CMCO - Earnings call transcript Q4 2022 | Columbus McKinnon Corporation

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Operator

Greetings, and welcome to the Columbus McKinnon Corporation Fourth 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] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Shawn Southard, Investor Relations. you. Thank ahead. go Please

Shawn Southard

and and everyone. McKinnon. your Donna your certainly time today interest good you, We morning, appreciate Thank in Columbus

with Financial Wilson, Greg David me and Here and CEO; our Rustowicz, Officer. President Chief our are

You if XXXX the formal released results, fiscal follow-up fourth adequate our will financial the allow Q&A. can you discussion, our a access should today before as return After which line accompany www.columbusmckinnon.com. open one a for flow time. limit market, slides will with to well website copy question to yourself and as have our for morning the quarter continuous of to this not we Please we at the conversation then release the that question queue and

in I Slide first If will the statement. to Safe you'll turn the deck, Harbor X review

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

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

reconciliation accompany slides. X, release for with and Slide tables substitute to this the measures not to with in call consider turn or David information will to please GAAP. of David? results With today's the over that comparable measures in begin. should advance the presentation GAAP prepared the of accordance in I non-GAAP and that, additional You the We've provided isolation

David Wilson

for quarter fiscal and Sales and very XX% XX%. were level we a inflation. was XXXX, million. sales created with to challenged growth morning, in in We inefficiencies even a with constraints and up expectations everyone. quarter record Thank chain you, fourth Organic $XXX outperformed the of while year's strong the good Shawn, the supply quarter record by last over were

We transformation global for of many critical motion McKinnon material to our the are today. solve steadily in help is challenges, advancing intelligent the and positioned leader facing be world handling to solutions is uniquely Columbus the

We availability of infrastructure, ergonomic for chains, are rebalance central direct-to-consumer of and the automation to labor in and supply need global localize a made delivery. need shortages in and the for the midst factory world the to in investments and handling safe being efforts automation material

costs executed As growing impacted demand was shutdowns effect with expediting and meet increases to having the we in the rapid associated needs freight margin our in and given inflation in products, China quarter global chain. high the supply that in the war and and on for the customer gross Ukraine are

and impact the cost of a completed customer recent the rate escalated which cost increases, the did also at given we strategic of full relationship. recover large We where material inputs not project nature that

our margin EBITDA $XX $XX nearly XX.X%. in at the established a was level was adjusted the and quarter record income operating Our new million million. operating quarter in income

growth execute Fiscal address on significant and to realizing later platform to taking are strategic markets platform. stream a added higher our unusual of longer-term increased our progress as strategic business. expanded high year secular platform was access we margin margin revenue the important and of profile addition committed We with this acquisition of the attractive provided began We operating our our this of to capabilities Columbus Garvey diversified in business actions model associated tailwinds accretive to XXXX environment remain and precision step year further the our through represents transformation. strong change targets. We and with the This with risk conveyance mix, and a the McKinnon's offerings market-leading with financial Dorner.

initiative growth customers through and growth framework, automation initiatives -- organic to accelerated clarify innovating our our and our outward core commercial levered looking leveraging markets while opportunities also strategy. rethinking We with to

further quarterly also ended fiscal with We remained nicely to also a food benefited ‘XX the robust of sciences entered across the of over million market began $XXX recovery the half targeted backlog record. demand beverage, in from record million, new e-commerce markets. pick core and market growth and orders markets $XXX nearly ‘XX latter life We fiscal a and entertainment year. The with increasing and secular of up and

If to made markets highlight over turn we the our our progress the we X, to approach you'll the we've like portfolio as year to and significant Slide unlock to past improved please Columbus reimagined potential. I'd McKinnon's serve

XX% our business higher work tied transformative of approximately growth, this markets. Given is higher margin now to

financial now our review in quarter. the to over I'll turn advance Greg you’ll Slide Greg? If call X. performance the to to

Greg Rustowicz

you, XX% prior we million, sales of the David were the provided quarter. last year morning, Slide net up from fourth $XXX.X good and Thank period everyone. On quarter guidance the and X, ahead in significantly

supply challenges we and our shipments that While allowed exceed chain to guidance. continued, us backlog significant had prioritize

availability up conveyance levels. the pricing XX%, up acquisition. rates, third full incremental fourth estimated sales our we a in in million of of the the shipments million been a This requirements. an match As order timing precision quarter. from shipments David benefited of $XX to Garvey mentioned, Overall, were customer the which delayed of revenue struggle quarter supplier in material it with constant added and fourth resulted as $XX.X challenge has in up Sequentially, quarter strong platform from was XX.X% quarter,

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

year-over-year X.X%, quarter’s X.X%. We also pricing accelerate was saw with pricing than higher last which of improvement

