On this page of StockholderLetter.com we present the 6/12/2023 shareholder letter from COLUMBUS MCKINNON CORP — ticker symbol CMCO. Reading current and past CMCO letters to shareholders can bring important insights into the investment thesis.
FISCAL YEAR 2023 ANNUAL REPORT
Columbus McKinnon (Nasdaq: CMCO) is a leading worldwide designer, manufacturer and marketer of intelligent motion solutions that move the world forward and improve lives by efficiently and ergonomically moving, lifting, positioning and securing materials. Headquartered in Buffalo, New York, our key products include hoists, crane components, precision conveyor systems, rigging tools, light rail workstations, and digital power and motion control systems. We are focused on commercial and industrial applications that require the safety, reliability and quality provided by its superior design and engineering know-how. FINANCIAL SUMMARY (in thousands, except per share, margin and ratio data) Fiscal Year Ended March 31, 2023 2022 2021 2020 2019 Income Statement Data Net sales Gross profit 936,240 342,099 Gross margin Operating margin 10.5 % 8.1 % 34.8 % 89,824 6.5 % 69,442 11.1 % 9,106 876,282 304,997 35.0 % 42,255 29,660 809,162 283,186 33.9 % 73,781 48,429 649,642 220,225 34.8 % 97,841 Net income 315,730 36.5 % Income from operations 906,555 7.9 % 59,672 42,577 Net income per diluted share 1.68 1.04 0.38 2.50 1.80 Non-GAAP adjusted net income per diluted share1 2.94 2.83 1.57 3.20 3.24 Balance Sheet Data Total assets $ 1,698,455 $ 1,685,707 $ 1,150,432 $ 1,093,272 $ 1,061,571 Total liabilities 864,658 912,904 620,283 629,687 630,412 Total debt 471,592 511,226 248,954 251,306 300,320 Total debt, net of cash 338,416 395,836 46,827 136,856 Total shareholders equity 833,797 772,803 530,149 463,585 229,227 431,159 Total debt/capitalization 36.1 % 39.8 % 32.0 % 35.2 % 41.1 % Total debt, net of cash/net total capitalization 28.9 % 33.9 % 8.1 % 22.8 % 34.7 % Other Data Operating cash flow Depreciation and amortization Capital expenditures Working capital (excl. cash and debt)/sales Days sales outstanding 2 Inventory turns Employees 2 83,636 41,947 2,3 (12,632) 48,881 41,924 (13,104) 17.3 % 15.5 % 54.3 53.0 3.6 3,392 98,890 28,153 (12,300) 9.3 % 106,795 29,126 (9,432) 79,499 32,675 (12,288) 14.5 % 17.2 % 51.5 59.4 55.5 3.9 4.4 3.9 3.7 3,224 2,653 2,997 3,128 1 The Company b elieves that non-GAAP adjusted net income per diluted share is a meaningful measure of financial performance in comparing period-to-period results. Please see the tab le at the b ack of this report for a reconciliation of GAAP net income per diluted share to non-GAAP adjusted net income per diluted share. This information should b e considered in addition to, b ut not as a sub stitute for, other measures of financial performance reported in accordance with GAAP. 2 FY2019 working capital/sales, days sales outstanding and inventory turns exclude the Tire Shredder b usiness, which was divested on Decemb er 28, 2018, and Crane Equipment & Service, Inc. and Stahlhammer Bommern Gmb H, each of which were divested on Feb ruary 28, 2019. 3 March 31, 2022, figure excludes the impact of the Decemb er 1, 2021, acquisition of Garvey Corporation.
FY 2023 SALES Latin America Canada Asia Pacific 4% Linear Motion 10% 5% 5% 25% Automation by Geographic Market Europe, Middle East & Africa 61% Conveying Solutions U.S. 14% by Product Category 16% 60% Lifting Solutions FY2023 Sales: $936.2 million Sales Cash Flow from Operations (in millions) $34.2 (in millions) $906.6 $876.3 Total Debt, Net of Cash $936.2 $106.8 $809.2 $98.9 $395.8 $83.6 $79.5 $649.6 (in millions) $338.4 $229.2 $48.9 $136.9 $842.1 '19 $46.8 '20 Sales '21 '22 Divestitures '23 '19 '20 '21 '22 '23 '19 '20 '21 '22 '23
A LETTER FROM THE PRESIDENT AND CEO DEAR SHAREHOLDERS, We finished fiscal 2023 on a strong note marked by several new records including: Sales of $936.2 million Gross margin of 36.5%, and Operating income of $97.8 million For the year, net income was $1.68 per diluted share. On a non-GAAP basis, adjusted earnings per diluted share 1 grew 4% to $2.94 for another new record. These results highlight additional proof points that we are progressing steadily toward our stated financial objectives of $1.5 billion in revenue with 21% EBITDA margins in fiscal 2027. Our collective achievements over this past year emphasize the effort and collaboration of our team as we execute to improve our customer s experience, increase productivity, and advance our strategy. TRANSFORMATION STRATEGY: BUILDING A SCALABLE, PROFITABLE, GROWTH ENTERPRISE In fiscal 2023, we grew revenue by 3% or 7% on a constant currency basis1 and, over 2 years, we have grown revenue by $286.6 million, or 44%, including $167.0 million of acquired revenue. We have clearly evolved beyond the blueprint of our strategy and are firmly into its execution, enabling an efficient and scalable enterprise that delivers top-tier profitable growth. We are executing our growth initiatives and unlocking our earnings power by driving productivity, reducing overhead costs and leveraging 80/20 to simplify our business, its processes, our organization and product lines. Concurrently, we are engaging externally to ensure that we remain market-led and customer-centric as we deliver top-tier execution and elevate our competitive advantage. Over