140 Years Strong - Columbus McKinnon

Transcription

2015 Investor and Analyst Day
140 Years Strong
July 7, 2015
© 2015 Columbus McKinnon Corporation. All Rights Reserved. Confidential and Proprietary.
Safe Harbor Statement
These slides contain (and the accompanying oral discussion will contain) “forward-looking
statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such
statements 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 integration of acquisitions and
other factors disclosed in the Company’s periodic reports filed with the Securities and Exchange
Commission. Consequently, such forward looking statements should be regarded as the
Company’s current plans, estimates and beliefs. The Company does not undertake and
specifically declines any obligation to publicly release the results of any revisions to these
forward-looking statements that may be made to reflect any future events or circumstances after
the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
2
© 2015 Columbus McKinnon Corporation
140 Years Strong
July 7, 2015
Timothy T. Tevens
President and Chief Executive Officer
Columbus McKinnon Corporation
LIFT
SECURE
Easily and Safely
Founded: 1875
IPO: 1996
NASDAQ: CMCO
Market Capitalization
$501.7 million
Annual Dividend
$0.16
Recent Price
$25.00
Dividend Yield
0.6%
52 Week High-Low
$29.69 - $20.16
Institutional Ownership
Shares Outstanding
20.1 million
Insider Ownership
3.5%
Average Daily Volume
48,918
Employee Count (approx.)
2,750
$13.39
Fiscal Year End
(3 mos.)
Book Value per Share
93.3%
March 31
Market data as of 6/30/15 (Source: Bloomberg); shares outstanding as of 5/26/15; book value per share, employee count and institutional ownership as of
3/31/15; insider ownership as of most recent filing
4
140 Years Strong
Our
Goal
People Excellence
New Markets, Geographies
and Distribution Channels
Superior Customer Satisfaction
New Products & Services
Our
Mission
Operational Excellence
“To be the global leader in helping customers lift,
position and secure materials easily and safely.”
Helping our customers succeed
Innovation, quality, safety and continuous improvement in all aspects of performance
Our people and our diverse backgrounds
A healthy company with the highest integrity which values all stakeholders
5
Our
Initiatives
Our
Values
Customer Intimacy
Strong global
brands
Broad product
offering
Customer
Intimacy
Know the
customer
Operational
Excellence
6
Strategic Imperatives
Superior Customer Satisfaction
Grow
Profitably
Geographic Market
Expansion
Acquisitions and
Strategic Alliances
Global Product Development
and Key Vertical Markets
7
Leverage Existing Footprint
APAC
Latin America
EMEA
From strength in
China
From strength in
Mexico and Brazil
From strength in
Europe and S. Africa
8
Invest in Product Development
Voice of
Customer
- Tied to customer intimacy
- Increased cadence
of new products
Market-driven
New Products
New
Technologies
Revised
Product
Development
Process
9
Achieve World Class Performance
Customer
Operations
People
Continuous Improvement
10
Objectives
FY14 Actual
FY15 Actual
World Class
Customer Satisfaction - Total
5.1
3.5
2.5
1.02%
0.85%
0.75%
4.26
4.3
6.0
On-time Deliveries
88.0%
90.2%
98.0%
Warranty Costs
0.34%
0.33%
0.35% - 0.30%
Productivity
11.2%
31%
+10% - +15%
Safety RW/LT
1.88
1.52
0.50
Internal Defect Rate
Inventory Turns
Continuous Improvement
11
Develop Our Culture and People
Positive Culture
Americas
 Safety focus
 Productivity
 Great Place to Work
People Development
 Succession planning
EMEA
 Training and development programs
• Global and regional leadership development
• Career path planning
12
APAC
Global Support
Product
Development
and Vertical
Markets
CM Lean
Business
System
Americas
EMEA
Acquisitions
APAC
Global
Sourcing
Business
Systems
13