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

of was a X.X% sales currency reduced by sales. or Foreign $X headwind and million

on by sales color region. little a provide me Let

XX.X%. strength fourth in For we with volumes saw up sales the quarter, continued U.S. the

basis XX% XX% Volume America, of X.X%, levels. approximately We the over from in XXX Outside We point basis outside also up Canada also points increased up and improvement U.S. Latin quarter pricing volume improved XXX the in was in X% third of volume U.S. XX% APAC. in sales third improved increased quarter X.X%, Europe. saw was as which X% pricing approximately levels.

increases. With timeframe the in our costs, economic quarter, material inflation and implementing which pricing took fiscal aggressive is annual current we backdrop actions of fourth higher significant more also freight price for the

XX.X%. rising declined (ph) This acquisition XX amortization of inventory recent On We $X.X due and acquired Garvey gross of lower was inventory million will both turn. margin customer in the as basis requirements freight rapidly basis ETL prior the XX.X%, points which backlog to was margins as do both what material was Normalizing primarily protect backlog than additional amortization associated gross costs which X, the costs was points. environment, expense. in with margins grow up leadership inbound This for XXX inventory this expense, margin step-up to balancing recognized and necessary negative inflation raw from maintaining the year. our we items, projects. gross quarter, This in was outbound our is well for sequential adjusted as what and Slide these margin one position. Gross expecting a were included while step-up impact over were completes from acquired and

supply constraints. XXX inefficiencies by our acquisitions conveyance points margin with were associated production chain juggling this due we our addition, schedules also Overall, In accretive precision adjusted basis quarter. impacted to gross to were

with million quarter Let compared profit bridge. profit me the out by prior was driven on Fourth few point increased gross several highlights a $XX.X and our year gross factors.

which related of profit. million that inventory gross $X.X Sales these I expense added of acquisitions acquisition step-up expense million and of a included million $X.X higher lower just added material costs volume were Our together million. $XX.X Offsetting inflation and representing pricing of backlog changes discussed. cost $X.X freight net of productivity other and provided net mix and $X items amortization million,

Foreign gross currency million. translation by profit reduced $X.X

As of this million, was costs million, was costs costs included record percent sales. with fiscal business sequentially Compared $X.X full as which prior and and or million. million at by quarter, by RSG&A from and sequentially quarter power million, million by XX.X% $X of additional the of acquisition higher which were realignment sales the a million due higher costs of realignment $X.X deal the we Garvey of the in shown a by year leveraged Dorner fourth $X.X of $X to $X.X controlled higher were largely scale. incurred on the Slide coming costs quarter in were RSG&A expense business $XX.X of ’XX. year, RSG&A of our partially of quarter well offset $X.X in RSG&A sales costs RSG&A With in X.X%, demonstrated million X, of costs acquisitions

strengthening dollar $X U.S. the RSG&A translation our with currency addition, million. by lowered In foreign cost

to quarter, the we between and million. range $XX expense For million first $XX fiscal RSG&A expect

Adjusted $XX.X included impact Turning to XX.X% past from which margin points. fiscal year. Slide million. This from of sales, expansion operating XX prior year, points contributed was up accretive XXX basis X. the the basis completed the this margin Adjusted operating acquisitions income was

from operating improved on volume We strategic pricing. leverage also benefited and

quarter can earnings Adjusted diluted see period. GAAP in for prior from substantially earnings of As share $X.XX year you per Slide on per of $X.XX $X.XX. up recorded diluted the was share X, the we

per amortization basis reminder, tax on earnings As adjusted back are calculation. a a effected expense our adding we to share diluted

to XX% XX, expected non-GAAP EBITDA in approximately increase the the adjusted as XX.X%. million This anticipated interest Slide rate the million be tax share. margin XXX points. full basis be first rates Weighted $XX about in since With we January, to by quarter. $X.X use our earnings shares significant will year continue average expense our over is calculating improved recent when the was interest to was per outstanding year prior are diluted pro and On forma adjusted for and

acquisitions by adjusted recent to EBITDA were points. our margin XXX Our accretive basis

Our and continues X.X%. invested also was to improve return on capital

achieving EBITDA drive executing but and Nonetheless, team are plans margins ROIC, executing these targeting We clear driving in macroeconomic and are current shareholder the still value. focused less on that of double-digit the is XX% is our long-term environment. the margin timing becoming and will goals strategy expansion

generated XX, free Slide in $XX to million quarter. flow we cash of the fourth Moving approximately

full $XX.X includes outflows million. of cash the related deal For costs. we year, This generated million to acquisition $XX

of supply lessen added rising impacts. approximately meet also demand to and million inventory chain $XX We

expecting. the Capital Our percent million working were in sales of capital expenditures $XX we was for what were was year. line as which with XX.X%, a

expect in to our expenditures to margin our enable leg We invest we million next initiatives. of of fiscal expansion the $XX as ‘XX capital $XX in factories million

acquisition, to refinanced million, accordion capital the feature Turning B. an XX, Garvey rate $XXX.X XX rate an was of million $XXX additional Dorner Slide a as The loan last We $XX equity term outstanding current new X.XX% plus loan structure with refinanced LIBOR borrowed is of included our the B blend carries rate the with million. a and B LIBOR which an basis a term to of loan offering that term a floor. utilizing interest May, and result swap we the which point XX% acquisition, X.XX%. principal April interest approximately and loan B of term The swaps hedged

on XX, but adjusted March includes of ratio Garvey's net LTM our expected X.X synergies, leverage March forma As excludes basis, a improved EBITDA, to cost pro which times.