the past year, we streamlined our organization within each region. In addition to unlocking approximately $8 million in annualized savings, this realignment further integrated our operations, and we expect will lead to an improved CMCO customer experience. Our complete offering of automation, precision conveyance, lifting and linear motions solutions is now more broadly available within our Americas (North, Central and South America), EMEA (Europe, Middle East and Africa) and APAC (Asia Pacific) regions. END-TO-END DIGITAL ENABLEMENT Critical to our transformation strategy are our end-to-end digital enablement initiatives. The tools and approaches we are implementing unlock potential, improve customer experience, enable growth, increase productivity and enhance returns. We are streamlining processes, applying technology, expanding analytics and enabling scale and productivity. We believe that by augmenting the capability and use of digital enablement tools, we can make it easier for our customers to do business with us, capture greater intelligence, better identify opportunities, enhance communication, increase customer engagement and improve overall service levels. We are attacking this throughout our business processes including everything from lead generation to our enterprise operating systems and all the way through to our points of delivery. EXECUTING TO PLAN During the year, we addressed several complex, global challenges consistent with those facing all manufacturers around the world. Inflation was rampant, interest rates reached their highest levels in 1 Adjusted earnings per diluted share and revenue on a constant currency basis are non-GAAP measures which the Company believes are useful in evaluating performance. See the reconciliation of GAAP measures to non-GAAP measures in the back of this Annual Report.
15 years, supply chains remained disruptive and the labor force was in short supply. We overcame these challenges and, despite the hyper-inflationary environment, delivered price improvement of 5.2%. Our focus throughout the year was on improving our customers experience. Given ongoing supply chain constraints, lead-times remained extended throughout much of the year and we were challenged to provide accurate and timely information while keeping our customers informed. In response, we elevated efforts to improve our responsiveness utilizing net promoter score (NPS) survey feedback and analysis. We heard the voice of our customers and prioritized key initiatives, increased inventory where appropriate, deployed enabling technologies and instituted a more connected and informed call center. We are making meaningful progress in these areas and will continue striving for greater improvements. Critical to our strategy and margin expansion efforts is the 80/20 Process. Within this process, productline simplification has been a focus area for Columbus McKinnon over the past couple of years. This demands a careful balance of customer and market requirements against the backdrop of a highly fragmented and complex portfolio of lifting products that evolved over a long history of acquiring products and brands with limited rationalization. We are simplifying this portfolio and investing in the best products to address targeted applications and enable profitable growth in attractive markets. We have reduced overall SKU counts in these areas by more than 50% to date and our most meaningful improvement opportunities still lie ahead. EXPANDING PRECISION CONVEYANCE PLATFORM We closed on the acquisition of montratec GmbH on May 31, 2023. This acquisition brings asynchronous intelligent automation and monorail transport systems that further strengthen our precision conveyance and automation offerings. A leading automation solutions company that designs and develops intelligent transport systems for interlinking industrial production and logistics processes, montratec provides modular, intelligent monorail transport systems for the electric vehicle (EV), semiconductor, electronics, life sciences, aerospace and other industries. This acquisition advances our strategy to expand our presence in attractive markets with strong secular tailwinds and opens the door for greater scale for our precision conveyance solutions in Europe. In line with our acquisition strategy, we expect montratec s growth and margin profile to enhance our earnings power and advance the transformation of Columbus McKinnon as a leading intelligent motion solutions provider for material handling. ON TRACK TO DELIVER As we look to the year ahead, we are encouraged by our overall opportunity landscape despite an uncertain macroeconomic backdrop. We remain focused on executing to plan while earning greater market share, identifying new opportunities for profitable growth and investing in innovation. Looking out through our strategic planning horizon, we expect to make steady and measurable progress toward our strategic plan objectives over the next several years as we unlock our potential and transform Columbus McKinnon into a top-tier, intelligent motion solutions enterprise. We hope you share in our excitement about our future. Sincerely, David J. Wilson President and CEO June 5, 2023
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CMCO 6/12/2023 Shareholder/Stockholder Letter Transcript:

