CMCO - Earnings call transcript Q2 2022 | Columbus McKinnon Corporation

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Operator

Greetings. Welcome to the Columbus McKinnon Corporation Second Quarter Fiscal Year 2022 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded. the for to Columbus turn Pawlowski, host, now Relations Investor McKinnon. will conference your over Deborah I Thank you.

You may begin.

Deborah Pawlowski

not, our market. with release Thanks, results this Alex us David Greg have joining a Chief you as financial queue Financial of you follow-up the ask discussion, kindly Thank line as And CEO; Officer. before and question you Wilson, allow and Rustowicz, morning me I our columbusmckinnon.com. well our and the conversation slides back I a good XXXX can flow here the continuous for released formal accompany the morning, After today. second which everyone. that fiscal time. then President if we and get that and you access the today have hope and we for Greg's copy to website, I quarter open adequate Q&A. will will ask then at in one our for with David question

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filed in what be during or As at statements Securities differ the make uncertainties actual events can These provided as our other that and earnings website the uncertainties These other with are are apply future we materially formal Commission. discussion is factors release documents during to from as stated on today. and These may sec.gov. Q&A results and some could statements other to forward-looking well risk as found documents well Exchange with session. risks to well you and subject that the as as know, cause as factors the

some will our useful be in measures. believe today's We performance. we financial During non-GAAP will discuss evaluating call, also these

in presentation the with in this accordance for consider GAAP. prepared results isolation or not information as a substitute should additional You of

in the for We measures a comparable your information. have and tables GAAP measures of slides reconciliation release today's with provided in non-GAAP the

turn it I over turn will begin. David? Slide to if that, with to to So David will X, you

David Wilson

we as and the million strong everyone. the supply to is you, even world in geographic XX% shipments of growth We in regions. navigated we $XX good also out quarter of our leaving global QX the I point planned Thank challenges delivered all due was delivered robust all sales that as behind the approximately Despite with shortages Deb with morning, constraints. targeted strength demand Margins chain, results of should year-over-year in supply markets. the driven facing by expanded nicely. across growth well

of execute are strengthening, X.X as through evolution and motion McKinnon of Dorner. adjusted reflected Columbus could on improved solutions be strategy, a intelligent our growing our example McKinnon our growth Earlier Columbus achieved addition precision XX.X%, gross we we tools is on We we in respectively. strategy conveying new of and One legacy including Through and our automation of restructuring in the attractive for to value as provides presence our set with increased proposition growth we a our solutions, the the year, competencies as conveying fact, markets. that processes continue results to profitability strategy. innovation. acquired with Business a combination Process, our Columbus blueprint enterprise. the more customers expanding into core improved innovate the high-value framework establish or and margin operational channels System In is product new portfolio our with and Then, margin targeted for deepen GAAP focus platform, and of of Dorner. CMBS an we the of both McKinnon of deliver our Improved XX.X% nice core quarter new Growth this in combination at focused enhancing for products, combined and created expand records the work. believe of we markets. benefits to began attractive XX/XX of This product The offerings, our solutions and reimagined demonstrate on the example a our this growth

gaining are a program automation to Dorner and that part us. are working continues deliver pilot the traction of early customers conveyor to We well. with be excited this are

While business performance inflation impacts, opportunities and chain also continues quarter in timing was to the supply are the impacted generate. of about this the we pricing constraints excited by and

very to a quarter. we like of In fact, evolving backlog contributed orders Slide This how the our X, are September. million solutions our Columbus On in $XXX conveyor at record talk for to healthy end through million of I'd were $XX.X the McKinnon.

bringing We at portfolio. to we are elements clarity further our how key look and rethinking of

serve lens that single at to less up highlights important products new high rates to automation to business made the these is and through single digit mid- motion linear product markets. portfolio. high and XX% This tend our grow mid- digit cyclical of this because our at -- lines Looking

expect platform markets. Columbus higher business our our growth, digits, XX% conveying the is what we prospects. addition which higher profile we than a growing highly end to the better Today, markets. you much nearly total growth with And precision one double attractive driven portfolio has had and secularly we're further our just growth more of engaged in mix have serving Now in And of a revenue McKinnon serve and with as M&A pipeline we transform -- of year an growing to imagine, might of ago. mix active attractive