ratio the our barring X We leverage fiscal end ‘XX of expect additional targeted achieve any towards to acquisitions. times of

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

David Wilson

Thanks, Greg.

an exceptionally we with strong you compared was daily As with quarter. orders order average trailing in rate third on see had the QX can XX% that XX, up Slide

shared As accelerated million, $XXX nearly a and record quarter. our were earlier, QX throughout the orders I new

through we the order reported weeks may that recall, approximately of first previously X% rates were you January. As three up

record So sales backlog million. February quite growth a $XXX Even March XX% quarter, million. was is and to especially with first level backlog to of expected the $XXX sales strong. our was ship backlog, outpaced grew in which short-term Long-term backlog beyond the and new million of record quarter total $XXX in about were order of our our

$X range quarter to headwind If to Slide FX you expect range million in $X in we the year-over-year the versus sales sequential to of million. includes see $XXX be This turn QX, $XXX headwind. first you'll in $X million to and would million XX, that a please million FX

We're pandemic at services. demand our and platform availability which to cascading further in have and war our China the backlog materials. [indiscernible] represents new shared chain execute major midpoint. with on expected also further million in through the While integration organic Even range our realize rate productivity supply to shutdowns initiative, and have on of Germany. quarter market at us cost and Ukraine shipments enable million we our impacts synergies digit robust, $XXX the of block impact is our system are training, implementing guidance effects these the of mid-single European is the last go-live as a however the through the This headwinds, an This complete related harmonization and to building will remain ERP growth $XXX transition. and to expected year-over-year of first

by are our growth continue We to in with organic demand all the significant encouraged gaining we're initiatives. markets see and traction

In fact, order first through in saw effectively quarter the in mid-May our line in record sequential we have with rates been QX. levels

associated and macroeconomic demand. and to of our on during supply action while targets price our forward June improvements also We're execution. with operational our updated uncertainty increasing further period Day to this to on XX. details focused and remain We're During encouraged very longer-term Investor and laser sharing high prospects cost disruption, inflation address by look customer strategy executing deliver taking

truly are into as scalable in motion call global and for leader open Columbus we for can questions. that, for more better, evolve more solutions handling. intelligent creating the we With Donna, business model We profitable a the McKinnon material

Operator

for Instructions] first [Operator from The Thank questions. go ahead. floor DA Matt Davidson. now Please coming of is is Summerville you. The open question

Matt Summerville

you're A perhaps obviously all volume, considered going of revenue Obviously, Thanks. to that QX I going questions. a couple guidance. your be Europe in have absorption down assume sequential lower would in given basis, on to things

And you we how So throughout be in kind I QX? seasonality, go-forward of should year? thinking thinking we guess will, particular, beyond and earnings incremental as as we move margin move how margins should about the about be we if a operating cadence

David Wilson

important call. Matt. address Good ones and in to questions Fair morning, us for the

head that margin in make expecting QX We had are we advancements from there pricing make -- the erosion of as on based QX and up that QX we'll there from and pick some with that sorry, the training but do and we putting particularly within through into and to we're hours, ERP we other taken actions lost are relating that implementation. absorption, business, challenges associated mentioned we've the acknowledge there you stall our advancements time

too, a so at been won't And they probably saw but would the we normally rates that trending in but what have step anticipate QX, be acknowledge for we implementation. we that forward from that

Greg Rustowicz

Greg. is this Matt, And Yeah.

as we’re taken business. I backlog, In addition reprice backlog, record as of large got already able as we -- to to extent that, backlog orders all to that -- million choose, a $XXX we've at not the pricing we've purchase the priced for mean

So that's factor in another this.

