired (See Note 2)	(1,616)	(472,954)
Net cash provided by (used for) investing activities	(7,027)	(480,797)

FINANCING ACTIVITIES:
Proceeds from the issuance of common stock	621	1,412
Repayment of debt	(20,264)	(461,286)
Proceeds from issuance of long-term debt	—	650,000


	September 30, 2022		March 31, 2022
At cost - FIFO basis:
Raw materials	$	148,908	$	129,015
Work-in-process	28,422		28,093
Finished goods	43,369		36,661
Total at cost FIFO basis	220,699		193,769
LIFO cost less than FIFO cost	(27,910)		(21,630)
Net inventories	$	192,789	$	172,139


Balance at April 1, 2022	$	648,849
Working capital adjustment for Garvey (Refer to Note 2)	1,616
Garvey contingent payment reclassification (Refer to Note 2)	(2,000)
Currency translation	(20,615)
Balance at September 30, 2022	$	627,850


	September 30, 2022						March 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
Trademark	$	18,978	$	(5,297)	$	13,681	$	19,529	$	(5,032)	$	14,497
Indefinite lived trademark	44,558		—		44,558		46,721		—		46,721
Customer relationships	309,775		(74,757)		235,018		325,431		(71,202)		254,229
Acquired technology	96,107		(24,759)		71,348		96,433		(21,789)		74,644
Other	3,228		(2,627)		601		3,476		(2,779)		697
Total	$	472,646	$	(107,440)	$	365,206	$	491,590	$	(100,802)	$	390,788


		Fair Value of Asset (Liability)
Derivatives Designated as Hedging Instruments	Balance Sheet Location	September 30, 2022		March 31, 2022
Foreign exchange contracts	Prepaid expenses and other	$	239	$	—
Foreign exchange contracts	Accrued liabilities	(355)		(217)
Interest rate swap	Prepaid expenses and other	6,990		859
Interest rate swap	Other assets	6,907		4,512
Interest rate swap	Accrued liabilities	(736)		(1,371)
Interest rate swap	Other non current liabilities	(101)		(387)
Cross currency swap	Prepaid expenses and other	2,426		—
Cross currency swap	Other assets	4,360		—
Cross currency swap	Accrued liabilities	—		(170)
Cross currency swap	Other non current liabilities	—		(8,543)


	September 30, 2022		March 31, 2022
Accrued general and product liability, beginning of period	$	22,575	$	21,227
Estimated insurance recoveries	(102)		1,109
Add provision for claims	1,826		6,648
Deduct payments for claims	(1,553)		(6,409)
Accrued general and product liability, end of period	$	22,746	$	22,575

Estimated insurance recoveries	(9,059)		(9,160)
Net accrued general and product liability, end of period	$	13,687	$	13,415


	Three months ended September 30, 2022
	Retirement Obligations		Foreign Currency		Change in Derivatives Qualifying as Hedges		Total
Beginning balance net of tax	$	(20,897)	$	(36,780)	$	1,912	$	(55,765)
Other comprehensive income (loss) before reclassification	48		(10,781)		10,617		(116)
Amounts reclassified from other comprehensive loss	118		—		(5,931)		(5,813)
Net current period other comprehensive income (loss)	166		(10,781)		4,686		(5,929)
Ending balance net of tax	$	(20,731)	$	(47,561)	$	6,598	$	(61,694)


	Six months ended September 30, 2022
	Retirement Obligations		Foreign Currency		Change in Derivatives Qualifying as Hedges		Total
Beginning balance net of tax	$	(21,043)	$	(28,079)	$	(777)	$	(49,899)
Other comprehensive income (loss) before reclassification	76		(19,482)		17,984		(1,422)
Amounts reclassified from other comprehensive loss	236		—		(10,609)		(10,373)
Net current period other comprehensive income (loss)	312		(19,482)		7,375		(11,795)
Ending balance net of tax	$	(20,731)	$	(47,561)	$	6,598	$	(61,694)


Details of AOCL Components	Amount reclassified from AOCL		Affected line item on Condensed Consolidated Statement of Operations






Net amortization of prior service cost and pension settlement expense
	$	157
	157		Total before tax
	(39)		Tax (benefit) expense
	$	118	Net of tax

Change in derivatives qualifying as hedges
	$	84	Cost of products sold
	(175)		Interest expense
	(7,750)		Foreign currency
	(7,841)		Total before tax
	1,910		Tax (benefit) expense
	$	(5,931)	Net of tax


	September 30, 2022		March 31, 2022
Operating leases:
Other assets	$	28,434	$	30,809

Accrued liabilities	6,559		7,965
Other non current liabilities	22,678		23,711
Total operating liabilities	$	29,237	$	31,676

Finance lease:
Net property, plant, and equipment	$	12,987	$	13,525

Current portion of long-term debt and finance lease obligation	574		544
Term loan and finance lease obligations	13,246		13,540
Total finance liabilities	$	13,820	$	14,084


	Six months ended, September 30,
	2022		2021
Cash paid for amounts included in the measurement of operating lease liabilities	$	4,277	$	4,569
Cash paid for amounts included in the measurement of finance lease liabilities	$	578	$	562
ROU assets obtained in exchange for new operating lease liabilities	$	3,026	$	1,471
ROU assets obtained in exchange for new finance lease liabilities	$	—	$	14,582



a)			The new enterprise resource planning system was designed to generate reports and other information used to account for transactions and reduce the number of manual processes employed by the Company;

b)			The new enterprise resource planning system is technologically advanced and is expected to increase the amount of application controls used to process data; and

c)			The Company has designed new processes and implemented new procedures in connection with the implementation.


Exhibit 31.1*						Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934; as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 31.2*						Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934; as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 32*						Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 101*						The financial statements from the Company’s Quarterly Report on Form 10-Q for the three and six months ended September 30, 2022 formatted in iXBRL.

101.INS*						XBRL Instance Document

101.SCH*						XBRL Taxonomy Extension Schema Document

101.CAL*						XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*						XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*						XBRL Taxonomy Extension Label Linkbase Document

101.PRE*						XBRL Taxonomy Extension Presentation Linkbase Document

Exhibit 104*						Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document)


		COLUMBUS McKINNON CORPORATION
		(Registrant)

Date:	October 27, 2022	/S/ GREGORY P. RUSTOWICZ
		Gregory P. Rustowicz
		Executive Vice President Finance and Chief Financial Officer
		(Principal Financial Officer)


/S/ DAVID J. WILSON
David J. Wilson
Chief Executive Officer
(Principal Executive Officer)