McKinnon. on focused Columbus a value are We higher building

to share of offerings. will we recent Turning most X. announcing our be product series that to happy to our Slide soon I'm Intelli-Motion addition

is focused organic strategy product Our new on development. through growth and driving innovation growth

linear applied our automation capabilities Here, solution. to we actuator have our

precision improved drives into fit, offering. variety We our directly controls our require form, have applications that variable movement. actuator integrated provides a This custom and function for performance lifting and of

processes that let attractive me development addition opportunities. it automated, financials advanced solution streamlines this targeting new and launch for to With costs to In motion our feedback, integrated footprint to that, and more the control excited offerings turn of equipment. Greg installation to accelerating growth review the and in reduces positioning detail. intelligent We're be Greg? product are

Gregory Rustowicz

quarter Slide XX.X% period net from pandemic. was in sales the were On David. which year second up by the X, you, Good heavily prior the impacted million, morning, Thank $XXX.X everyone.

we to saw challenges. almost experience X% supply companies, like improve we sequentially, revenue other chain industrial continue While

sales the that about As acquisition constraints revenue a quarter $XX quarter. included us in David of had for Dorner our Supply mentioned This delivered Dorner revenue guidance second impact million of quarter lower we is estimate of that the end chain approximately also the earlier, below $X in by quarter. chain because the million putting million the quarter. almost results. our $XX Dorner the was impacted in constraints, this was supply slightly to

$XX our million XX.X%. a volume bridge. sales at volume with was Looking growth of driver or Sales major up

also positive by saw we pricing as We improve X.X%. realized year-over-year pricing

In also year, our price August. raised and June implemented the addition to at typical we the of end again of our increases at prices fiscal start in

pricing in year-over-year year-over-year Our of price, last price $X reported of resulted $X actions the quarter. million we up from million

tailwind a $X.X contributed of and was million sales. X.X% or currency Foreign

provide me color region. Let little a on by sales

second nearly the in we XX%. the up with sales volumes U.S. For strength quarter, significant had

XX% America, XX% APAC. the Canada EMEA regions, Latin first basis pricing volume up improved up as also approximately sales Outside XXX We points XX% increasing U.S., quarter XX% and volume in and in from the of in in strengthened was levels. X.X% all both

quarter announced contribution pricing also by points. up over X.X%. can demonstrates measurable basis pricing quarter are We in XX The Europe With recently levels this fiscal pricing which first our material over first quarter. This was more additional of inflationary pressures. price an globally, and effective the in Dorner how both pricing by actions inflation continued third internationally the improved additional quickly actions We raw we quarter. taking trailing increases mitigate for are surcharge

taken the Dorner the adjusted basis as was basis to of inflationary rationalizations margin taken, out expanded margin XX.X% this pressures. On years portfolio. product in gross to improvements up strengthen accretive adjusted of have of to the over over few our XX quarter. the XX/XX gross from power, last a as our front many well, points we a actions to process, -- current achieved including gross Slide XX.X% trailing facility first record points expect the we and XX margin earnings quarter. With actions result record stay Overall, we a We X, our have in

the margins and leverage productivity operating reflected higher year-over-year sales In from of addition favorable volumes gross impact Dorner, adjusted in to our factories.

even With levels the of pre-COVID back as operations addition legacy are to expanded not yet our to margins Dorner, volumes. pre-COVID

Let our quarter. me on gross point a highlights profit out the few for bridge

by $XX.X Second profit. the quarter several factors. prior and gross compared $XX.X which first, contributors of gross driven provided was major Dorner The were profit increased million year million with

face gross strategy gross strong of million Second profit. than to in volume year-over-year was note $X.X has productivity just to profit chain more added raw our the $X.X And discussed pricing million It's which increases even inflation. challenges. material we the offset that to third important was from supply a sales contribution

of the drive incurred continue we structure our realignment to cost to and we improve ways addition, business $XXX,XXX in In profitability. quarter costs find as

Slide Dorner adjusted quarter. was costs integration EBITDA million operating the included adjusted sales. total quarter, costs item Included calculations. business Dorner a added on and $X RSG&A costs as shown income, were of in which we EPS this costs X, our million As XX.X% $XX.X have realignment in or RSG&A $XXX,XXX and forma in the of pro in adjusted of

