Sidoti s Fourteenth Annual New York Emerging Growth Institutional Investor Forum March 23, 2010

Transcription

1 Sidoti s Fourteenth Annual New York Emerging Growth Institutional Investor Forum March 23, 2010 Timothy T. Tevens President & Chief Executive Officer Rakesh A. Jobanputra Treasurer 1

2 Safe Harbor Statement These slides contain (and the accompanying oral discussion will contain) forward-looking statements within the meaning of the Private Securities Litigation Reform Act of Such statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to differ materially from the results expressed or implied by such statements, including general economic and business conditions, conditions affecting the industries served by the Company and its subsidiaries, conditions affecting the Company s customers and suppliers, competitor responses to the Company s products and services, the overall market acceptance of such products and services, the integration of acquisitions and other factors disclosed in the Company s periodic reports filed with the Securities and Exchange Commission. Consequently such forward looking statements should be regarded as the Company s current plans, estimates and beliefs. The Company does not undertake and specifically declines any obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. 2 2

3 Columbus McKinnon Corporation Founded 1875 Publicly traded 1996 Ticker Market Capitalization Shares outstanding NASDAQ: CMCO $305.2 million 19.1 million 52 week high-low $ $8.16 Recent Price $15.98 Average Daily Volume (TTM) 140,326 Book Value per share $9.70 Institutional Ownership 91.4% Insider Ownership 55% 5.5% Fiscal Year End March 31 Market data as of 3/16/10; book value as of 12/31/09; ownership as of most recent filing 3 3

4 CMCO: A Compelling Investment Opportunity Profitable Growth Grow Core Business Grow in International Markets Increase Manufacturing Productivity Pursue Strategic Acquisitions and Alliances 4 4

5 Strong Brand Recognition 5 5

6 Company Overview Leading U.S. Market Share 68% of net U.S. sales into markets where CMCO has a #1 position Largest installed base of hoists in North America Approx. 75% of sales from products priced under $5K: MROP 6 6

7 Company Overview Most Comprehensive Product Offering One-stop shopping No SKU > 1% of sales Efficient Operations With Low Cost Structure Broad And Growing Global Presence In Sales and Operations Developed Markets Emerging Markets China, Latin America, Eastern Europe 7 7

8 Long-Term Growth Drivers Competitive Pressures to Maximize Productivity it & Efficiency i Quick & easy Loads lifted and placed efficiently Fewer people required Growing Global Focus on Worker Safety Promote safety and reduce risk of personal injury Reduction of workers compensation expenses 8 8

9 Broad Product Offering LTM December 31, 2009 Net Sales: $489.0 million Lift Tables, Shredders & Light Rail 3.0% Hoists 52.9% Actuators/ Rotary Unions 14.7% Cranes 9.7% Rigging & Lifting Tools (Chain & Attachments) 19.7% One-Stop shop for distributors and customers No single product SKU comprises more than 1% of sales 9 9

10 Extensive Distribution Channels LTM December 31, 2009 Net Sales: $489.0 million Hoist Repair Parts 5% OEM/Government 3% Other 2% 2% US General Line Distributors 29% Consumer Crane End Users 10% Pfaff International Direct 12% Specialty Distributors 7% International General Line Distributors 30% Extensive Distribution Channels 15,000 + distributors & end-user customers 10 10

11 Worldwide Operations 23 manufacturing facilities in 7 countries 32 stand-alone sales/service offices in 16 countries 9 stand-alone warehouse facilities in 4 countries 10-15% manufacturing from low cost operations Headquarters Manufacturing Facility Warehouse/Sales/Service Office 11 11

12 Diversified End User Markets Largest customer ~ 4% of sales General Manufacturing Marine Logging Agricultural Transportation Warehousing Logistics Crane Building Food Processing Mining Construction Entertainment Energy Power Generation, Distribution & Transmission 12 12