Many Strategic Accomplishments
I. Profitable Revenue Growth
% On-Time Deliveries
100
 Global vertical market roll-out
 Completed value added acquisitions
• STB, Unified Industries
95
90
85
80
75
70
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
Customer Complaints/1000 Lines
II. Global Organization
 New product development leadership
 SAP installation 26% complete
12
11
10
9
8
7
6
5
4
3
FY06
III. Operational Excellence
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY12
FY13
FY14
FY15
Internal Defect Rate
 Enhanced China operations capability
2.00%
1.80%
1.60%
• Completed Hangzhou expansion
1.40%
1.20%
• Allows for product localization
1.00%
 Continued positive operational performance
14
0.80%
FY06
FY07
FY08
FY09
FY10
FY11
Key Takeaways
Ability to drive growth independent of the business cycle
Global reach of our markets
Extensive breadth of our products and services
Future expectations:
Growth, margin expansion and cash generation
15
Global Product Development
Jeffrey S. Armfield
Executive Director,
Global Product Strategy and Development
Productivity, Safety & Quality Wins
Technical
Performance
Global
Compliance
Serviceability
Automation
Readiness
Ergonomics
17
Lighter, Smaller
Products
3
Disciplined Approach
Market
Needs
Product
Planning
Product
Development
Revenue
and
Profit
Product
Launch
Market
Feedback
Cross-Functional, Measurable, Repeatable
18
3
Emphasis on People and Process
Market
Needs
Product
Planning
Strategic Product
Management
Voice of Customer and
Watch the Work
Knowledge Based
Product
Development
Engineering Metrics
Market Performance
Metrics
Market
Feedback
Speed to Market
19
3
Successful Launch: 2-Ton Single Reeve Lodestar
Market Needs
Smaller hoist
Faster lift speed
Product
Planning
Onsite observation
Product
Development
Extensive testing
Market
Feedback
Feb. 2015 launch
well received
20
Improvements Address Market Needs
Targets Industrial & Entertainment Markets
 Higher speed
 Quieter and lower power consumption
 Improved safety; unique clutch positioning
 Improved serviceability; easier access to
components
 Longer life
 Enhanced gear box and technology
 Heavy duty motors
 Lifetime warranty
21
Successful Launch: Universal Trolley System
Market Needs
Universal adaptability
Range of motion
options
Product
Planning
Consolidate
multiple systems
Product
Development
Extensive testing
Market
Feedback
May 2015 launch
22
Innovations Address Market Needs
Targets Industrial Markets
 Universal design fits most hoists & beams
 Modular design





Manual, geared, powered
One to three tons
Various height applications
Improves minimum radius curve
Various wheel diameters
 Lower cost / higher performance
 Long service life
 Low maintenance; permanently lubricated
ball bearings
23
What’s Ahead
Future focus areas: Explosion proof, variable speed,
automation, remote access
Leveraging deep application/engineering knowledge
Targeting geographies
Ethnography: Watch the work
24
24
Create Demand:
End User Focused
Gene P. Buer
Vice President,
Global Services and Vertical Markets
Create Demand
Customer Intimacy Critical to Strategy
Vertical Markets
 Deep industry and customer knowledge
 Create end-user pull – build demand for products and systems
 Channel utilization – connecting high value-add channel partners to users
 Developing application-specific products and systems
Global Services
 Turnkey systems and asset management services
 Premium customers
 Total Cost of Ownership (TCO)
 Leveraging entire portfolio to deliver best-in-class solutions
26
Broad and Diverse Vertical Markets
27
Global Target Market Opportunity(1)
($ in millions)
38%
Estimated market share of CAM(1,2):
5%
11%
15%
12%
21%
19%
10%
9%
$1,000
$900
$800
$700
$600
$500
$400
$300
$200
$100
$0
$4,000
$3,500
$3,000
$2,500
$2,000
$1,500
$1,000
$500
$0
