Columbus McKinnon Achieves Record Gross Margin in First Quarter Fiscal Year 2019
BUFFALO, N.Y.--(BUSINESS WIRE)--Jul 31, 2018--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 2019 first quarter, which ended June 30, 2018.
First Quarter Highlights (compared with prior-year period)Delivered strong results demonstrating progress with Blueprint 2021 strategy to improve earnings power Achieved record gross margin of 35.4% driven by volume and productivity Operating margin was 6.0%; Adjusted operating margin expanded 150 basis points to 11.8%, excluding $11.1 million held for sale impairment charge and $1.9 million of integration costs Net income was $7.7 million; adjusted net income increased 39% to $17.5 million; earnings per diluted share was $0.33, or $0.74 on an adjusted basis Achieved record quarterly sales of $225.0 million; excluding foreign currency impact, sales increased 7.8%
Mark Morelli, President and CEO of Columbus McKinnon, commented, “We delivered another strong quarter which we believe demonstrates that we are on the right path with our Blueprint 2021 strategy. We are successfully driving margin expansion and improving earnings power. We are still in the early stages of Phase II of our strategy, and we are encouraged that the enhancements we are making will be sustainable throughout economic cycles.”
He added, “In line with our strategy to simplify our business, we have initiated the divestiture of three businesses. This includes our Tire Shredder business, our crane builder business, Crane Equipment and Service Inc., and Stahlhammer Bommern GmbH, which was acquired in 2014.” The Company recorded a held for sale impairment charge of $11.1 million as it considers strategic alternatives for these businesses. These businesses contributed approximately $38 million of sales and $1 million of operating income in Fiscal 2018.
Mr. Morelli concluded, “Markets remain strong and our bidding pipeline is robust. In fact, project orders are being pushed out as customers address schedules and staffing challenges. We are also advancing our Phase II efforts to focus on profitable revenue. As a result, we plan to shed an estimated 1% of revenue in the second quarter that will provide gross margin expansion. Given our focus on quality revenue and the timing of projects, we believe second quarter revenue will grow about 2% to 3%. And, while research, selling, and general and administrative expenses are expected to be approximately $48 to $49 million in the quarter, we believe the impact of our Phase II efforts will drive year-over-year margin expansion.”
First Quarter Fiscal 2019 Sales
Volume drove growth in the U.S. and EMEA. Excluding the effect of foreign currency translation, non-U.S. sales were up 7.5%.
First Quarter Fiscal 2019 Operating Results
*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.
Record gross profit and margin were largely the result of higher volume and improved productivity. For more information on changes in gross profit, please see the table on page 7 of this release. Excluding an $11.1 million impairment charge and $1.9 million in STAHL integration costs, adjusted income from operations was $26.5 million, a $5.5 million, or 26% increase. Adjusted operating margin was 11.8% compared with 10.3% in the first quarter of fiscal 2018. Please see the reconciliation of GAAP income from operations to adjusted income from operations on page 9 of this release.
Adjusted net income for the quarter was $17.5 million, or $0.74 per diluted share, compared with $12.6 million, or $0.55 per diluted share, in the prior-year period. Adjusted EBITDA margin achieved a record level of 15.7%. Please see the reconciliation of GAAP net income and earnings per share to adjusted net income and earnings per share on page 10 of this release.
Columbus McKinnon will host a conference call and live webcast today 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 and asking for the “Columbus McKinnon conference call.” The webcast can be monitored at www.cmworks.com/investors. An audio recording will be available from 1:00 PM Eastern Time on the day of the call through Tuesday, August 7, 2018 by dialing 412-317-6671 and entering the passcode 13680955. 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, cranes, 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 revenue and earnings, involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to differ materially from the results expressed or implied by such statements, including general economic and business conditions, conditions affecting the industries served by the Company and its subsidiaries, conditions affecting the Company’s customers and suppliers, competitor responses to the Company’s products and services, the overall market acceptance of such products and services, the effect of operating leverage, the pace of bookings relative to shipments, the ability to expand into new markets and geographic regions, the success in acquiring new business, the speed at which shipments improve, the effectiveness of new products and other factors disclosed in the Company’s periodic reports filed with the Securities and Exchange Commission. The Company assumes no obligation to update the forward-looking information contained in this release.
Financial tables follow.
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