$XX.X sales. million one-time costs, of have these Excluding would been RSG&A costs or XX.X%

$XX approximately are This estimate rising compensation for we additional related million. annual strategic For initiatives a to investments the increasing price fiscal costs growth includes as quarter, plan and higher as incentive expense to costs. third in RSG&A higher stock well our stock

margin strategic the X. This the is points Slide driven and Adjusted Turning expansion sales, leverage pricing. the was in operating prior up to income of was basis operating by million. $XX.X business margin XX.X% Adjusted operating XXX year. from

M&A on the adjusted expense per see to of per per adding $X.XX. our to we adjusted on earnings In recorded quarter We quarter sequentially. better reiterate forward, this in were All I to Slide of with $X.XX the As earnings added true amortization for basis change. strategy. from GAAP share. the up want intend share $X.XX periods earnings that a substantially indicator you this we per year share diluted prior our performance company cash per per and share tax-effected programmatic on this are restated back to chart share and for calculation. starting we last $X.XX up earnings can have this which were diluted of be diluted $X.XX as going Adjusted diluted is the that XX, been share QX, a feel earnings

we quarter the our as expense shares $X.X quarter well. financing third to XX.X expect diluted new the and With the million in shares in interest outstanding million May, third average in completed we of anticipated are approximately

rate for our EBITDA XX.X%. in margin Our be will of on basis as is margin continue to tax was On was second the non-GAAP to to XX% XX% tax a adjusted quarter, basis. improved earnings EBITDA our points. rate by expected GAAP we In use on and XX-month XX, continues Dorner adjusted and basis accretive to to range our adjusted increase XX% XX.X% Slide adjusted our to a EBITDA trailing margin share. per XXX a our

Our trailing return on also continues and X.X% basis. was on XX-month improve invested to a capital

We excluding continue 'XX fiscal target of expect to be EBITDA in acquisitions. our and margin ROIC XX% future a the to impact double digits

XX. to Moving cash the basis, million million. year-to-date related million deal we acquisition $XX.X in quarter generated year-to-date, of Slide $XX.X and of second $XX we costs. On have incurred to outflows We a generated cash

inventory which have increased, includes million working we meet have also our rising to capital increased demand. sales in $XX by investment additional investments As approximately

line a what were million Our as working $X.X was expecting. the was sales quarter. in was with capital of XX.X% which CapEx we percent in

the million for million of expect We year. CapEx full $XX $XX to

post Term years. B. acquisition a Turning that capital basis to gives point of LIBOR We Dorner equity structure LIBOR This $XXX structure the Term new serve loan loan X.XX% offering B an included an floor. new interest with and low for Slide plus XX. million will us the a carries which a us coming flexible capital refinanced cost, rate XX The well

leverage which September ratio September was excludes cost XX, includes X.XXx. LTM synergies, adjusted our forma EBITDA basis on net a expected As of pro Dorner, but

great making we Xx fiscal leverage which towards We to barring any easily expect of acquisitions. within progress 'XX additional our are ratio targeted achieve

will and was Finally, liquidity strong which million XX and remained $XXX David. I includes to cash turn back our on of it at the to and Slide over end our hand Please approximately advance September. revolver availability

David Wilson

grow the shows the of as our and the demand XX strength Slide Dorner our of Greg. of recover, the efforts Thanks, acquisition. to markets success share continued market our impact

were the business for orders Excluding of over and acquisition, up benefit were FX project and up business our Dorner last year orders XX%. the nearly XX% short-cycle

than greater and one was has ratio backlog. helped book-to-bill backlog and to short-cycle record nicely Both Our again drive grown. our project

and million of our remains in to order provide the to on in are our pipeline Slide is three that opportunities up of X% quite weeks turn rates robust. rates $XXX update X% XX ship sequentially backlog first third the are near-term scheduled The Through rates. September's an we versus up have quarter. and We October, QX's will I versus pursuing Please expectations.