Total Target Market
Current Addressable Market (CAM)
Potential Target Market with New Products
Columbus McKinnon FY 2015 Sales
 Addressable market with current portfolio: ~$2.0 billion
 Potential opportunity with product line expansion: +~$1.8 billion
 Combined sales represent ~9% of the total global market
1 Company
estimates
2
Represents percent of current addressable market
28
Vertical Market Strategy
Customer Intimacy Model
Intelligence
 Leverage relationships
 Gather Voice of Customer (VOC), watch the work
 Assess the competition
 Customer specific solutions
 Deepen customer relationships
Develop
 Deliver solutions
 Train and educate users
Implement
Scale
 Approach similar customers
 Modify to suit
 Deepen vertical market knowledge
29
Regional Focus on Targeted Verticals
Americas
EMEA
APAC
Key Verticals:
Key Verticals:
Key Verticals:
Entertainment
Oil & Gas
Construction
Automotive
Heavy OEM
Entertainment
Oil & Gas
Construction
Entertainment
Oil & Gas
Automotive
Heavy OEM
Mining
Power
30
Global Services Turnkey Solutions
Optimizing Facility Uptime
 Comprehensive project management
 Engineering services
 Installation and commissioning
 Complete documentation
 Operator and maintenance training
Objective: Highest Uptime and Lowest TCO
31
Global Services Case Study
Global Heavy Equipment OEM
 Product: Axle assemblies for
wheel loaders
 Systems to optimize design and layout
 Unified aluminum rail workstations
 CM Lodestar chain hoists
 On-site project management
 Lifetime service program
 Results: Reduced installation time, lowered rolling
resistance, higher duty cycle and longer life cycle
32
Global Services Asset Management
Lowest Life-cycle Cost
 Baseline audits
 Equipment repairs and upgrades
 Preventative maintenance and fleet standardization
 Operator training
 Asset management software
Objective: Highest Uptime and Lowest TCO
33
Where Do We Go From Here?
 Focus on Automotive and
Heavy Equipment OEMs
 Frequent lifts
 Heavy / critical lifts
 Targeting Fortune 100
companies
 Leveraging successes to
broaden and deepen market
penetration
34
Acquisitions:
Expanding Market Opportunity
Alan S. Korman
Vice President
General Counsel and Corporate Development
Drive Growth and Add Value
Add $200-300 million revenue
Deepen reach into key vertical markets
Increase presence in geographic markets
Access to new technologies/expand product portfolio
36
Energized Approach
 Regional business leaders engaged
 Identify key criteria unique to regions
 Help identify candidates
 Increasing targets in the funnel
 Broaden the target pool into adjacencies
 Driving evaluation and decision-making process
 Ability to respond rapidly to opportunities
37
Strategically Driven Acquisitions
Expand addressable market
Strategic
Objectives
Deepen market penetration
Value
Creation
Leverage channel strength
Size: $50 - $200 million revenue; willing and able to go larger
Screening
Criteria
Profitability: Margins > corporate average with synergies
Unique competitive advantages: IP
ROIC > WACC
Price
Discipline
Generally accretive within one year
EBITDA multiples vary given synergies
38
Approach in Action
• Candidate search
• Filter through criteria
Identify
• Analyze targets against criteria
• Review market and industry info
• Determine next steps
Evaluate
Approach
• Key stakeholders
• Formulate message
• Designate contact team
39
Unified Industries - February 2014
 Leading light rail designer and manufacturer
 Efficient work station lifting systems
 Focused on selling to “Big 3” automotive
 Facility in Howell, MI
 Broader offering for general industry
 New solutions into APAC, India
 Value Creation: sell through all regions,
manufacture locally (China and Germany)
 2013 revenue: $12.4 million
40
Stahlhammer Bommern (STB) – Dec. 2014
