NEWS RELEASE
CONTACT:
Robert R. Friedl, Vice President - Finance
and Chief Financial Officer
716.689.5479
bob.friedl@cmworks.com
COLUMBUS MCKINNON NET INCOME MORE THAN DOUBLES ON 15.8% INCREASE IN SALES FOR
FIRST QUARTER FY 2006
o EARNINGS PER SHARE OF $0.49, UP $0.26 FROM PRIOR YEAR
o OPERATING MARGIN IMPROVES 120 BASIS POINTS TO 10.4%
o NET DEBT REDUCED BY $8.5 MILLION IN THE QUARTER
AMHERST, N.Y., July 26, 2005-- Columbus McKinnon Corporation (NASDAQ: CMCO), a
leading designer, manufacturer and marketer of material handling products, today
announced first quarter fiscal 2006 net income increased 118%, or $3.9 million,
to $7.3 million compared with fiscal 2005's first quarter net income of $3.4
million. On a diluted per share basis, first quarter 2006 earnings were $0.49
compared with $0.23 in the same period last year.
Net sales for the fiscal 2006 first quarter were $140.9 million, an increase of
$19.2 million, or 15.8%, over last year's first quarter. Demand from end user
markets of Columbus McKinnon products was driven by a continued strength in the
U.S. and international economies. Volume accounted for approximately 8% of the
increase in sales while price changes accounted for 6%, and currency translation
for about 2%.
Timothy Tevens, President and Chief Executive Officer of Columbus McKinnon,
commented, "Our first quarter results clearly demonstrate the earnings power we
have gained through our lean manufacturing and product and facility
rationalization initiatives. As we look forward, we anticipate more moderate
rates of revenue growth as bookings, when compared with prior periods, have
tempered to growth in the mid-single digit range. Importantly, in spite of more
moderate levels of revenue growth, we do expect material costs and employee
benefits costs to stabilize this year allowing more of our productivity
improvement to drop to the bottom line. This improvement, along with an expected
50% reduction in Sarbanes Oxley compliance documentation and testing costs, will
help to boost operating margins."
Debt, net of cash at July 3, 2005, was $253.0 million, an $8.5 million reduction
from $261.5 million at March 31, 2005, and a $28.5 million reduction from $281.5
million a year ago. The percentage of debt to total capitalization has improved
120 basis points and 600 basis points when compared with March 31, 2005, and the
end of last year's first quarter, respectively.
Net cash provided by operations was $10.6 million for the fiscal 2006 first
quarter compared with $1.1 million in the fiscal 2005 first quarter, driven by
earnings growth and improved working capital management.
PRODUCTS SEGMENT
- ----------------
Products segment sales for the first quarter of fiscal 2006 represented 87.9% of
consolidated net sales, increasing 14.1% to $123.9 million. Gross margin for
this segment was 27.6% compared with 26.9% in last year's first quarter. Income
from operations, as a percent of sales, was 11.4% for this period, up from 10.0%
in the fiscal 2005 first quarter.
Backlog stood at $42.8 million at the end of the quarter. The time to convert
Products segment backlog to sales can average from a few days to a few weeks,
and backlog for this segment on average represents four to five weeks of
shipments.
SOLUTIONS SEGMENT
- -----------------
Net sales for the Solutions segment were $17.0 million in the fiscal 2006 first
quarter, up $3.9 million, or 29.7%, from sales of $13.1 million in the same
period last year. Gross margin was 13.7% compared with 16.8% last year, down due
to a less favorable sales mix, yet income from operations as a percent of sales
was 2.9% for this period compared with 2.5% in last year's first quarter as a
result of lower selling, general and administrative costs.
Backlog for the Solutions segment at July 3, 2005 was $17.3 million, slightly
down from backlog of $18.2 million at the end of the fiscal 2005 first quarter
and up from $9.6 million at the end of the fiscal 2005 fourth quarter. For this
segment, the average cycle time for backlog to convert to sales can range from
one to six months.
OUTLOOK
- -------
Mr. Tevens noted, "We are making great strides in reducing our debt and
strengthening our balance sheet. Our objective remains to use cash from
operations to pay down debt in order to reduce interest expense and to enhance
our strategic flexibility.
"For example, one of our key strategies is to grow international sales at a rate
significantly higher than the growth rate of sales in the U.S. market. We are
capturing opportunities to selectively penetrate international markets where our
share today is significantly lower than the leadership position we have earned
in the U.S. market. I'm proud to report that international sales for the fiscal
2006 first quarter were $50.7 million compared with $40.2 million last year, a
26% increase."