revenue to typical fiscal level quarter XX. holidays. than activity our third approximately quarter December seasonality account million takes our expect This impact for our of which three second We of shipping includes fewer and production year-end days the be $XXX and the into ending

also to assume similar We chain constraints supply QX. continue that at levels

as shortage well. planning, processes been a within supply inventory while suppliers demand visibility our a all to sales, operational dealing we it or of daily with On as adjustments SIOP of possible. has We improved chain. of our working has in our suppliers remaining no communication have positive surprises, are chain, disruption key agile remain with secured There the supply of where capacity at the ahead and been sites. Regarding and drill our both note, expediting are and demand stay triage, and and constant improving however, operations

We qualified working prioritize all to suppliers needs establishing are with where are appropriate. actively and alternatives

is vehicles processing As addition strong responsiveness are production in for been the has increasing of automate business mentioned also there. We XXX our of with efficiencies. markets quite most strength as drive electric but across energy robust. looking strong industry all from rapidly. a Globally, This our to customers. competitive jet with are well in is demand Demand order with is of flagship seeing from ways with by as new growing remains Automotive the driven provides that metals the expertise being also E-commerce increased engineering also our driving earlier, market growing rates continuously not aerospace believe This given customer Boeing and us demand expansion. only the industry for the MAX markets. we and our combined advantage.

Life as In seen manufacturers increasing prescriptions. space increasing and is beverage line in capacity pharmaceutical out are addition, meet expanding for capabilities their delivery marketplace demand. of sciences our to the we have products building as the is production growing sanitary the food demand direct for of also

hygienic around Columbus advanced the AquaPruf were required technology McKinnon's not as purpose employees. global in from associates to amount Growth markets they new an our we with better be in reducing we area environmentally conveyors working sustainable, to line and and of designed this for objectives last to friendly to the Columbus engagement advance sanitary development serve expect, our for a and conveyor culture the our Blueprint you our to world clean organization. product solutions to and mind, longer-term of We drive new only of and growth environments. market, as Also, in launched performance water customers' are chemicals our of and the new continued would to these maintain work this continue X.X and year investing McKinnon. September. bring With the that profile margin spent hundreds success Important will strategy the in is clarify These

that one employees As a reason company could of and important that companies, uncovered that with build single would loyalty for the that a our a emotionally why. purpose a company. sense collection was the connect A around acquired unite existence, purpose we customers with of and it would

position XXX and products For been years, Columbus materials. to have lift, McKinnon nearly used secure

years, few our enable and technologies motion last automation offerings. intelligent added capabilities control that into the we've integrate Over and

our transport advance the move of we team information by Columbus and world and equipment blood our align safety, improvements And of end of the our accurate deliver enable. productivity Examples statement to that follows, Summer of an our our and test support technologies of and Abbott's include benefit laboratory vials precisely provide. the efficient specialty the the in and solutions led forward around world NASA's motion motion throughout use from offerings define control users utilize significantly. Aquatics use McKinnon's solutions these conveyors products to Columbus and products intelligent and our these intelligent lives. create results purpose the improve the the purpose that within diagnostic motion to and the This use rigging interconnectivity, orbiter system connection as National entertainment together Ultimately, traveling Olympics. processes service the benefit crane equipment the of customers produced that at uptime the hoists actuators to Center space and Our shuttle McKinnon's and

the lives. in difference applications Columbus customers a make are for move we world exciting McKinnon day used critical day improve times are solutions the forward true Our that and and and These after serve.

are about Alex, future the let's now. for thrilled are We open line questions creating. we the

Operator

with question. the proceed [Operator from comes Please line Instructions] of first D.A. Matt question Our Summerville your Davidson. with

Unidentified Analyst

morning. Matt. for Good This is Will on

Gregory Rustowicz

morning. good Will, Hey

Unidentified Analyst

a gross that I pricing by quarter cost inflation come had on expectation? going for that of pricing profit exceed question that bridge. did amount you would Was expectation the it into your your that about or ahead

Gregory Rustowicz

No. Will, Rustowicz. Greg this is

-- that have would did anticipate we that, happen. we So

We pretty In case. been XX always the have consistent. been my that's years,

to monitor in And pricing We we lot out it. stay of try a business. front have in as power we of the inflation,

we're So and perhaps margins. our margins able maintain even grow margins to --

Unidentified Analyst

received then had I And quarter. fiscal any movement of that the I kind were is to from to quarters? or coming drove sticking were productivity you sustainable bridge, Understood. that as and what what they color noticed doubled not wondering increase first the whether your less in the was in you more that benefits if or than