 Leading European manufacturer of heavyload hooks, rigging tools and engineered
components
 Expanded lifting hook capacity to 2,000 tons
 Increased eye, shank and ramshorn lifting
hook offerings
 Primarily serves Europe
 Value Creation – rigging product extension
into Americas
 2014 revenue: €14.5 million
STB Large Capacity
Ramshorn Hook
41
Strong Pipeline of Candidates
 Energized Process
 Diverse mix of candidates
 Public and private ownership
 Domestic and international companies
 Developed and emerging markets
 Hoists, rigging tools, winches, workstations, motion control
 Near-term actionable opportunities
42
Americas:
Leverage Market Position to Grow
Kurt Wozniak
Vice President, Americas
140-Year History
FY 2015 Total Sales
$579.6 million
31%
69%
Americas
Rest of World
History:
1875
Company founded as Moore Manufacturing Company
1899
Name changed to Chisholm and Moore Manufacturing
Company
1917
Columbus Chain merged with McKinnon Chain, forming
Columbus McKinnon Chain
1928
Acquired Chisholm Moore (CM brand)
1929
Incorporated Columbus McKinnon Corporation
1976
Acquired Midland Forge
1979
Acquired Dixie Industries
1995
Shaw-Box, Chester Hoist and Budgit brands added with
Lift-Tech acquisition
1996
Duff-Norton, Coffing Hoists, Little Mule and Yale brands added
with Yale Industrial Products acquisition
2009
Divested American Lifts business
2012
Divested Gaffey division of CES
2014
Acquired Unified Industries
44
Americas Strategy for Growth
Strategy:
 Broaden product offerings
 Build customer and industry knowledge
 Leverage CM Lean Business System
Objectives:
 Grow market share
 Increase penetration into target verticals
 Improve productivity and drive
continuous improvement
45
Moderate Economic Recovery
Americas Sales
$401
$408
$400
$398
$357
83%
17%
83%
17%
84%
16%
83%
17%
84%
16%
FY2011 FY2012 FY2013 FY2014 FY2015
US
Other
 Divested ~$20 million in
revenue from crane business
in FY2013
 Acquired Unified in Feb 2014;
had $12 million in revenue
in 2013
 Moderate economic recovery
in U.S.
 Challenged in Brazil by political
environment and recession
46
Leading Market Share
 Largest installed base of
hoists in North America
 72% of net U.S. sales are
products where CMCO
has the #1 position
 Built leadership in
Canada, Mexico, Brazil
47
Customer Intimacy Critical for Success
 Greater intimacy with customers and end users




Well-established brands
Broad product portfolio and semi-customization
Operational excellence
Memorable customer experiences
 Columbus McKinnon University
 In-depth product training to channel partners / end users
 In-Stock Guarantee
 Rapid response
 Improved on-time delivery
 ~ 280 SKUs
48
Growth Opportunity in LATAM
 Entered Mexico
 1975: Acquired 50% interest in Endor
 1995: Purchased remaining 50%
 Expanded sales footprint:
Assembly and distribution centers
 Panama, Brazil, Uruguay
 2014: Recife, Brazil
 Localized products add value
49
Major Manufacturing Base
10 out of 18 global manufacturing facilities
in North America
50
Rationalized North America Footprint
CM Lean Business System
Reduced manufacturing square footage
• 2008: 1.6 million square feet
• 2015: 1.0 million square feet
Reduced principal manufacturing facilities
• 2008: 14
• 2015: 10
Operational excellence
• Component shipments to assembly warehouses
• Kata methodology
51
Drive Demand Independent of Economic Cycles
 Vertical market strategy
 Deepen customer knowledge
 Increase application expertise
 Train users in safe and productive lifting
 Customer intimacy
 Direct interaction
 CMCO University
 Enhanced customer experience
 Duplicate Global Services successes
52
Europe, Middle East & Africa:
Deepening Market Presence
Dr. Ivo Celi
Vice President, EMEA
Gained Market Presence
($ in millions)
FY 2015 Total Sales
$579.6 million
28%
72%
EMEA
Rest of World