FISCAL YEAR 2023
ANNUAL REPORT

Columbus McKinnon (Nasdaq: CMCO) is a leading worldwide designer, manufacturer and marketer of intelligent
motion solutions that move the world forward and improve lives by efficiently and ergonomically moving, lifting,
positioning and securing materials.
Headquartered in Buffalo, New York, our key products include hoists, crane components, precision conveyor
systems, rigging tools, light rail workstations, and digital power and motion control systems. We are focused on
commercial and industrial applications that require the safety, reliability and quality provided by its superior design
and engineering know-how.
FINANCIAL SUMMARY
(in thousands, except per share, margin and ratio data)
Fiscal Year Ended March 31,
2023
2022
2021
2020
2019
Income Statement Data
Net sales

Gross profit
936,240

342,099
Gross margin
Operating margin
10.5 %

8.1 %

34.8 %
89,824
6.5 %
69,442
11.1 %
9,106
876,282
304,997
35.0 %
42,255
29,660
809,162
283,186
33.9 %
73,781
48,429
649,642
220,225
34.8 %
97,841
Net income

315,730
36.5 %
Income from operations
906,555
7.9 %
59,672
42,577
Net income per diluted share

1.68

1.04

0.38

2.50

1.80
Non-GAAP adjusted net income per diluted share1

2.94

2.83

1.57

3.20

3.24
Balance Sheet Data
Total assets
$ 1,698,455
$ 1,685,707
$ 1,150,432
$ 1,093,272
$ 1,061,571
Total liabilities
864,658
912,904
620,283
629,687
630,412
Total debt
471,592
511,226
248,954
251,306
300,320
Total debt, net of cash
338,416
395,836
46,827
136,856
Total shareholders    equity

833,797

772,803

530,149

463,585
229,227

431,159
Total debt/capitalization
36.1 %
39.8 %
32.0 %
35.2 %
41.1 %
Total debt, net of cash/net total capitalization
28.9 %
33.9 %
8.1 %
22.8 %
34.7 %
Other Data
Operating cash flow

Depreciation and amortization
Capital expenditures
Working capital (excl. cash and debt)/sales
Days sales outstanding 2
Inventory turns
Employees
2
83,636