Gregory Rustowicz

Yes.

to second producing. COVID we're quarter. So the with which that We're but incremental David off a to operations productivity the all challenges driver constant wasn't sure the it of quarter. that quarter, COVID that It comparing large was related team about. ago a the the worst all chain hats to year June a the changes quarter good talked volumes was they're work -- doing despite are on But the that for our supply of going for is

we've consolidations we're going continue to pre-COVID when return operational programs, see do margins. it's business, levels that -- we our plant last our years. it's that legacy in to done excellence gross forward, several from volumes in So anticipate we should the ramp the benefiting a And over

Unidentified Analyst

Absolutely.

Operator

Thank you.

your Our next Please Tanwanteng Securities. proceed question comes Jon CJS from with question. with

Gregory Rustowicz

John. morning, Good

Peter Lukas

morning. Pete rate actually this It's morning. we back Or $XX I going had the good RSG&A normalize Hi, that that down? should into one-time something that a step some is Lukas should million run for including is Jon Yes. question; XXXX? just items

Gregory Rustowicz

like There some code, it's on ZIP items $XX based -- one-time going million rising costs $XX to that for June down are were Yes. compensation we in get XX. -- because in in increased where the million, stock be There that at stock quarter price relative should there variability our can instance, to $XX QX that in of this be step but million, neighborhood.

So a that result $XX we $XX the way a rate. to per incremental rate. about run it typically that's million said quarter to that, million, having company. run hope $X And probably will million ZIP Columbus But expense is the level. is legacy drive was for $XX Dorner the code, in further right the which McKinnon think about million

initiatives RSG&A we're and also would A be digital of have costs our We some new growth other that in lot improvements category. as initiatives. well development in investing more made in business the for but product our

Peter Lukas

through versus are how I was of X% that orders Great, say then, did heard make -- October, up in I want helpful. to And QX? just trending you terms you, sure

Gregory Rustowicz

versus XX% short-cycle X% versus versus Dorner is XX% has Dorner, if sequentially X% look to QX And were September. Yes, level at obviously, up versus short-cycle and up business there. business in Dorner September up and is up September. I project our September, Yes. is X% versus business up projects and a business the sequentially lumpiness that and project of And

Peter Lukas

you organic a to times of And demand? see continuing strong that's more or think do are you increasing, lead function

Gregory Rustowicz

demand. it's say would to I continuing strong No. latter. organic the We're see

Peter Lukas

Thank you. helpful. Very Great.

Gregory Rustowicz

Thanks, Pete.

Operator

Thank you.

next with question Wells Fargo. McGinn Please with question. Our from Michael your comes proceed

Gregory Rustowicz

Hey, Mike.

Michael McGinn

morning, God everybody. quarter. Good

Gregory Rustowicz

you. Thank

Michael McGinn

margin. gross on was question My

than this profit. mentioned think $XX If that of is Dorner I XX% business doing which puts the and for close run. contributed into them is more legacy on envelope half what change the a rate million gross your year? to legacy? the margin, function them Is color your that having higher I'm back a of maybe some Any rolls you businesses and historically then Dorner almost pricing to inelasticity gross cadence the this of kind math, gross of versus margin back of

Gregory Rustowicz

Yes.

it's Mike, -- So Greg.

we expect to build-to-order Columbus depend of legacy historically would of tend So the Margins they're XX% be to clearly, by to continuing today. It's build-to-order do closer that business. legacy McKinnon margins mix over drive versus I our to And to Dorner gross on be in probably engineered-to-order higher. north going on But volumes. margins. time we're is the XX% that XX% XXX general, side the points gross basis to to impacted on level. lower And say

David Wilson

pressures And Absolutely. Dorner of inflationary and relates the also, like as that increases. had add, just phasing to challenges would price our rest I business, it Mike,

on impacted pricing so our if inflation more we if on think basis, the But in by in the was you pricing inflation timing Dorner you versus -- outpaced ratio, the line-by-line this about impacts. negatively And a period of will. to aggregate,

their in we go. expect results catch to up that we so on impact had period and this those an as And on