History:
1904
Yale established first sales offices in Europe
1996
Acquired Yale Europe
1999
Acquired Camlok Lifting Clamps, UK
2000-2007
Expanded sales network: The Netherlands, Spain,
Hungary, Italy. Added train maintenance and
engineering products in South Africa
2008
Acquired Pfaff: Eengineering solutions
2010-2012
Founded subsidiaries in Russia, Middle East, Turkey
2012
Acquired Yale Lifting Solutions in South Africa
2013
Acquired Hebetechnik, Austria
2014
Acquired Stahlhammer Bommern
54
54
EMEA Strategy for Growth
Strategy:
 Deepen customer intimacy in
vertical markets
 Expand regional reach
 Leverage rigging products, market
channels, services and solutions
Objective:
 Grow market share
 Leverage market disruption to
take share
55
Deepening Presence in a Challenging Environment
Challenged by two recessions…
(€ in millions)
EMEA Sales
€118
FY 2011
€127
FY 2012
€129
FY 2013
€123
FY 2014
€128
FY 2015
…but better times appear to be on the horizon
56
Customer Intimacy
Manual hoist leader
• Tripled addressable market with additional products
• Electric chain hoist, explosion proof products, rigging tools
Local presence
• Establishing sales and services in local markets
Addressing key vertical markets
• Expanding reach into industrial, oil & gas and construction in Turkey, Middle East
• South African mining strike behind us – growing again
Linking EMEA
• SAP installed in most countries
• Centralized services
57
Driving Growth
Geographic presence
• Growing in Austria, Hungary, Italy, Poland
• Growing in Russia despite upheaval
Product expansion
• Explosion proof hoists
• Unified product: light rail systems
• STB high-capacity hooks
Acquisitions
• Hebetechnik: Direct sales skills and unique on-site service capabilities
• STB: New and expanded product offerings
• Yale Mining: Deeper penetration in mining vertical
58
Expanding Channels to Market
59
Hoist Business
 Shortened lead times
 Reduced costs in logistical processes
 Increased capacity 30% utilizing same headcount
 Increased productivity 10% year to date
Motion Control: Underway
 Consolidating operations
 Reducing headcount, square footage,
administrative redundancies
 Maintaining capacity
 Improving margins
60
Specialty Application Success
Rail Technology
 Precision motion-controlled lifting system
 Supports manufacturing, inspection,
maintenance and repairs for diesel and
high speed rail
 Includes mobile lifting jacks, lifting
platforms, complete under-floor lifting
systems
61
Growing Excellent Presence
 Long history of solving material handling problems
 Profitable products targeting vertical markets
 Acquire additional profitable businesses
 Develop new and improved products
 Expand sales presence
 Further develop channels to market
 Focus on developing regions
62
Asia Pacific:
Expand Beyond China
Benjamin AuYeung
Managing Director, APAC
Solid Foundation for Market Leadership
FY 2015 Total Sales
$579.6 million
3%
History:
1992
Established low cost manufacturing
operations for Americas
2010
Initiated 10-year plan to sell into China:
 From importing to localized
 Manual to powered hoists
 Build out sales network and
partnerships
97%
APAC
2014
 Completed facility expansion
 Localizing powered products
 Expanded partnerships
Rest of World
64
Growth Opportunity: Asia Pacific
Strategy
 Localized products
 Cost competitive
 Leverage strong brand
 Premium markets value quality
and Total Cost of Ownership
Objective:
 Accelerate growth rate to capture
$100 million revenue opportunity
65
Gaining Traction
($ in millions)
APAC Sales
 Sales by APAC into APAC:
$19
$17
 36% 5-year CAGR in China
 18% 5-year CAGR in
rest of Asia
$19
$17*
$11
 Strong trend continued in
Q4 FY15: Sales up 23%
$14.6
$7.4
$8.1
$10.9
$11.4
 Focus on growing in
key vertical markets