David Wilson

a Yeah. the seasonal remain We're business QX. this by related prospects encouraged the longer-term in similar first really project the a impact but for on and we a of for targets, however, or trajectory bit impact and

Matt Summerville

relative Thank a a you. fiscal how time of as fiscal of about to talk your guys March annual it, the how thinking in then, and the about normal put you should realized extent we frame increase incremental follow-up, increase? willing much you're And ‘XX to sort list be during for did price through price to ‘XX

David Wilson

Yeah.

that impacted carrying we QX actions we’re and is we anticipating outpacing level, probably last record highlighted saw Greg sure work quickly offset that are last cost rapid cost and some costs out for just QX. taking and backlog the we get realization in company, cost as that but at that we'll pricing what's the a of took, relative to we're mix, we phasing charges material inputs what material that's cost as under. focused throughout price as recently and to we QX, think I get on best through, price inputs were so see the came in the successful through and And then remain particular price, be we're we’re that backlog very about that actions that the price we'll at that's making increases, those a we from half year thinking new backlog that through very I is this year, by and timing the increases has year see level at in freight and a And that way came but outpaced probably element ratio. second we'll a you probably cost better to think given incremental

Greg Rustowicz

in on different at we'll to other higher steadfast and region, remain raised ways at and of maybe towards comments, look Yeah. price also else by David's we're clearly or inflationary average Matt, add general, probably end between the and prices and/or additional range, our we've increases pressures anywhere looking our And on XX%, X% to realize to by that and margins surcharges.

Matt Summerville

Understood. Thank guys. you,

David Wilson

Matt. Thanks,

Operator

of Research. ahead. you. Barrington Thank question The Howe Chris coming go is from next Please

Chris Howe

Can about I versa? about questions. taking and to picked order Dorner different how Thanks they their prior some you're What's that pulling seeing, quarter you synergies everyone. together for last talked synergies the that anticipation or follow you morning, up performance your vice orders Good Garvey in of up had, the in call -- this customers on we the and the the performed my wanted you revenue quarter. Garvey dynamics it's year? talk for the into whether fiscal the

David Wilson

to Yeah. We're are with in. doing really the pleased business about the acquisitions and The remain taking continue bullish intent we're very that well. direction strategic our the very Sure. businesses

and was For enhanced. training was not good that to to sales as the make were in as to when continue businesses the the together to sure business. $XX.X the the but making portfolio. quarter, representing the was only really focused acquisitions couple acquisition both wins, emphasize ability businesses realized progress we cross-sell of quick opportunities relates And teams it broader across through on got it a the it million fourth synergistic we the about across and completed brought We the continue

So chip I the the away of starting to we're tip there. think at just that iceberg

Greg Rustowicz

Yeah.

color little as a So more well.

of for process, the and $XXX,XXX $X almost Garvey million about synergies we quarter. of And far, talked so quotes out products, where the current $XXX,XXX revenue we've last that Dorner cross-trained got active recognize forces. sales there we So the we've did including

We we talked quarter that anticipating. continue the exponentially. gross what is David up wise, low to the Performance this XX% were both margins, just about EBITDA expect in ramp margins. going XX% to delivered businesses revenue,

So other that one project expecting. margins segment. below average was a be, that point actually we in or what margin on the the for And we kind would were that is track of recognized below

going taken actions address to that we've So forward.

Chris Howe

clear challenged does Okay. a still have Can still we XX% ROIC. here target How into happened does challenging second of QX. being question, clear, a is quarter-by-quarter picture timing -- duration be your follow-up double-digit half QX, a what into further we'll a environment the less a impact better put context some less any It's And helpful? going the more the bit clear. it adjusted there little get this have of a on but less comments the environment just looks or goal, EBITDA color in then that, we about how you basis, would

David Wilson

we're Sure. would quarter. probably as better by say No, to going quarter that's Chris, said, like fair get I and you visibility we it's progress

management that that of a this by have plan We goal end year. achieve the

We stabilize that self-help footing. need that to previously, that back of we'll enabling the timeframe effects on and business and and we are execute where the those but us out, to that we to gets plan, chain execute a if shutdowns is we're so don't we things really achieve the forth, we're and outcome plan not seeing to environment confident factors the it we and achieve outlined committed that's given that normal inflation business as higher impacts can control, the port making to sure macro we that of supply will executing disruptions, so And in control. an more China bit in this we playing a have,

goals during we that June. more the environment goal that when our of our nothing's point, So, we'll reaching but economic together relative pursuit beyond Investor in really get our to about for Day and talk that, changed,

Chris Howe

a is And completed the QX? implementation schedule Okay. production expected apologize but ERP if be you with already, the in to in that's I that to implementation mentioned Europe in facilitate it limited QX affecting more

David Wilson

all And prepared as in across XX is, more this transition our It as us expect. implementations the is, really impact expected. major now. in synergies enables Europe as to last drive The would performing enterprise. the live areas as working type and the on fact, we system of operational better is the said we I is performance block we're through across get go going last, elements. this my done remarks, forward. We've The building that We're

a And expect to be able this impact, to for go to and so we as drive forward. we us be better QX performance

Greg Rustowicz

factory Chris, most in the a efficiencies working. Yeah. at about systems this our We XX% live just week and learning perspective May complex the the factory it's We're And is this probably -- and system. our in went curve. largest shipping system, X from clearly really

this it's and haven't had this them not size. them. that’s, we've like done before, been None So of we of XX have of

reap just of it's you the down on what very what it's, to we're do very pain implemented, the then All the the enterprise. trying so benefits guess positive, an have system get but all process. to the And focused to part of achieve is you I road.