41,947
2,3
(12,632)
48,881

41,924

(13,104)
17.3 %
15.5 %
54.3
53.0
3.6
3,392
98,890

28,153

(12,300)
9.3 %
106,795

29,126

(9,432)
79,499
32,675

(12,288)
14.5 %
17.2 %
51.5
59.4
55.5
3.9
4.4
3.9
3.7
3,224
2,653
2,997
3,128
1
The Company b elieves that non-GAAP adjusted net income per diluted share is a meaningful measure of financial performance in comparing period-to-period results. Please see
the tab le at the b ack of this report for a reconciliation of GAAP net income per diluted share to non-GAAP adjusted net income per diluted share. This information should b e considered
in addition to, b ut not as a sub stitute for, other measures of financial performance reported in accordance with GAAP.
2
FY2019 working capital/sales, days sales outstanding and inventory turns exclude the Tire Shredder b usiness, which was divested on Decemb er 28, 2018, and Crane Equipment &
Service, Inc. and Stahlhammer Bommern Gmb H, each of which were divested on Feb ruary 28, 2019.
3
March 31, 2022, figure excludes the impact of the Decemb er 1, 2021, acquisition of Garvey Corporation.

FY 2023 SALES
Latin America
Canada
Asia Pacific
4%
Linear Motion
10%
5%
5%
25%
Automation
by
Geographic
Market
Europe,
Middle East
& Africa
61%
Conveying
Solutions
U.S.
14%
by
Product
Category
16%
60%
Lifting
Solutions
FY2023 Sales: $936.2 million
Sales
Cash Flow
from Operations
(in millions)
$34.2
(in millions)
$906.6
$876.3
Total Debt,
Net of Cash
$936.2
$106.8
$809.2
$98.9
$395.8
$83.6
$79.5
$649.6
(in millions)
$338.4
$229.2
$48.9
$136.9
$842.1
'19
$46.8
'20
Sales
'21
'22
Divestitures
'23
'19
'20
'21
'22
'23
'19
'20
'21
'22
'23

A LETTER FROM THE PRESIDENT AND CEO
DEAR SHAREHOLDERS,
We finished fiscal 2023 on a strong note marked by several new
records including:

Sales of $936.2 million

Gross margin of 36.5%, and

Operating income of $97.8 million
For the year, net income was $1.68 per diluted share. On a non-GAAP
basis, adjusted earnings per diluted share 1 grew 4% to $2.94 for
another new record.
These results highlight additional proof points that we are progressing steadily toward our stated financial
objectives of $1.5 billion in revenue with 21% EBITDA margins in fiscal 2027. Our collective
achievements over this past year emphasize the effort and collaboration of our team as we execute to
improve our customer   s experience, increase productivity, and advance our strategy.
TRANSFORMATION STRATEGY: BUILDING A SCALABLE, PROFITABLE, GROWTH ENTERPRISE
In fiscal 2023, we grew revenue by 3% or 7% on a constant currency basis1 and, over 2 years, we have
grown revenue by $286.6 million, or 44%, including $167.0 million of acquired revenue. We have clearly
evolved beyond    the blueprint    of our strategy and are firmly into its execution, enabling an efficient and
scalable enterprise that delivers top-tier profitable growth. We are executing our growth initiatives and
unlocking our earnings power by driving productivity, reducing overhead costs and leveraging 80/20 to
simplify our business, its processes, our organization and product lines. Concurrently, we are engaging
externally to ensure that we remain market-led and customer-centric as we deliver top-tier execution and
elevate our competitive advantage.
Over the past year, we streamlined our organization within each region. In addition to unlocking
approximately $8 million in annualized savings, this realignment further integrated our operations, and we
expect will lead to an improved CMCO customer experience. Our complete offering of automation,
precision conveyance, lifting and linear motions solutions is now more broadly available within our
Americas (North, Central and South America), EMEA (Europe, Middle East and Africa) and APAC (Asia
Pacific) regions.
END-TO-END DIGITAL ENABLEMENT
Critical to our transformation strategy are our end-to-end digital enablement initiatives. The tools and
approaches we are implementing unlock potential, improve customer experience, enable growth,
increase productivity and enhance returns. We are streamlining processes, applying technology,
expanding analytics and enabling scale and productivity. We believe that by augmenting the capability
and use of digital enablement tools, we can make it easier for our customers to do business with us,
capture greater intelligence, better identify opportunities, enhance communication, increase customer
engagement and improve overall service levels.
We are attacking this throughout our business processes including everything from lead generation to our
enterprise operating systems and all the way through to our points of delivery.
EXECUTING TO PLAN
During the year, we addressed several complex, global challenges consistent with those facing all
manufacturers around the world. Inflation was rampant, interest rates reached their highest levels in
1
Adjusted earnings per diluted share and revenue on a constant currency basis are non-GAAP measures which the Company
believes are useful in evaluating performance. See the reconciliation of GAAP measures to non-GAAP measures in the back of this
Annual Report.