FY2011 FY2012 FY2013 FY2014 FY2015
Sales by APAC into APAC
* Excludes $6.5 million rail project and road project sold into Taiwan from EMEA
66
Solid Market Coverage
 China: 8 offices, 26 engineers/sales reps/sales support personnel
 Offices located in main industrial hubs in China
 Sales teams are located in offices across China:
 Provide regional coverage
 Improve customer intimacy
Shenyang
Beijing
Xi An
Shanghai
Chengdu
Wuhan
Hangzhou
Guangzhou
67
Deeper Reach Through Partners
Two-step approach:
 Establish and test
 Formalize agreement
47
43
37
30
30
21
35
26
10
FY
2011
FY
2012
FY
2013
Signed
FY
2014
FY
2015
Potential
68
Wide Range of Partners in China
System integrators
Crane builders
Our
Focus
(value-added
resellers)
Specialist traders
(industry-specific)
General traders
(manual hoists)
69
EPCs
Growing Beyond China
 ABC approach
 Application-based
customer solutions
 Broaden Asian-ized
products
 Coverage and distribution
development
 Identify and reach out to
acquisition targets
 Hoist / component / system
 Korea/Japan/India/China
70
Expanding Southern Footprint
 Leverage experience building
China model for developing
emerging markets
Korea
Japan
 India
 Indonesia
 ASEAN Trio (Thailand,
Thailand
India
Malaysia and Singapore hub)
Singapore
 Established 3 offices with
9 sales personnel and
1 support staff
 Move faster in talent
development
71
Expand Partnerships Rest of Asia
Current Focus
Partners
Singapore
3
Thailand
4
Indonesia
5
Malaysia
3
India
5
Philippines
2
Australia
3
Japan
5
South Korea
4
Total
34
Over 30
additional
potential
partners
Use two-step partner approach
72
Large Automotive Opportunity
 Building relationships with major players
 Establishing references and reputation
 In discussions to build multi-plant solutions
Collaboration
Managing Projects
73
Success with Automotive OEMs
China, Japan, U.S. and Europe
74
Significant Heavy Equipment OEM Presence
 Leveraging global reputation
 Relationships
 Products
 Global Services
 Hire additional in-country sales
and application engineers
Collaboration
Managing Projects
75
Success with Global and Local OEMs
Facility upgrade projects and new builds
76
Accelerate Growth Rate
Entry into China market challenging…
 Vertical market strategy clearly works
 Engineering capability is critical to success
Next steps:
 Accelerate development of engineering competency
 Deploy in-country sales engineers and service technicians
 Retain more application engineers (China/Singapore/India)
 Create wire rope hoist solution for mass market in China
…but gained invaluable know-how to drive higher growth
77
Driving Value:
Achieving Financial Goals
Gregory P. Rustowicz
Chief Financial Officer
Expanded Margins in Challenging Environment
($ in millions)
Net Sales
$597.3
$591.9
$583.3
$579.6
$524.1
Gross Margin(1)
25.4%
26.6%
29.2%
9.1%
31.0%
31.6%
9.6%
9.8%
7.6%
Operating Margin(1)
5.3%
FY 2011
FY 2012
FY 2013
FY 2014
(1) Gross
FY 2015
margin for FY11 and FY15 and operating margin for FY11, FY14 and FY15 as shown are adjusted to exclude unusual items and are Non-GAAP financial
measures. Please see supplemental slides for a reconciliation from GAAP financial measures to the Non-GAAP financial measures provided above
79
Margin Goal Achievable
 Target: 12% to 14% operating margin goal
 At historic peak sales of ~$630 million (FY 2009 normalized)
 While making strategic growth investments
 Achieved average operating leverage of 53% since FY 2011
 Expecting operating leverage of 30% to 40%
Incremental revenue
+ $50 million
Operating leverage
@ 40%
Incremental operating income
= $20 million
FY2015 adjusted operating income
+ $57 million
Total operating income
= $77 million
Operating margin: 12.2%
$77 million/$630 million
80
Efficient Operations
$480 million
$579.6 million
∆
+ 21%
20
14
- 30%
2,691,200