Gregory Rustowicz

we one our is other to backlog. don't that point Mike, reprice And make,

to so backlog we've we're benefiting the not price. And from extent increase from periods, pre-price got

just given latest reflect the fact record there. and that So through -- incrementally, coming price is doesn't in backlog all the the there should in prices quarter December our more increases at be pricing levels of

Michael McGinn

your sequentially payroll days leverage any year-over-year would of sort just the And have the here, you my to So trying and have effect? that's less payroll on of I'm days model trending or towards it. three amount same days, presuming three SG&A? selling less and square Is comment then RSG&A impacting XX%. SG&A the some because days Got selling how that

Gregory Rustowicz

Yes.

or days XX% give XX%. it going in in the was QX QX, to X -- you per do we the quarter shipping it's U.S. XX% So -- and our was of Page release, be and we on

So versus that's XX%. it decline. last a number, about same X% the XX% year, was And

instance outside I in Now into do to less product production we periods. holiday in there's just ship with absorption quarter. next do have we run And going warehouse which mean, while our for on less days. Europe is in granted of That -- biggest results the market, cost personnel will we that's maintain U.S., longer the

So XXX that point is look they three our to the basis gross about years sequentially shipping typically because one the important if note points drop days. over you margins, last at of the of impact

Michael McGinn

I And some China With some of it. about the give businesses at XXXX uptick heading you one into supply and here. legacy sexy in any Got less that of confidence in rent kind seen have calendar statements kind you more want your of of here? to sneak $XX Alcoa draconian impacts aluminum, making magnesium and

David Wilson

have. We

the obviously, in few energy seeing our we're in we've in as quarter and And more markets a same gas second in broadly, In well, orders markets And our fact but nice increases the way. further. also the oil frontlog demand responding we've globally. secured metals seen develop project are

we So the serve that increase we're impact. a that that an across we nice having seeing markets and demand is believe

Michael McGinn

time. Great. Appreciate the

David Wilson

You bet. Mike. Thanks,

Operator

Thank you.

Please Our with Howe Chris Barrington your proceed from with question. next comes Research. question

Chris Howe

you the with Slide anticipate look overtime, at Good has Perhaps how David. McKinnon a of looking that at morning, how kind the the how do see solutions and is, the we now platform. a getting and Good If X, business from each I'm with out? About in you do what section conveying from see a trends top-down steady growth state further morning, evolved of perspective Greg. general evolving Columbus you basis, this looking mix this pie? of

David Wilson

beyond as obviously working lifting the the our it from head evolving segments think we lifting we business anticipate in of a percentage But process, through And the see contribution we value we think a enterprise. XXXX materially. of out Chris areas. the our next X-year our question, value percentage of and focus are Good serving we that the grow higher grow a into those to to business can has transition a strategic heavy from growth strategically business we business a as see Right. and core we higher this higher into of Right. are the perspective, total, frankly, elements grow reduces. that over strategic as ours and it's window. across And year of do majority planning the one business growth, as platform we our And we'll total all business

And grow so we our we And have ability business. and attractive more become cyclical business on for has oriented and forward. we've and beyond as think of less secularly clearly, portfolio an impact mix that go a the that expand established the targets more margins in the we we to EBITDA

Chris Howe

perhaps you have placed logistical more that by Okay. on And into XXXX, of that my while outlook the and challenges. on next challenges conservative on see chain question, persist reported duration? others chain call companies we some the environment, summer this continue challenge it's with how conversation anticipate calendar context? the you How Some a supply do a improvements place every supply to have in the this can comment you

David Wilson

don't that is a this will say we not And that anticipate we I XX, should this that that's we I certainly controlling QX advancing play business, calendar control. exit can and our and what ball have will out have 'XX. our into continue anticipated that calendar will fiscal strategy And we're that something how continue 'XX it continues on And a focusing advancing would going clearly, but through I it's Yes, away crystal -- we that problem into as we say. anticipate on QX Right. period.

our be identifying likely challenges our And secured in the business appropriate despite of increased capacity connectivity business, the our processes, sales we're and So possible. planning environment. with persisting getting a inventory alternatives we're that playbook, set where think we we're we're will vendors, executing positioning the improving operations, we're improving improving what key well there

