Columbus McKinnon Reports Operating Income Expanded 18% on 7% Increase in Sales in Third Quarter Fiscal 2013
Sales outside the U.S. increased 9.7%; U.S. sales up 5.4%
Margins expand on higher volume and pricing; Gross margin
increased 160 basis points to 28.6%
Operating income grew 34.7% to $14.2 million compared with prior
year adjusted operating income of $10.5 million, which excluded a
one-time gain; Operating margin reached 9.3%
Adjusted operating leverage 34.9% in the third quarter, 41.1%
operating leverage YTD
Net income grew 12.5% to $9.6 million, or $0.49 per diluted share
Generated $26.3 million in cash from operations in first nine
months of fiscal 2013; Cash on hand at quarter end was $111.9 million;
Net debt to net total capitalization was 17.6%
AMHERST, N.Y.--(BUSINESS WIRE)--
Columbus McKinnon Corporation (NASDAQ: CMCO), a leading designer,
manufacturer and marketer of material handling products, today announced
financial results for its fiscal 2013 third quarter, which ended
December 31, 2012.
Timothy T. Tevens, President and Chief Executive Officer, commented, “We
continue to have solid growth in emerging economies, specifically in
China, as our brand strength helps to drive demand. Investments in Asia
that require our equipment are also driving demand. U.S. order growth
was flat in the third quarter compared with the prior year due to the
uncertain economic climate that currently exists.”
Net sales for the third quarter of fiscal 2013 were $153.2million,
up $10.5 million, or7.3%, from the prior-year period. U.S.
sales, which comprised 54% of total sales, increased $4.3 million, or
5.4%, to $83.1 million. End user and channel partner demand, as well as
two additional shipping days, were the main drivers of higher U.S. sales
this quarter when compared with the prior year. Sales outside of the
U.S. were up $6.2 million, or 9.7%, to $70.2 million, reflecting
positive growth in emerging economies, the completion of large
engineered projects and the additional shipping days. Foreign currency
translation had a negative impact of $2.0 million, or 1.4%, on sales
during the quarter. Excluding the impact of foreign currency effects,
sales outside of the U.S. increased by 12.9%. Acquisitions and
divestitures had a negative impact of $2.6 million on sales when
compared with the prior-year period. Excluding the effects of foreign
currency translation and acquisitions and divestitures, revenue grew by
10.6% in the quarter.
The fluctuation in sales for the third quarter of fiscal 2013 compared
with fiscal 2012 is summarized as follows:
($ in millions)
$
Change
%
Change
Increased volume
6.4
4.6
%
Additional shipping days
4.9
3.4
%
Pricing
3.8
2.6
%
Acquisitions and divestitures (net)
(2.6
)
(1.9
)%
Foreign currency translation
(2.0
)
(1.4
)%
Total
$
10.5
7.3
%
Volume and pricing drive margin improvements
Gross profit increased to $43.8 million, or 28.6% of net sales, for the
fiscal 2013 third quarter from $38.6 million, or 27.0% of net sales, in
fiscal 2012’s third quarter. Improved gross profit was driven by volume
and mix of $2.6 million combined with improved pricing of $3.8 million,
which more than offset material cost inflation. Foreign currency
translation had a $0.6 million unfavorable impact on gross profit.
Selling expenses were $16.4 million, up 2.6%, or $0.4 million, from the
third quarter of fiscal 2012. Increased costs were related to the
Company’s expansion into South Africa, as well as Turkey, Morocco and
Dubai. As a percent of revenue, selling expenses were 10.7% compared
with 11.2% in the same period last year.
General and administrative (G&A) expenses were $12.7 million, or 8.3% of
net sales, in the third quarter of fiscal 2013,up 9.7% from the
previous fiscal year’s third quarter, when G&A was $11.6 million, or
8.1% of net sales. G&A costs were up in the third quarter of fiscal 2013
due to investments for growth in the Asia Pacific region. Also, the
prior-year period had a favorable pension adjustment of $0.6 million.
Operating income in the fiscal 2013 third quarter was up $2.2 million,
or 18.2%, to $14.2 million. Operating margin expanded 90 basis points to
9.3%. When adjusting the prior year’s third quarter operating income for
the gain realized on the sale of a closed facility, operating income
grew 34.7% in the fiscal 2013 third quarter. Operating leverage for the
fiscal 2013 third quarter was 34.9% when adjusted for the gain in the
prior year’s quarter.
The effective tax rate for the 2013 third quarter was 11.1% compared
with 16.4% in the third quarter of fiscal 2012. The effective tax rate
for fiscal 2013 is expected be in the range of 13% to 17%,
including the impact of the valuation allowance on deferred tax assets.