1,608,000
- 40%
2,716
2,747
+ 1%
FY2002
Sales
Major Manufacturing Facilities
Manufacturing--Square Feet
Number of FTE
FY2015
Four-year Productivity Gains:
$12.8 million
Lean Activities:
Continuous process globally
ERP System:
26% complete on March 31, 2015
Driving ease of commerce
Localizing Products in China:
Expanded capacity in China by ~40%
Transferred Western-designed products
Reduced product costs
81
 Lean methodology applied throughout operations
 Company-wide culture
 Never-ending process: Consistently about 100 ongoing projects
 Continuously improving and applying experience gained
 Six key initiatives
 Associate involvement and development
 Operational effectiveness
 Workplace safety and organization
 Supply chain material flow
 Quality management system
 Continuous flow
82
Global ERP Implementation Plan
FY 2015
FY 2017
FY 2016
26% Global
Revenue
30% Global
Revenue
FY 2018
78% Global
Revenue
Implementations:
Duff Norton, CMEP, CMIP,
UK, Misc. EU
France and Brazil
US H&R
Global Master Data Governance & Clean Up
Remaining Material Locations To Be Determined:
Hangzhou, Canada, Mexico, CES, Austria, Hungary, Sarasota, Unified, South Africa
83
Business Driven
Implementation
Plan
Benefits of Global Collaboration
Improved
Global
Operational
Efficiencies
Ease of
Commerce
Global
ERP
Working
Capital
Improvement
Better Data
and Faster
Decisions
84
Strong Cash Generation
($ in millions)
Operating Free Cash Flow (1)
Cumulative Operating Free
Cash Flow (1)
$128.3
$48.0
$98.6
$27.5
$70.6
$22.6
$21.0
$9.8
$61.3
$107.3
$71.1
$48.0
$8.7
$(9.3)
(2)
(2)
FY09 FY10 FY11 FY12 FY13 FY14 FY15
FY09
FY10
FY11
FY12
(1)
Operating free cash flow is defined as cash provided by operating activities minus capital expenditures
(2)
Fiscal 2010 and fiscal 2011 include $10.8 million and $4.5 million of cash payments related to restructuring charges, respectively
FY13
FY14
FY15
Note: Operating free cash flow is a non-GAAP measure. See supplemental slides for operating free cash flow reconciliation and other important disclaimers regarding operating free cash flow
Note: Cumulative operating free cash flow uses FY 2009 as a starting point
Note: Figures for individual years may not add up to cumulative totals due to rounding
85
Emphasis on Working Capital
Inventory Turns
Working Capital as a Percent of Sales
21.7%
17.6%
16.9%
FY11
FY12
4.7x
20.8%
50.6
FY11
FY12
(1)
4.3x
4.5x
4.0x
18.3%
FY13
FY14
FY15 (1)
FY11
Receivable Days Outstanding
49.1
4.3x
50.5
FY13
FY13
FY14
FY15
Days Payable Outstanding
52.9
31.8
49.2
FY14
FY12
FY15
FY11
32.3
FY12
31.1
FY13
FY15 working capital as a percent of sales excludes STB acquisition which was acquired on December 30, 2014
86
29.2
FY14
29.4
FY15
Low CapEx Requirements
CapEx
CapEx / D & A
$20.8
$17.2
$12.5
FY11
$13.8
FY12
$18-$22
156%
(1)
$14.9
FY13
114%
FY14
FY15 FY16E
FY11
116%
FY12
123%
FY13
FY14
118%
FY15
 Normal capital spend ~$10-$12 million
 Extraordinary investments in productivity and capacity

Invested $19 million in SAP since FY2011

Invested $6.4 million for China plant expansion
 FY16 estimate includes $5.5 million for NA sales and training operations/
Corporate headquarters
(1)
Guidance provided on May 28, 2015
87
Creating Shareholder Value
Return on Invested Capital (ROIC)(1)
ROIC/WACC
1.2x
13.9%
10.9%
12.8%
1.3x
1.1x
1.0x
11.2%
4.8%
0.5x
FY11 (2) FY12 (2) FY13 (2) FY14
FY15
FY11
FY12
FY13
FY14
FY15
WACC(3)
10.0%
11.4%
11.1%
9.9%
(1) ROIC is defined as income from operations, net of 30% tax rate, for the
trailing 12 months divided by the average of debt plus equity less cash
(average capital) for the trailing 13 months.
10.1%
(2) Average capital within the ROIC calculation for FY 2011 through FY
2013 removes the effect of the deferred tax asset valuation allowance,
which was reversed in FY 2013.