13 Leading U.S. Market Positions 68% of U.S. Sales are Products Where CMCO Is #1 Supplier U.S. MARKET SHARE MARKET KEY POSITION % OF U.S. SALES (6) COMPETITORS Powered Hoists 46% (1) #1 25% Kito Harrington, Konecranes, Manual Hoists & Trolleys 58% (1) #1 14% Demag Cranes Forged Attachments 38% (1) #1 7% Crosby, Cooper Industries (BT) Lifting & Sling Chains 71% (1) #1 4% Peerless Chain, Cooper Industries (Campbell Chain) Hoist Parts 60% (2) #1 8% Kito Harrington, Konecranes, Demag Cranes Mechanical Actuators 44% (3) #1 5% Joyce Dayton, Nook Tire Shredders 80% (4) #1 3% Mac-Saturn Jib Cranes 25% (5) #1 2% Gorbel, Spanco, Demag Cranes Total 68% (1) Estimates derived from industry association data. (2) Estimates based on hoist estimates derived from industry association data. (3) Estimates based on comparison of our sales to that of competitors sales and estimates of total market from trade associations. (4) Estimates based on the number of our tire shredders in use and their capacity and the total number of tires shredded as published by a trade association. (5) Estimates based on the number of bids won as a percent of the total projects for bids submitted and from estimates of our competitors positions. (6) As of December 31,

14 Columbus McKinnon VISION Become THE Material Handling Champion of the World Superior Customer Excellence Superior Customer Satisfaction Our Goal Operational Ex xcellence People Exce ellence New Products & Services New Markets, Ge eographies, and Distribution Channels Our Initiatives We value our corporate health We value each other and our diverse backgrounds We value innovation, quality and craftsmanship in all aspects of performance We value helping our customers succeed Our Values 14 14

15 Growth Strategy Grow Core Business New Products New North American Go-to-Market strategy Broaden Product Offering 15 15

16 Growth Strategy Grow International Markets Invest in growing industrial markets China Eastern Europe Latin America 16 16

17 Growth Strategy Increase Manufacturing Productivity LEAN Quality Global Supply Chain 17 17

18 Growth Strategy Acquisitions Strategic Value Creation International growth Synergistic Product expansion Small, bolt on 18 18

19 Sales Correlated to Industrial Capacity Utilization Percent Source: The Federal Reserve Board Dec-72 Dec-78 Dec-84 Dec-90 Dec-96 Dec-02 Dec-08 U.S. Capacity Utilization All Manufacturing December 1972 forward Feb. 2009: 67.0% Feb. 2010: 69.4% June 2009: 65.2% Eurozone Capacity Utilization All Manufacturing Q forward cent Perc Q4 2008: 74.6% Q4 2009: 72.0% Q2 2009: 69.6% Source: European Commission Mar 85 Mar 87 Mar 89 Mar 91 Mar 93 Mar 95 Mar 97 Mar 99 Mar 01 Mar 03 Mar 05 Mar 07 Mar 09 19

20 Macro Economic Growth Drivers Global Focus on Infrastructure Investments Highways Highways & Bridges High-speed Rail & Mass Transit School & Public Facilities Sewers & Public Utilities 20 20

21 FY 2009: Abrupt Change in Outlook ($ in millions) Recession Hits Global Economy and CMCO $471.7 $513.3 $593.8 $606.7 $ % 13.6% $ % 10.0% 8.4% 3.2% * Q TTM** Net Sales Operating Margin Note: Restated for Univeyor Discontinued Operations, divested July 2008 * 2009 margin excludes $107.0 million goodwill impairment charge ** Q TTM margin excludes $107.0 million goodwill impairment charge and $12.9 million restructuring charges 21 21

22 Restructuring for the Future $16 - $19 MM Estimated Annualized Savings Headcount Reduction Completed 7/09 Total Restructuring Cost $5.8 MM Est. FY10 Savings $5 - $6 MM Est. Annualized Savings $7 - $8 MM Facility Consolidation Completion: Chain Mfg. Facility 10/09 Forge Facility 12/09 Hoist Mfg. Facility 6/10 Restructuring Charges $8.5 - $10 MM Non-GAAP Restructuring Costs $ $7 MM Est. FY10 Savings $1.5 - $2 MM Est. Annualized Savings $9 - $11 MM 22 22