Chris Howe

Okay, my these pipeline? pipeline, on evolution are we about of in some that What to this quickly. different question last capital should opportunities of family-owned this seeing? comment is placed. great. pipeline? size ownership and M&A ask I you structure? businesses businesses? the And of Can you the will be strategically allocation on How these of could prudent Are think growing if I What continue would assume type the

David Wilson

$X as Right. that we'll thoughtfully responsible allocation disciplined I absolutely pursued would and execute to The prudent say, first, the and fragmented we pipeline previously, and attractive. a $X.X market clearly, there. continue billion and be to opportunities plays served is talked [indiscernible] will worth Capital very has our expanded right. as continue TAM of you're And and acquiring to about we pipeline see we're fragmented about in our globally. business in a that products opportunities. And business, automation micro-segments conveyance motion They Dorner portfolio. we've including that business. total conversations, a increased linear products our specialty previous landscape to successful in into landscape aperture the them addressable expansion and That more for addition of nice we billion about of attractive and the as in have at define

have a process. that companies that more that of bank structure negotiation would a will, a a potential of with held, a more more runway or that And more public through of company you us in and so have build mature that to companies that terms ownership lot privately time over a ranges, can of be formal ownership or and pretty if processes private structure independent broad in and are a terms transaction of relationships opportunity run provides with exclusive equity from you more might transactional

that that transactions that be I be And million close good slightly in larger million And with in total fit establishing learn to We're a continuing would so, depending they and the to to in than we be relationships that $XXX so say, on sizing smaller from the bring how markets. those standpoint, that, those companies certainly looking at $XX or revenue to well with that we're participants would open value. to have that might they would market and relationships strategy. would say our And slightly than we're what more. to or stay we

Chris Howe

David. Thanks,

David Wilson

You're Chris. welcome. Thanks,

Operator

Thank you.

Ferazani Sidoti. with question. proceed Our comes Steve with next from Please question your

Steve Ferazani

want on you chain did close the terms supply David, follow-up chain quarter to last name quantify impact but issues. you. did in Hey, I -- thank hear of get Steve Ferazani, timing in usually the deliveries on I issues? wrong the the It's supply enough. Did of

David Wilson

had the ready Yes. been we to us, receive $XX that that were and had in had we quarter was materials that we the impact Steve. of anticipating. That's in materials That shift included for we committed received million it would go was what we right. worth product to

Steve Ferazani

Okay.

And supply you guidance incorporate think I do when provide challenges how you very into which how difficult? those for number so that is imagine about chain sales, I

David Wilson

persist a challenges that's to at the in Yes. We've anticipated level level we've similar throughout QX seen the QX. that

working to what we're And obviously, challenges to the saw we're very that so we at in hard, similar levels improve QX. that on will persist but anticipating

Steve Ferazani

then is front. call which And on lot the this which on other question a come the up labor hasn't

case the how Given huge on I particularly think you October, capacity labor in keeping growth at of noted the even up in Dorner? you Dorner you're the and growth saw front, the and

David Wilson

throughout Steve, progress, in QX made our recruiting Yes. We've efforts.

a nice value. that really has done and the people have opportunities added join job creative for creating firm to getting team of Our

the as in well seen the at of I occupational us that end have companies been the most the as net And unfortunately had turnover think XX moving. open had We positions is people to as quarter, effect we've have environment. have

working our current the we're But fill so, flexing those compensate. And obviously, that's continuing overtime and to status. to obviously work and

Gregory Rustowicz

Steve, And I probably a would that right chain the lesser issue than now. say, that's supply

Steve Ferazani

it's supply the think side holding maybe you is the you causing that revenue on purely it back do chain not, some? And is or

David Wilson

us I capacity not at factories potential But impact be Yes. a lot more I in working we're capably it'd naive back to it's I holding can given of that there a running with is think you mean, there. all flex shifts our because full there not that guess say perpetually. three

then so that where become ways chain to a to compensate will And to gating get some think to needs that shortages. a supply because point able when creative item that overtime us. be is we're and for those better, we But resolved for work I work in the flowing

Gregory Rustowicz

issue And issue and an a one not color for of really us. on It's international other shortage, the piece U.S. it's by labor large.

