COLUMBUS MCKINNON CORPORATION 
By - Net sales increased 12.9%, reflecting Pfaff-silberblau acquisition
- International revenue comprised 42% of net sales
- EPS of
- Generated
- Debt to total capitalization of 30.4%, in line with long-term corporate goals and compared with 32.8% at the end of the third quarter of fiscal 2008
Third quarter highlights
Net sales from continuing operations for the third quarter of fiscal 2009 were
Fiscal 2009 third quarter net income, including discontinued operations, was
One-time accounting adjustments associated with the Pfaff
acquisition $0.04
Increased unrecovered material costs $0.05
Restructuring charges $0.03
-----
Impact on income from operations $0.12
Mark-to-market adjustments of the Company's self-insurance
investment portfolio $0.12
Currency translation losses associated with intercompany
loans $0.06
-----
Impact on income from continuing operations $0.30
Loss from discontinued operations $0.04
-----
Impact on net income $0.34
=====
Periods prior to the third quarter of fiscal 2009 have been restated to reflect the classification of the Company's former subsidiary, Univeyor, as discontinued operations. The Univeyor divestiture was announced on
Review of third quarter fiscal 2009 financial results
The fluctuation in sales compared with last year's quarter is summarized as follows, in millions:
Decreased volume $(9.1) (6.2%)
Improved pricing 5.8 4.0%
Pfaff-silberblau acquisition 26.8 18.3%
Foreign currency translation (4.6) (3.2%)
----- -----
Total $ 18.9 12.9%
===== =====
International sales from continuing operations were
Gross margin declined to 27.1% for the quarter compared with 31.1% in last year's third quarter due to lower volume in U.S. sales, higher steel costs which reflect a continuation from the fiscal second quarter, one-time inventory valuation accounting charges related to the Pfaff-silberblau acquisition and currently lower margins at Pfaff. Material costs in the third quarter, particularly steel which lags market pricing, exceeded the prior year by approximately
Selling expenses were
General and administrative (G&A) expenses were
Operating margin was 9.0% in the third quarter of fiscal 2009 compared with 13.3% in the third quarter of fiscal 2008, negatively impacted by the inclusion of lower Pfaff margins, a one-time Pfaff inventory valuation purchasing accounting adjustment, higher material costs, restructuring charges, and lower U.S. volume.
Interest and debt expense increased 14.5% in the current quarter as interest related to the debt assumed upon the acquisition of Pfaff was partially offset by a decrease in interest expense related to a reduction in the Company's senior subordinated notes, of which CMCO purchased
Fiscal 2009 third quarter profitability was also impacted by a
Reflected as 'foreign currency exchange loss', the Company recorded a
The effective tax rate for the quarter was 35.3% compared with 40.3% for the prior year's quarter. The lower rate was primarily due to a higher proportion of income derived from international jurisdictions with lower tax rates. The Company expects the rate to be in the 35% to 36% range for fiscal 2009.
The Company realized a
Working capital as a percentage of sales was 20.5% at the end of fiscal 2009's third quarter compared with 18.9% at the end of last fiscal year's third quarter and 18.2% at the end of fiscal 2008. Excluding
Solid balance sheet; financial flexibility
Debt, net of cash, of continuing operations at
Cash provided by continuing operations in the first nine months of fiscal 2009 was
Capital expenditures for the first nine months of fiscal 2009 were
Nine-month fiscal 2009 review
Net sales for the first nine months of fiscal 2009 were
Income from continuing operations was
Net income for the first nine months was
$0.8 million, or $0.04 per diluted share, for one-time
accounting adjustments associated with the Pfaff acquisition,
$0.7 million, or $0.04 per diluted share, for restructuring
charges,
$2.6 million, or $0.14 per diluted share, for a mark-to-market
investments adjustment,
$1.1 million, or $0.06 per diluted share, for currency
translation losses on intercompany loans, and
$2.7 million, or $0.14 per diluted share, for discontinued
operations.
Included in the first nine months of the fiscal 2008 period were net after-tax charges of
Backlog and orders continue to grow, but caution and preparedness are critical
Backlog was
Mr. Tevens commented, "Columbus McKinnon is a much stronger company than it was during the last recession. Our balance sheet is far stronger, with a significantly lower debt level and a stronger cash position, our operations are more efficient and flexible and our management team is well prepared to manage through this current slowing of the global economies. I am confident in our ability to continue to provide superior products, value and service to our customers worldwide and meet the challenges of the current economic environment, while continuing to pursue our long-term growth goals and positioning
About Columbus McKinnon
Teleconference/webcast
A teleconference and webcast have been scheduled for
The webcast will be accessible at Columbus McKinnon's web site: http://www.cmworks.com.