15 years, supply chains remained disruptive and the labor force was in short supply. We overcame these
challenges and, despite the hyper-inflationary environment, delivered price improvement of 5.2%.
Our focus throughout the year was on improving our customers    experience. Given ongoing supply chain
constraints, lead-times remained extended throughout much of the year and we were challenged to
provide accurate and timely information while keeping our customers informed. In response, we elevated
efforts to improve our responsiveness utilizing net promoter score (NPS) survey feedback and analysis.
We heard the voice of our customers and prioritized key initiatives, increased inventory where
appropriate, deployed enabling technologies and instituted a more connected and informed call center.
We are making meaningful progress in these areas and will continue striving for greater improvements.
Critical to our strategy and margin expansion efforts is the 80/20 Process. Within this process, productline simplification has been a focus area for Columbus McKinnon over the past couple of years. This
demands a careful balance of customer and market requirements against the backdrop of a highly
fragmented and complex portfolio of lifting products that evolved over a long history of acquiring products
and brands with limited rationalization. We are simplifying this portfolio and investing in the best products
to address targeted applications and enable profitable growth in attractive markets. We have reduced
overall SKU counts in these areas by more than 50% to date and our most meaningful improvement
opportunities still lie ahead.
EXPANDING PRECISION CONVEYANCE PLATFORM
We closed on the acquisition of montratec   GmbH on May 31, 2023. This acquisition brings
asynchronous intelligent automation and monorail transport systems that further strengthen our precision
conveyance and automation offerings. A leading automation solutions company that designs and
develops intelligent transport systems for interlinking industrial production and logistics processes,
montratec provides modular, intelligent monorail transport systems for the electric vehicle (EV),
semiconductor, electronics, life sciences, aerospace and other industries. This acquisition advances our
strategy to expand our presence in attractive markets with strong secular tailwinds and opens the door for
greater scale for our precision conveyance solutions in Europe. In line with our acquisition strategy, we
expect montratec   s growth and margin profile to enhance our earnings power and advance the
transformation of Columbus McKinnon as a leading intelligent motion solutions provider for material
handling.
ON TRACK TO DELIVER
As we look to the year ahead, we are encouraged by our overall opportunity landscape despite an
uncertain macroeconomic backdrop. We remain focused on executing to plan while earning greater
market share, identifying new opportunities for profitable growth and investing in innovation.
Looking out through our strategic planning horizon, we expect to make steady and measurable progress
toward our strategic plan objectives over the next several years as we unlock our potential and transform
Columbus McKinnon into a top-tier, intelligent motion solutions enterprise.
We hope you share in our excitement about our future.
Sincerely,
David J. Wilson
President and CEO
June 5, 2023


shareholder letter icon 6/12/2023 Letter Continued (Full PDF)
 

CMCO Stockholder/Shareholder Letter (COLUMBUS MCKINNON CORP) 6/12/2023 | www.StockholderLetter.com
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