Steve Ferazani

I David. Thanks, Fantastic. Thanks, the time. appreciate Greg.

David Wilson

Thank bet. Steve. You you,

Operator

you. Thank

question. Please with comes Capital with next Palm Craig-Hallum Greg question proceed Our from Group. your

David Wilson

morning. Hi Greg, good

Greg Palm

I questions for maybe to of little of I into tie sort competitive morning. most want similar from of seeing here. just but a on Thanks your and circling kind actions guess note the good environment And how bit pricing little supply Hey, are your competitors? kind a a competitive of bit back that view taking from the to Anything overall you you curious just standpoint? positioning chain procurement there?

David Wilson

do have to we We've that. what been need and been competitors remained to focused I disciplined. rapidly moving we've think do on our

as haven't competitive Greg to have, pricing think we we've and of increases. relates a relates power. to leaders as think pricing But I channel as level -- it And the been landscape. lack earlier, we of it in our price discipline indicated I seen that

Greg Palm

sense. just makes that, assumption of December one for Got then with supply my just there? is trending quarter up quarter, the and guide quick be that entirety guidance. a the if lower continue And else will And your I'm lower on should of not orders Anything sure just chain sense follow-up it, that's byproduct sequentially days? nicely then, in of aware shipping the the the and the we sequential continuation is

David Wilson

that's No, it nutshell. in a really

strong have demand. We

gating and a in have as that position well this limiting using level is simply chain backlog. of record capacity possibly can where a in as we and self-help executing but further to We're supply the improve of constraint environment item. the methods effect the we're We

Greg Palm

there. it right, Thanks. leave Yes, I'll understood. All

David Wilson

you. Yes. Thank

Operator

you. Thank

next with Our a D.A. from question. Matt follow-up proceed question Davidson. your with Please Summerville is

Unidentified Analyst

Will, This for again. Thanks taking is follow-up. my

David Wilson

Hey, Will.

Unidentified Analyst

laggard. if was I the that but seeing it what markets I because forgive you're missed market the And I end in your me in was wondering David, know was your was entertainment I mix how wondering talking it progressing. just pretty last remarks quarter definitively prepared about

David Wilson

Delta stable. Yes. variant obviously infection second It's been the by impacted the relatively It's increasing in rates throughout it's quarter.

saw as the questions given there that then of what an indoor fact us availability venue so quarter stabilize increasing activity. the the got rate and entertainment kind for to in maybe is around -- of pre-COVID of we venue more entered second demand XX% -- And demand we that there became

X% But very that it market. I'd underway And bullish just discussions that in realized good so, to relative of say absolute in terms still outlook of at that to that about just levels. at that's stable it's pretty level. diminished And rate business relatively compared of pre-pandemic peak a a sales was and was total terms demand, our activity emphasize, to are that's a

us, back although for even recovering the a markets an So come the overall will opportunity nice of further. piece and it's think and something are exciting business as that we not material

Unidentified Analyst

Understood.

David Wilson

Will. you, Thank Great.

Operator

the reached Thank will now to closing for turn the gentlemen, of over have I you. and session. question-and-answer Ladies end we Wilson David call the remarks.

David Wilson

day. executing X.X high-value, our supply addressing to execute all Alex. focused markets Great. they're to and of inflation initiatives industrial work are playbook and the enterprise create a great that strong everybody want our demand our dynamic I our We're have while control. We're seeing technology this advancing environment. chain intelligent hope you attention for challenges. improving their and all to doing Thank controlling our actively business you, well for strategy motion, what a great and thank in to and global Thanks associates on we across We're can transformation company.

Operator

and this wonderful Thank and you your time. at Thank participation conference day. today's you you. lines for This a your may have concludes disconnect

Deborah Pawlowski	Investor Relations
David Wilson	President, Chief Executive Officer & Director
Gregory Rustowicz	Vice President of Finance, Treasurer & Chief Financial Officer
Peter Kirk Lukas	CJS Securities
Michael McGinn	Wells Fargo Securities
Chris Howe	Barrington Research
Steve Ferazani	Sidoti & Company
Greg Palm	Craig-Hallum Capital Group

Columbus McKinnon (CMCO) 30 Oct 212022 Q2 Earnings call transcript