23 Strategic Focus: Product Innovation ($ in millions) Investment in Research & Development 23 23

24 Strategic Focus: International Market Penetration ($ in millions) Note: Restated for Univeyor Discontinued Operations, divested July

25 Expanding International Presence Driving Growth US 69% US 58% Rest of World 3% Europe 15% Europe 28% Latin America 3% Canada 10% International 31% Sales FY04: $416.0 million Note: Restated for Univeyor Discontinued Operations, divested July Rest of World 5% Latin America 5% Canada 4% International 42% Sales LTM Q3 FY10: $489.0 million 25 25

26 Emphasis on Productivity and Cash (in thousands) LEAN $164 Sales per Employee $220 $214 $204 $205 $221 Inventory Turnover (in thousands) LEAN FY01 FY06 FY07 FY08 FY09 Q310 FY01 FY06 FY07 FY08 FY09 Q310 30% 20% 10% Working Capital as a Percent of Sales 25.3% 17.1% 19.5% 18.2% 18.8% 18.5% FY01 FY06 FY07 FY08 FY09 Q Receivables Days Sales Outstanding FY01 FY06 FY07 FY08 FY09 Q

27 Managing Material Costs Cost of Sales LTM Q3 FY10 $ million Materials ~ 50% of COGS 50% Steel ~ 10% of COGS 40% Purchasing council manages major negotiations on pricing 10% Challenging suppliers and service providers Labor & Overhead Other Material Steel 27 27

28 Reduced Debt Levels Lowest Level Since CMCO Went Public in 1996 ($ in millions) Total debt & interest expense reduced by approximately two-thirds thirds since FY01 LEAN began Net debt $82.5 million FY 2001 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 Q3 10 Total debt Interest expense Note: Restated for Univeyor Discontinued Operations, divested July

29 Strong Balance Sheet - Financial Flexibility Ratios at December 31, 2009 Goal is Total Debt / Total Capitalization 30% 41.9% Net Debt / Total Capitalization 30.8% Total Debt / TTM EBIT* 8.6x Net Debt / TTM EBIT* 5.3x Credit Ratings Agency Rating Corporate S&P BB- Corporate Moody s Ba3 * Excludes $107.0 million goodwill impairment charge and $12.9 million restructuring charges 29 29

30 Financial Flexibility (in millions) Dec. 31, 2009 Cash $ 51.0 Senior Debt Revolving Credit Facility $ - $85 million commitment; plus $65 million accordion LIBOR plus bps, Due 2013** Other Senior Debt 8.7 Senior Subordinated Notes (B1/B) 8.875% interest, due Callable November 1, Total Debt Shareholders' Equity Total Capitalization $ ** Recently completed, effective 12/31/

31 FY 2010 Third Quarter Results Revenue (in thousands) $165,076 $606,708 (in thousands) Gross Profit $44,791 $26, % 22.5% $118,971 (in thousands) Operating Income $14, % $1,073* 0.9% (9.5)% * % excludes $3.6 million restructuring charges 31 31

32 Long-Term Goals Revenue: $1 billion 50/50 International / US Organic growth: US at GDP + International at 10%-11% Acquisitions: $100 - $200 million New products: 20% of sales Operating Margin: 12% - 14% Working Capital / Revenue: 15% Inventory turns: 6x 7x DSO: < 60 days Debt to Total Capitalization at 30%, flex to 50% with acquisitions Global resources in place to execute plan 32 32

33 FY10 Focus MANAGE Focus on liquidity and cash preservation Aggressively manage costs INVEST Enact strategic business model changes: reduce operating footprint in line with long-term strategy Continue to invest in strategic initiatives new products & markets 33 33

34 by Columbus McKinnon Corp. 34