An audio recording of the call will be available two hours after its completion and until
SafeHarbor Statement
This news release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements concerning future revenue and earnings, involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to differ materially from the results expressed or implied by such statements, including general economic and business conditions, conditions affecting the industries served by the Company and its subsidiaries, conditions affecting the Company's customers and suppliers, competitor responses to the Company's products and services, the overall market acceptance of such products and services, the effect of operating leverage, the pace of bookings relative to shipments, the ability to expand into new markets and geographic regions, the success in acquiring new business, the speed at which shipments improve, and other factors disclosed in the Company's periodic reports filed with the Securities and Exchange Commission. The Company assumes no obligation to update the forward-looking information contained in this release.
Contact:
Karen L. Howard
Vice President - Finance and Chief Financial Officer
Columbus McKinnon Corporation
716-689-5550
karen.howard@cmworks.com
COLUMBUS McKINNON CORPORATION
Condensed Consolidated Income Statements - UNAUDITED
(In thousands, except per share and percentage data)
Three Months Ended
------------------
December 28, December 30,
2008 2007 Change
------------ ------------ ------
Net sales $165,076 $146,176 12.9%
Cost of products sold 120,285 100,698 19.5%
------- -------
Gross profit 44,791 45,478 -1.5%
Gross profit margin 27.1% 31.1%
Selling expense 19,861 17,310 14.7%
General and administrative
expense 8,630 8,593 0.4%
Restructuring charges 990 149 564.4%
Amortization 421 29 1351.7%
--- --
Income from operations 14,889 19,397 -23.2%
------ ------
Operating margin 9.0% 13.3%
Interest and debt expense 3,604 3,147 14.5%
(Gain) loss of bond redemptions (244) 177 -237.9%
Investment loss (income) 3,335 (261) -1377.8%
Foreign currency exchange loss 1,759 153 1049.7%
Other income (517) (815) -36.6%
---- ----
Income from continuing
operations before
income tax expense 6,952 16,996 -59.1%
Income tax expense 2,454 6,849 -64.2%
----- -----
Income from continuing
operations 4,498 10,147 -55.7%
Gain (loss) from discontinued
operations, net of tax (685) (153) 347.7%
---- ----
Net income $3,813 $9,994 -61.8%
====== ======
Average basic shares
outstanding 18,876 18,753 0.7%
Basic income (loss) per share:
Continuing operations $0.24 $0.54 -55.6%
Discontinued operations (0.04) (0.01)
----- -----
Net income $0.20 $0.53 -62.3%
===== =====
Average diluted shares
outstanding 19,064 19,200 -0.7%
Diluted income (loss) per
share:
Continuing operations $0.24 $0.53 -54.7%
Discontinued operations (0.04) (0.01)
----- -----
Net income $0.20 $0.52 -61.5%
===== =====
COLUMBUS McKINNON CORPORATION
Condensed Consolidated Income Statements - UNAUDITED
(In thousands, except per share and percentage data)
Nine Months Ended
-----------------
December 28, December 30,
2008 2007 Change
------------ ------------ ------
Net sales $470,920 $432,603 8.9%
Cost of products sold 332,032 298,497 11.2%
------- -------
Gross profit 138,888 134,106 3.6%
Gross profit margin 29.5% 31.0%
Selling expense 55,227 49,736 11.0%
General and administrative
expense 27,977 25,181 11.1%
Restructuring charges 1,145 551 107.8%
Amortization 477 82 481.7%
--- --
Income from operations 54,062 58,556 -7.7%
------ ------
Operating margin 11.5% 13.5%
Interest and debt expense 9,929 10,476 -5.2%
(Gain) loss of bond redemptions (244) 1,620 -115.1%
Investment loss (income) 3,158 (812) -488.9%
Foreign currency exchange loss 2,548 301 746.5%
Other income (2,950) (2,341) 26.0%
------ ------
Income from continuing
operations before
income tax expense 41,621 49,312 -15.6%
Income tax expense 14,850 18,841 -21.2%
------ ------
Income from continuing
operations 26,771 30,471 -12.1%
Loss from discontinued operations,
net of tax (2,651) (1,504) 76.3%
------ ------
Net income $24,120 $28,967 -16.7%
======= =======
Average basic shares outstanding 18,851 18,702 0.8%
Basic income (loss) per share:
Continuing operations $1.42 $1.63 -12.9%
Discontinued operations (0.14) (0.08)
----- -----
Net income $1.28 $1.55 -17.4%
===== =====
Average diluted shares
outstanding 19,161 19,144 0.1%
Diluted income (loss) per share:
Continuing operations $1.40 $1.59 -11.9%
Discontinued operations (0.14) (0.08)
----- -----
Net income $1.26 $1.51 -16.6%
===== =====
COLUMBUS McKINNON CORPORATION
Condensed Consolidated Balance Sheets - UNAUDITED
(In thousands)
December 28, 2008 March 31, 2008