Chris Howe

you. Thank Okay.

Greg Rustowicz

Chris. Thanks,

Operator

from Greg Thank ahead. go Please is coming you. question next Palm of The Craig-Hallum.

Greg Palm

to taking a Good for revenue bit go just I is FX, Thanks normal is add be ERP think of if of morning. to sequentially, given back which normalize seasonality. even that still questions. the going suggests sort you given down the sort or revenue back guidance, don't quite Yeah. cadence I it to want the

mean strong. understand sounds expecting us because are you still gets just demand So it that like supply help exactly, overall worse, pretty chain I is

David Wilson

implementation a that and and Yeah. facing Demand combination Europe you forth. volume and can a when prior we those period quarter, you and as look the the acquisition QX. mid-single seasonality you the that X% this impact where and the impact as see in QX as bookings is obviously, head FX about we're from But at see we elements increase $X last in so a we're right. year headwinds organically sequential backlog were over this we adjusted see over encouraging represents Greg, our in have of so mentioned recovering that do didn't think then, facing digit increase about dynamics. into million that of pandemic. execute and of our first We And period the We're strong, very position from that because on in backlog, very we year or rates, quarter. That's typically, we can

And the But you look effect that not if of case. seasonal back a that was of see there for so than if you beyond that's you'll year, you'll look QX, pattern a business. see the that, that's that historic QX lower more a back is

Greg Rustowicz

XXXX, was the Yeah. about impact, but really to It's usually with in it [indiscernible] a hard slow. $X million, also we production $X of implementation, get pushed out million SAP

So customers chain. we had supply that we our fact quarter I of that that, about having But that so wouldn't disrupting fourth be million that hung about the talked was with the revenue had up said $XX impact.

would and the work order the pivot kind positive very large so we more and ship on have QX production inventory but, of and production made to of such other to right team revenue us or working say we is that the orders fact of push I allowed the think backlog out those number stall $XX orders facility. impact the I nimble, that a have decision. did and the hard million

Greg Palm

it. Got

been since of last on just that seasonality should And this couple subject, about we're given have years I about Okay. how that? the we normal just mean think anything year

David Wilson

Yeah.

of the a XX-XX half and the of year second you believe year or we of if back less more split. the kind go is with in first today, what XX-XX, half versus So history the of

of as X,XXX quarter increases. and the are just strongest and their company's of finished we -- quarter, season, they're new so companies fourth summer advance the construction now advance and price the buy historically, budgets in cetera., people the forward. et have approved in CapEx So (ph) that They buy quarter moving is seasonally entertainment

quarter their see say, manage weakest industrial inventory business reporting. always inventory for the quarter, days on our year-end the and shipping reductions a December side is as their Our less channel in does the there's just partners

XX-XX first or within is, of another. going so And half, be a second point half it's way to our one look

Greg Rustowicz

over QX up QX then and QX. QX strongest. down, are

Greg Palm

Perfect.

Thanks the Great. much so Okay. for help.

Greg Rustowicz

Greg. Thanks,

Operator

Please you. The of go coming from next Tanwanteng Thank Jon Securities. question is CJS ahead.

Jon Tanwanteng

the you assume if morning. expecting XX% I taking dollars, at profit was I to you I will if to to timeframe? Thank back not about point to dollar just you're get Good within talk same percentage your my but Investor target the this get questions. for in this question. wondering, more Day, the wanted same EBITDA the

Greg Rustowicz

Yeah.

the dollar essentially, from a talked and got of adding then percent roughly about around points back depreciation. RSG&A is we up of it So there we've X gross picked to way X.X get XX% a XX% sales a to perspective, we by margins, as

benefit when scale from of we're perspective, kind a this we billion RSG&A or scale so on And the million a rate. saw of $X $XXX quarter costs, in run

that is RSG&A Our level.

in supply seeing to front hard very working and get the need to all of pressures we're got get that chain, So inflationary plus to where we've get so. with to to that it $X Yeah. we're out the billion got of clearly RSG&A we to get to. do we've then And

and $XXX we we mean So, I plus this did or $XXX I fiscal million more. year, million think revenue clearly this quarter of need

Jon Tanwanteng

in so been QX pressures have the far or them that you've actually stronger demand Could Got again trends seasonality? order about or and Thank worse, you. as so end the prices, that’s talk gotten it. for the input seen also And supply far? you worse chain accounted moderate