The Company has approximately $90 million dollars of fully reserved U.S. federal
net operating loss carry forwards available to offset future U.S. taxable
income, allowing more of our U.S.-based margin expansion to drop directly to the
bottom line. Additionally, Columbus McKinnon estimates capital expenditures for
fiscal 2006 will be in the range of $5 to $7 million.
ABOUT COLUMBUS MCKINNON
- -----------------------
Columbus McKinnon is a leading worldwide designer, manufacturer and marketer of
material handling products, systems and services, which efficiently and
ergonomically move, lift, position or secure material. Key products include
hoists, cranes, chain and forged attachments. 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 on its web site at
HTTP://WWW.CMWORKS.COM.
TELECONFERENCE/WEBCAST
- ----------------------
A teleconference and webcast have been scheduled for July 26 at 10:00 AM Eastern
Time at which the management of Columbus McKinnon will discuss the Company's
financial results and strategy. Interested parties in the United States and
Canada can participate in the teleconference by dialing 1-888-459-1579, and
asking to be placed in the "Columbus McKinnon Quarterly Conference Call" and
providing the password "Columbus McKinnon" and identifying conference leader,
"Tim Tevens" when asked. The toll number for parties outside the United States
and Canada is 1-210-234-7695.
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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 September 26, 2005 by dialing 1-866-442-1602. Alternatively, you may
access an archive of the call until September 26, 2005 on Columbus McKinnon's
web site at: http://www.cmworks.com/invrel/presentation.asp.
SAFE HARBOR STATEMENT
- ---------------------
THIS PRESS 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 LIKELIHOOD THAT THE COMPANY CAN
UTILIZE ITS NOLS, THE EFFECT OF OPERATING LEVERAGE, THE PACE OF BOOKINGS
RELATIVE TO SHIPMENTS, 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.
TABLES FOLLOW.
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COLUMBUS MCKINNON CORPORATION
CONSOLIDATED INCOME STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA AND PERCENTAGES)
THREE MONTHS ENDED
------------------
JULY 3, 2005 JULY 4, 2004 CHANGE
------------ ------------ ------
NET SALES $ 140,877 $ 121,658 15.8%
Cost of products sold 104,334 90,207 15.7%
------------------------------------
Gross profit 36,543 31,451 16.2%
Gross profit margin 25.9% 25.9%
Selling expense 13,658 12,700 7.5%
General and administrative expense 8,175 7,485 9.2%
Restructuring charges 26 33 -21.2%
Amortization 62 77 -19.5%
------------------------------------
INCOME FROM OPERATIONS 14,622 11,156 31.1%
------------------------------------
Interest and debt expense 6,716 7,048 -4.7%
Other (789) 18 -4483.3%
------------------------------------
Income from cont. ops. before income tax expense 8,695 4,090 112.6%
Income tax expense 1,587 728 118.0%
------------------------------------
Income from cont. ops. 7,108 3,362 111.4%
Income from disc. ops. 214 -
------------------------------------
NET INCOME $ 7,322 $ 3,362 117.8%
====================================
Average basic shares outstanding 14,672 14,576 0.7%
Basic income per share:
Continuing operations $ 0.49 $ 0.23 113.0%
Discontinued operations 0.01 -
------------------------------------
Net Income $ 0.50 $ 0.23 117.4%
====================================
Average diluted shares outstanding 15,029 14,600 2.9%
Diluted income per share:
Continuing operations $ 0.48 $ 0.23 108.7%
Discontinued operations 0.01 -
------------------------------------
Net Income $ 0.49 $ 0.23 113.0%
====================================
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COLUMBUS MCKINNON CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
JULY 3, 2005 MARCH 31, 2005
------------ --------------
ASSETS
Current assets:
Cash and cash equivalents $ 13,627 $ 9,479
Trade accounts receivable 89,881 88,974
Unbilled revenues 9,871 8,848
Inventories 79,646 77,626
Prepaid expenses 14,047 14,198
----------------------------------
Total current assets 207,072 199,125
----------------------------------
Net property, plant, and equipment 55,946 57,237
Goodwill and other intangibles, net 186,741 187,285
Marketable securities 25,674 24,615
Deferred taxes on income 4,398 6,122
Other assets 6,430 6,487