----------------- --------------
ASSETS
Current assets:
Cash and cash equivalents $21,973 $75,994
Trade accounts receivable 93,997 93,833
Inventories 106,850 84,286
Prepaid expenses 24,814 17,320
Current assets of discontinued operations - 17,334
- ------
Total current assets 247,634 288,767
------- -------
Net property, plant, and equipment 61,404 53,420
Goodwill and other intangibles, net 235,044 187,376
Marketable securities 28,039 29,807
Deferred taxes on income 12,452 17,570
Other assets 6,635 8,094
Non-current assets of discontinued operations - 5,001
- -----
Total assets $591,208 $590,035
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable to banks $1,858 $36
Trade accounts payable 37,870 35,149
Accrued liabilities 56,962 52,265
Restructuring reserve 933 58
Current portion of long-term debt 331 326
Current liabilities of discontinued
operations - 24,955
- ------
Total current liabilities 97,954 112,789
------ -------
Senior debt, less current portion 8,045 3,066
Subordinated debt 124,855 129,855
Other non-current liabilities 50,633 48,844
------ ------
Total liabilities 281,487 294,554
------- -------
Shareholders' equity:
Common stock 190 189
Additional paid-in capital 180,249 178,457
Retained earnings 145,746 122,400
ESOP debt guarantee (2,444) (2,824)
Accumulated other comprehensive loss (14,020) (2,741)
------- ------
Total shareholders' equity 309,721 295,481
------- -------
Total liabilities and shareholders' equity $591,208 $590,035
======== ========
COLUMBUS McKINNON CORPORATION
Condensed Consolidated Statements of Cash Flows - UNAUDITED
(In thousands)
Nine Months Ended
-----------------
December 28, December 30,
2008 2007
------------ ------------
Operating activities:
Net income $24,120 $28,967
Adjustments to reconcile income from
continuing operations to net cash
provided by operating
activities:
Loss from discontinued operations 2,651 1,504
Depreciation and amortization 7,521 6,003
Deferred income taxes 8,684 14,502
Loss (gain) on sale of
investments/real estate 2,943 (433)
Gain (loss) on early
retirement of bonds (300) 1,244
Stock option expense 1,001 944
Amortization/write-off of deferred
financing costs 449 814
Changes in operating assets and
liabilities:
Trade accounts receivable 10,577 2,453
Inventories (4,372) (13,122)
Prepaid expenses (775) 293
Other assets 997 (1,045)
Trade accounts payable (2,581) 3,043
Accrued and non-current liabilities (6,532) (6,932)
------ ------
Net cash provided by operating activities
from continuing operations 44,383 38,235
------ ------
Net cash used by operating activities
from discontinued operations (3,082) (250)
------ ----
Net cash provided by operating activities 41,301 37,985
------ ------
Investing activities:
Purchase of marketable securities, net (1,939) (1,397)
Capital expenditures (8,504) (7,390)
Purchase of businesses, net (53,261)
Proceeds from sale of property 1,269 5,504
----- -----
Net cash used by investing activities
from continuing operations (62,435) (3,283)
------- ------
Net cash provided by investing activities
from discontinued operations 448 386
--- ---
Net cash used by investing activities (61,987) (2,897)
------- ------
Financing activities:
Proceeds from stock options exercised 391 1,309
Net repayments under revolving line-of-
credit agreements (5,067) (842)
Repayment of debt (6,871) (26,465)
Other 567 420
--- ---
Net cash used by financing activities
from continuing operations (10,980) (25,578)
------- -------
Net cash used by financing activities
from discontinued operations (14,612) (603)
------- ----
Net cash used by financing activities (25,592) (26,181)
------- -------
Effect of exchange rate changes on cash (7,743) 3,511
------ -----
Net change in cash and cash equivalents (54,021) 12,418
Cash and cash equivalents at
beginning of year 75,994 48,655
------ ------
Cash and cash equivalents at end of period $21,973 $61,073
======= =======
COLUMBUS McKINNON CORPORATION
Additional Data - UNAUDITED
December 28, December 30, March 31,
2008 2007 2008
----------- ----------- ---------
Backlog (in millions) $79.1 $61.1 $57.7
Trade accounts receivable
days sales outstanding 51.8 days 54.8 days 53.0 days
Inventory turns per year
(based on cost of products
sold) 4.5 turns 4.6 turns 5.2 turns
Days' inventory 81.1 days 79.9 days 70.1 days
Trade accounts payable
days payables outstanding 28.7 days 27.2 days 29.2 days
Working capital as a % of
sales 20.5% 18.9% 18.2%
Debt to total capitalization
percentage 30.4% 32.8% 31.1%
Debt, net of cash, to total
capitalization 26.8% 21.7% 16.2%
Shipping Days by Quarter
Q1 Q2 Q3 Q4 Total
-- -- -- -- -----
FY10 63 64 60 63 250
FY09 63 63 60 65 251
FY08 63 63 60 63 249
SOURCE Columbus McKinnon Corporation