David Wilson

our quarter-to-date with with record QX and down mentioned, we saw faster And near are then rates acquisition up Yeah. running less rates input. On the March basis, XX%. in I XX%, slightly orders up cycle and throughout orders a February X.X%, in order or have levels short we project progressed more orders of about The line as of QX. been north

order with less And line so or on quarter. fourth we’re the more in a net basis, relating rates to

that to. seeing watching our So the across as feel this we’re end customer my we're all that but really strong have, obviously to results a experience first our and and laser on execution has driving commitments we're execution quarter demand we're focused period markets getting good and in in that our closely, about the focused we the continued into meeting team that I that very improving on said prepared really remarks demand, of committed

Greg Rustowicz

question, on price our then, look bridge see sales $X so that you was material can And quarter, Jon, Yeah. and up in million. you if our margin bridge, inflation costs gross the was the price but net of at X.X,

seen inflation, $XX.X materials. million gas to think costs on that's costs was of to up, And prices the million with $XX million. annualize are congestion. in in before you're in is at seeing up, affecting could is think issues that are that better. costs, on million worse marine clearly you And shutdowns our that, top get up, material it ports $XX we've be go things. $X.X going are issues I China range trucking we and with there COVID So We There inflation gets for which raw

And fiscal are, what double of were so, the our they container for previous we’re start year. at logistics actually costs

So that's another factor in the equation.

So I question. think that answers your

Jon Tanwanteng

just And hear with or see incorrectly? It I does. I that great. before of still did that you margin Okay, all clarify, gross do to in you think expected then that said sequential to pickup a

Greg Rustowicz

we will we in want in we've on mean to announced single-digit margins in one we're think roughly mentioned predicted right, today. we what other we've pricing not And had just and where where of quarter, on then this are clearly, was no this improvement I got system, Yeah. more right see -- shocks nobody I we to improve have that make gross else high we would the going are We what and range it's are when the January, to going now. to as where be, last we call. is the call going matter a that

Jon Tanwanteng

guys. you, Thank Understood.

David Wilson

Jon. Thanks,

Operator

Steve ahead. you. question next Please from coming of Sidoti. Thank go The is Ferazani

Steve Ferazani

Greg. morning, Good David. morning, Good

-- of had higher higher material project? mentioned obviously way guidance. in impact came the to couple larger on times couple you any costs mentioned offer that one one or You much it given Can that the of project impact the either a you of and margins kind quantify revenue on revenue your and a than

Greg Rustowicz

Yeah.

margin just million under it $X perspective. was I think from a impact

basis So XX points.

Steve Ferazani

thinking the it, costs you related lot oriented, in how you the times, said you talked How that to but you are those and how before things right this how addressing normal more manage Clearly, on you it? are Dorner And and call and projects. about addressing Okay. are -- you're that? more Garvey challenging perhaps we've now the a than idea project about are think would you

David Wilson

Steve. Yeah. Fair question,

our done latest able the escalators team. project our conversations and is, in where shelf more reduced clearly so are We've change tied we're so quotations we've we're in in on the shorter and made with cycle what orders, they're price to indices, tight customers. to drive then getting execution quotations also they're So life and can changes negotiate we've this we pricing

And management, made McKinnon we're focusing program our as project office so resource Columbus System, our on management there Business well. advancing of adjustments some and we've

taken our you're relates I So case we've think this in in the that the and right, resulted it like systems an in the were this nature the that and specifically our outline we outcome think assessment communications, as with in way some we've particularly of in approach issues in in team a business the that not of kind this we this of in a and well particular corrective I only the but also understood, customers. is post-mortem but feel project, unique projects, action, manage processes to that dynamic we've where environment, the had very got

Greg Rustowicz

it be has really Yeah. issue. The going steel. aluminum fortunate inputs. piece either That stainless or of to created main there's two the is, It's

Steve Ferazani

know swaps. about Helpful. doing expected prepayments, Thank increasing you just using thinking what we are you given ask rising. environment? to It right capital give rate you're like liquidity question a interest rate are the million talk that are and $XXX how you. Can you're interest debt structure, I wanted now about interest you with on thinking rates how in some sounded

Greg Rustowicz

$XX we thing, Yeah, mean interest at our entered manage so think it think locked structure we're to was we've the to a is about rate so be liquidity, ample one think into our got going filed I it. things $XX I or understand this are with and repayment, estimating we're this going in debt we how of We interest we another million I to going quarter, there, evening approach risk, we're payments macro all M&A And but and still roughly our conservatively February do strategy, swap programmatic up annually. as is and right appropriately in the liquidity. XX% And of with XX we X.XX. we've be principal swap of have uncertainty terms cautious million, we why and that's XX-K and a where rate think of rate now capital

a So to a quarter. quarter, XX XX roughly XX

Steve Ferazani

like it, just And a It's to of but in to and of slowdown you that everyone's again, it seeing do right. and see backlog, end this, you've you're want we on markets? demand, of your waiting I bookings that. in ask terms sounds addressed very in then All saw seeing of signs any any last slowdown your in the and Thank some clear signs you kind it one, it you're your helpful. are for