----------------------------------
TOTAL ASSETS $ 486,261 $ 480,871
==================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable to banks $ 4,728 $ 4,839
Trade accounts payable 35,019 33,688
Accrued liabilities 54,696 51,962
Restructuring reserve 122 144
Current portion of long-term debt 194 5,819
----------------------------------
Total current liabilities 94,759 96,452
----------------------------------
Senior debt, less current portion 119,441 115,735
Subordinated debt 142,259 144,548
Other non-current liabilities 43,609 42,369
----------------------------------
Total liabilities 400,068 399,104
----------------------------------
Shareholders' equity:
Common stock 150 149
Additional paid-in capital 104,283 104,078
Accumulated deficit (1,322) (8,644)
ESOP debt guarantee (4,409) (4,554)
Unearned restricted stock (29) (6)
Accumulated other comprehensive loss (12,480) (9,256)
----------------------------------
Total shareholders' equity 86,193 81,767
----------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 486,261 $ 480,871
==================================
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COLUMBUS MCKINNON CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
THREE MONTHS ENDED
------------------
JULY 3, 2005 JULY 4, 2004
------------ ------------
OPERATING ACTIVITIES:
Income from continuing operations $ 7,108 $ 3,362
Adjustments to reconcile income from continuing
operations to net cash provided
by operating activities:
Depreciation and amortization 2,332 2,325
Deferred income taxes 1,724 1,455
Gain on sale of investments (481) -
Gain on early retirement of 2008 bonds (11) -
Amortization/Write-off of deferred financing costs 320 369
Changes in operating assets and liabilities:
Trade accounts receivable (2,096) 2,582
Unbilled revenues and excess billing (1,823) 92
Inventories (2,620) (2,080)
Prepaid expenses 130 (1,118)
Other assets (202) (129)
Trade accounts payable 2,095 (5,207)
Accrued and non-current liabilities 4,161 (519)
----------------------------------
Net cash provided by operating activities
10,637 1,132
----------------------------------
INVESTING ACTIVITIES:
Purchase (sale) of marketable securities, net (688) 208
Capital expenditures (1,674) (838)
Proceeds from net assets held for sale - 220
----------------------------------
Net cash used in investing activities (2,362) (410)
----------------------------------
FINANCING ACTIVITIES:
Proceeds from issuance of stock 1 -
Net borrowings under revolving line-of-credit agreements 4,205 1,175
Repayment of debt (8,186) (1,078)
Deferred financing costs incurred (98) (11)
Other 145 143
----------------------------------
Net cash (used in) provided by financing activities (3,933) 229
----------------------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (408) 12
----------------------------------
Net cash provided by continuing operations 3,934 963
NET CASH PROVIDED BY DISCONTINUED OPERATIONS 214 -
Net change in cash and cash equivalents 4,148 963
Cash and cash equivalents at beginning of year 9,479 11,101
----------------------------------
Cash and cash equivalents at end of period $ 13,627 $ 12,064
==================================
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COLUMBUS MCKINNON CORPORATION
BUSINESS SEGMENT DATA
($ IN THOUSANDS)
PRODUCTS SOLUTIONS CONSOLIDATED
-------- --------- ------------
QUARTER ENDED JULY 3, 2005
Net sales $ 123,881 $ 16,996 $ 140,877
Gross profit 34,220 2,323 36,543
Margin 27.6% 13.7% 25.9%
Income from operations 14,128 494 14,622
Margin 11.4% 2.9% 10.4%
QUARTER ENDED JULY 4, 2004
Net sales $ 108,557 $ 13,101 $ 121,658
Gross profit 29,245 2,206 31,451
Margin 26.9% 16.8% 25.9%
Income from operations 10,824 332 11,156
Margin 10.0% 2.5% 9.2%
ADDITIONAL DATA
JULY 3, 2005 JULY 4, 2004
------------ ------------
BACKLOG (IN MILLIONS)
Products segment $ 42,845 $ 45,363
Solutions segment $ 17,276 $ 18,230
TRADE ACCOUNTS RECEIVABLE
days sales outstanding 57.4 days 60.5 days
INVENTORY TURNS PER YEAR
(based on cost of products sold) 5.2 turns 5.1 turns
DAYS' INVENTORY 70.2 days 71.6 days
TRADE ACCOUNTS PAYABLE
days payables outstanding 30.2 days 24.9 days
WORKING CAPITAL AS A % OF SALES 19.4% 22.1%
DEBT TO TOTAL CAPITALIZATION PERCENTAGE 75.6% 81.6%
SHIPPING DAYS BY QUARTER
Q1 Q2 Q3 Q4
-- -- -- --
FY06 65 63 58 65
FY05 65 63 58 63
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