(3) Source: Bloomberg
FY11
FY12
FY13
FY14
FY15
88
Recent Capital Structure Improvements
 Redeemed $150 million 7 7/8% Senior Subordinated Notes
in February 2015
 Secured new $125 million delayed-draw term loan and new
$150 million revolving credit facility
 New term loan plus cash on hand financed redemption of Notes
 Cash interest expense savings of ~$7.6 million
 Contributes ~$0.27 per diluted share(1) in FY2016
 More flexible capital structure
 Pre-payable debt
(1) Applies
a 30% tax rate and reflects the Company’s policy of a fixed interest ratio of 50% to 70%
89
Strong Balance Sheet
($ in millions)
Cash and Cash Equivalents
$121.7
$80.1
Total Debt
$154.4
$112.3
$153.1
$152.1
$152.3
$89.5
$126.7
$63.1
$14.2
$13.5
$13.8
$13.5
$12.4
FY11
FY12
FY13
FY14
FY15
FY11
FY12
FY13
FY14
FY15
Interest Expense
Shareholders Equity
$291.3
$240.0
$162.1
FY11
Debt/Total Capitalization
$268.7
48.8%
(1)
48.8%
38.8%
34.3%
32.0%
$160.5
FY12
(1) Reflects
FY13
FY14
FY15
FY11
FY12
FY13
FY14
FY15
impact of foreign currency translation adjustment ($29.9 million) and change in pension liability and OPEB net of tax ($20.2 million)
90
140 Years Strong
Timothy T. Tevens
President and Chief Executive Officer
Long-Term Objectives
$1B in Revenue
Profitable & Efficient
 1/3 of sales in developing markets
and 2/3 in developed markets
 Organic growth (trend line):
 Operating margin:
12% - 14%
 Working capital/sales:
17%
 Inventory turns:
- U.S. & Western Europe at GDP+
 DSO:
- Emerging Markets at double digits
6x
< 50 days
 Acquisitions: $200 - $300 million
Strong Balance Sheet
and Financial Flexibility
to Execute Plans
 Continued introduction of new
products: 20% of sales
92
140 Years Strong
July 7, 2015
Supplemental Slides
Adjusted Gross Margin Reconciliation
Year Ended
March 31,
2011
Gross Profit
$
2012
126,052
$
2013
157,718
$
2014
174,231
$
2015
181,048
$
181,607
Add back:
Restructuring-related costs
3,900
Unusual product liability claims
2,900
-
-
-
-
European facility consolidation costs
-
-
-
-
1,176
Acquisition inventory step-up expense and real
estate transfer taxes
-
-
-
-
543
Non-GAAP adjusted gross profit
Sales
Adjusted gross margin
$
132,852
$
157,718
$
174,231
$
181,048
$
183,326
$ 524,065
$ 591,945
$ 597,263
$ 583,290
$ 579,643
25.4%
26.6%
29.2%
31.0%
31.6%
Adjusted gross profit is defined as gross profit as reported, adjusted for unusual 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 to the measure 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 gross profit to the historical period’s gross profit.
95
Adjusted Operating Margin Reconciliation
Year Ended
March 31,
2011
Operating income
$
2012
18,572
$
2013
45,144
$
2014
54,371
$
2015
54,350
$
54,648
Add back:
Restructuring-related costs
6,200
-
-
-
-
Unusual product liability claims
2,900
-
-
-
-
Atypical merger and acquisition expense
-
-
-
1,657
-
European facility consolidation costs
-
-
-
-
1,726
Acquisition inventory step-up expense and real
estate transfer taxes
-
-
-
-
659
Non-GAAP adjusted operating income
$
Sales
$ 524,065
$ 591,945
$ 597,263
$ 583,290
$ 579,643
5.3%
7.6%
9.1%
9.6%
9.8%
Adjusted operating margin
27,672
$
45,144
$
54,371
$
56,007
$
57,033
Adjusted operating income is defined as operating income as reported, adjusted for unusual items. Adjusted operating income 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 operating income is important for investors and other readers of the Company’s financial
statements, and assists in understanding the comparison of the current quarter’s operating income to the historical period’s operating income.
96

140 Years Strong - Columbus McKinnon

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