David Wilson

conversion. I'd little conversation reference Steve a so Yeah. color make only -- project the comment might far a The that more is, quotation add to to

very of but high, encouraging, which it's at little So project the been it than a the up, or slower had is those on dialog lot orders a and project ago. quarters is cycle active quotation activity side two there's are a quarter it's converting

Steve Ferazani

an -- any a broad end-markets that or it at is there kind directed is answer? of of sort any Is

David Wilson

hey, we're and yeah, we're a Yeah. want look, activities project it talking a It's be what nine answer, six seeing, activity phasing a first $X that broad I it's months. seeing wanted million people kind as million might X they of over run but months, the project some just be saying, are of I over that release might to delivers the to about

Steve Ferazani

it. David. Great. I’ll Thanks, Appreciate Greg. Okay. leave. Thanks,

David Wilson

Steve. Thanks, Okay.

Operator

question JPMorgan. The is from Baumann go you. next coming ahead. of Please Pat Thank

Pat Baumann

question. taking Hey. Good morning. my for Thanks

wondering so if on sequential lot margin just what gross a I versus a the covered you just expectations. bit guess, freight I'm much the freight been to just could detail what bit like already, January related Just help more, maybe exactly little your more dynamics a escalated little impacted

this aspect not what but clear you just with why timing call I'm element question, response other that through way? you think referred I or of this timing is

Greg Rustowicz

Yeah.

we're higher I points board. prices seen has up, certain gross you the up to We've mean, I it that, about to sequentially you which basis Well, are across how $X the of clearly, $X So $X is freight, XXX say marine commercially really what would talking truckload air are gallon. what also translates pump, for we travel that and really freight costs it that close went moving margin, into significant costs. if parts and if gas the well is see we've gotten. million, a have at increases happened we costs seen, was all with and we freight need expensive tickets product air domestically. now in desperately We've seen there airline over,

quarter, year-over-year So what situation probably this happened a in all December this within over what in it increase. basically, the some out due the we timeframe going the is of changes, the is versus right. March, Ukraine, to that's experienced in Europe This and

David Wilson

Port disruptions Yeah. China. in

element actions. with pricing we're the own I to this accommodate from that's under it think where our making timing that it into as fast get structure element was so, and out to the and in the And sure was Pat our our play. to occurring changes realization as is comes timing those that this adjustments make ability

Pat Baumann

but million expectation, $XX materials, to inflation mentioned you of what million $XX is… I guess, And

David Wilson

that's year. Yes, for the whole

Pat Baumann

that Yeah, you've are any based think a the actions year expecting. in but pricing are you but perspective for taken? includes but I freight, what you from event, What don't expecting on

David Wilson

Yeah.

far digits where average. we is So should what we've high-single is taken so

doesn't having X. that got went right later pricing in said current into effect either or Now March pricing backlog second record because again in week we've our once all April the have that

we're we're to not And the the backlog, pricing. the extent, of working going so to current see down benefit

other this. so help lag is to this we're ways and recover for there So working to look

Pat Baumann

project you particular? Understood. market backlog could if slides, about the conveying that color was precision you that. on end timing. Just reference down to curious something then on What some give in And in mentioned

David Wilson

as project just at comments Yeah. longer and and that project earlier a frame. -- -- get lot are our customers There food exciting activity is to of really quotation very taking conversion to business were markets focused science engaged beverage, and the about closure some to I opportunities activity, life made on look project remember some on e-commerce the we time

nature just lumpiness business. So the the I of the think that's of

Pat Baumann

Understood.

Thanks. Okay.

David Wilson

Pat. Thanks,

Operator

Thank of you. Michael The question go Please coming next ahead. Wells Fargo. McGinn is from

Michael McGinn

for time. Thanks the

regarding have you are how with are you to similar that. was to in how the like that projects that going many and Just and that also many back charge that the large question How that? currently that associated project customers place maybe do or -- have then

David Wilson

Yeah.

is activity, that XX% and and we big why impact, you been a would a have really the XX% So business big It any about was such and this a size roughly X% $XX amount, big, in that was have approximated if this have order project. of think active of million to related build a relative project type right. to project business given margin that top have mean that's XX-XX in versus short business a large to projects have perspective. gross from would I number probably -- that cycle, quarter would split I business

scope able rising from and rapidly are the said, we the opportunity the complexity timing standpoint, nature the perspective, And the thereafter, of that recover able the of I many escalation input and with costs all. recover to from some in we like weren't aftermarket strategic opportunities associated very process so opportunities a backlog. all of that recovered follow-on to of have And in don't We weren't some, and we price. a

Michael McGinn

Great. food And precision for what guess conveyance, end of are processing? this terms more I question,. or then in bullish e-commerce you simple year on market

David Wilson

couple But which that over pandemic. rate by pursuing. say from I e-commerce Well, years of all would grew the the perspective the at the last a dynamics we're through encouraged we're given markets

to I couple explosive last the of there think over growth it's it as not but was as be the to attractive, going is going years. be

beverage food sciences. And and and so traction great life in we're seeing

to obviously experiences we're customer base further pursue. the our threads we're great and also addition in e-commerce, expanding In gives already which us to e-commerce in having

Michael McGinn

come sneak one just or Okay. Konecranes are competitively dynamic business their I more Maybe and of just in, usual? expecting their business as believe, if I one could anything to products consolidating into that out services you

David Wilson

away the changing cargo shifting in tech obviously the are gears wake they that think the from merger. I of or acquisition walk

particularly they've in that terms and in I their of going think adjustments. of historically demonstrated I we're concerned that's markets shift. a discipline lacked to about through the think, they're so strategic approach not lot don't

Greg Rustowicz

the with one The had Yeah. channel. competing They [indiscernible] more with business should I will that competing be directly they've say channel, our the private service much was is, and thing equipment really our us. more, now now combined array. visible will think being into with have a our that They which the I would but they sold help channel,

Michael McGinn

the appreciate I time. Great.

David Wilson

Thanks, Mike.

Operator

Thank go from Walt The Please of is coming Seaport. question ahead. next you. Liptak

Walt Liptak

morning, far, you're working so Good call quarter. of ask Thanks. capital. how Yeah. lot the first about so working I'll thinking one I about wonder components of a detail, everyone. Good capital in the Hi. some

end you some do year to capital build do to some these expect For inventory example, working and how of accounts? the you again, on need then,

Greg Rustowicz

Yeah.

So, year just the at ended as I think capital, about we working XX.X%.

There which end be the would we blips inventory way DSOs capital impact year. quarter turns, metrics We expect on have mean, the are range clearly where working some think that probably, going But the I XX% the to temporary I think XX%. in the versus be our is to to we're at way. we had the first about will right could of it sales along quarter DPOs. is lower and than fourth

David Wilson

Yeah.

and of to million demonstrated of I pandemic, $XX ramp moves an mid-teens revenue. we a lead growth flex mid in up below to year as the up addition we down the with back last we went XX% to into the experience through experiencing the the ramped of the make to ability were think we

to but period but blips, that's we year. year to level, We end there relatively that to period expect stable at Greg's be where this some be expect could point, to

Walt Liptak

Okay. All Great. Thank you. right.

Operator

follow-up a is go question Securities. Please next The Instructions] CJS coming Tanwanteng from Jon of [Operator ahead.

Jon Tanwanteng

color you're revenue. system ERP this that implementing Sorry, recover future wondering back? whole -- us bit that does the just if losing a further I little on more out the could little when you or Europe, stack, quarters a was you're of just Are in you to bit in a push planning give

David Wilson

expect impact just is we expect do efficient recover the more This to coming and quarter, and No, consume ship we year. dollars to backlog as in get of those in an this revenue. in out it that we the period

Greg Rustowicz

Yeah.

that it, not could knowing maybe ERP So bit, so orders the into canceled. another a had orders being the we about not you are little say are but canceled. implementation think being March did the We way and timeframe, QX shipments upon as that Jon, to benefited outsized accelerate us, revenue

Jon Tanwanteng

Understood. Thank you.

David Wilson

Thanks, Jon.

Operator

back Thank no over you. at would I We're this floor Wilson like to showing time, in to comments. additional turn queue the questions for Mr. closing

David Wilson

step progress income XX% Great. strategic transformative Donna. significant was in Thank a We the transformation. our represents of completed as change for adjusted XX% and a you, Fiscal Columbus in deliver EBITDA. for and operating two growth terrific year, XX% growth results revenue, and year executed ‘XX McKinnon to advance acquisitions growth including we in

execution improving the earlier stated of to we remain I this and improve and actions focused address demand. on our customers' laser executing experience. while performance customer increasing period our business We're As to uncertainty, further taking in

truly the we We’re business scalable, McKinnon profitable and for Columbus solutions mix in handling. material leader into evolve and motion intelligent a more as model more better, creating global for

I have am very improvement how has resilient, emphasize on a of McKinnon proud global been our of dynamic talented want They focused Finally, team what associates. and through results to challenging Columbus I and remained and period. agile

only is As McKinnon persevered. a result, Columbus not

time company. a better make and you in We are it emerging Columbus your interest day. Thank and stronger McKinnon. a your great increasing today and as We appreciate

Operator

thank your and for concludes event. participation. you today's This Ladies gentlemen,

enjoy time and You the may webcast this disconnect log-off the your day. your rest of and lines at

Columbus McKinnon (CMCO) 25 May 222022 Q4 Earnings call transcript