Tax rates for the Company are impacted by the mix of income or loss
among taxing jurisdictions, specifically U.S. versus foreign
jurisdictions and the impact of various state taxes within the U.S.
Net income grew 12.5% to $9.6 million, or $0.49 per diluted share, in
the fiscal 2013 third quarter.
Strong cash generation and significant financial flexibility
Cash provided by operations for the first nine months of fiscal 2013 was
$26.3 million, up $12.8 million over the prior-year period. Cash and
cash equivalents grew to $111.9 million at the end of fiscal 2013’s
third quarter from $89.5 million at March 31, 2012. Mr. Tevens noted,
“With our solid cash position and strong cash generation capability, we
are well positioned to execute our strategic growth plans and to focus
on targeted activities to utilize our excess cash.”
Working capital as a percentage of sales was 17.5% at the end of the
third quarter of fiscal 2013, unchanged from the third quarter of fiscal
2012, but improved from 19.4% at the end of the second quarter of fiscal
2013.
Capital expenditures for the first nine months of fiscal 2013 were $7.1
million compared with $10.5 million in the comparable prior-year period.
Approximately $0.7 million was associated with the implementation of a
new enterprise management system. The Company expects fiscal 2013
capital spending to be in the range of $12 million to $15 million.
Gross debt at the end of this fiscal year’s third quarter was $152.3
million. Debt, net of cash, at December 31, 2012 was $40.4 million, or
17.6% of net total capitalization, compared with $63.6 million, or 28.4%
of net total capitalization, at March 31, 2012. At December 31, 2012,
the Company had $11.5 million in outstanding letters of credit.
First Nine Months of Fiscal 2013 Review
Net sales for the first nine months of fiscal 2013 were $452.7 million,
up 4.7%, or $20.3 million, from the same period in the prior fiscal
year. U.S. sales, which drove the growth, were up $21.3 million, or
9.1%. Sales outside of the U.S. decreased by $0.9 million, or 0.5%, in
the first nine months of fiscal 2013, representing 44% of total sales.
Foreign currency translation had a $16.3 million negative impact on
sales in the first nine months of fiscal 2013. Net of foreign currency
translation, revenue outside of the U.S. grew 7.7%.
Gross profit increased 14.6% and gross profit margin expanded 250 basis
points to 28.7% in the first nine months of fiscal 2013. Driving margin
improvement were higher sales volumes, increased pricing, improved
productivity, and lower product liability costs. This was partially
offset by material inflation and foreign currency translation.
Selling expenses were $49.2 million, an increase of $1.7 million, or
3.6%, compared with the prior-year period. As a percent of sales,
selling expenses were 10.9% in the first nine months of fiscal 2013
compared with 11.0% in the prior-year period. G&A expenses increased
$5.5 million, or 16.2%. As a percent of sales, G&A expenses were 8.7% in
the current period, compared with 7.9% in the prior-year period.
Increased G&A in the first nine months of fiscal 2013 were due to
expenses associated with the new ERP system implementation, higher
employee benefit costs, investments in Asia Pacific and general
inflationary increases.
Operating income grew 26.5% to $39.9 million, while operating margin
expanded 150 basis points to 8.8% in the first nine months of fiscal
2013.
Net income for the nine-month period ended December 31, 2012 grew $8.3
million, or 46.2%, to $26.3 million. On a per diluted share basis,
earnings in the first nine months of fiscal 2013 grew 45.7% to $1.34
compared with $0.92 for the prior-year period.
Company expects growth to moderate
Backlog was $95.4 million at December 31, 2012 compared with $104.2
million at December 31, 2011, when adjusted for the divestiture of the
Gaffey crane business. This reduction reflects the shipment of several
large engineered orders in the quarter. Although the time to convert the
majority of backlog to sales typically averages from one day to a few
weeks, backlog can include project-type orders from customers that have
defined deliveries that may extend out 12 to 24 months. As of December
31, 2012, approximately $33.2 million of backlog, or 34.8%, was
scheduled for shipment beyond March 31, 2013.
Mr. Tevens noted, “We remain optimistic regarding Asia and Latin America
as those regions continue to grow despite global economic challenges. We
are expecting the recession that Europe is currently experiencing to
have a negative impact on sales in the near term and we are also seeing
slower growth in the U.S. It does appear, however, that we should see
some strengthening in those markets in the second half of 2013 barring
major economic or geopolitical issues. We continue to find opportunities
to expand our business as the sales operations that we have established
in South Africa, Turkey, Morocco and Dubai are proving successful and
our operations in Asia Pacific and Latin America continue to build.”
Sales to emerging markets, which were approximately 9.0% of total sales
in the first nine months of fiscal 2013, have grown 16.5% when compared
with the prior-year period.
Both U.S. and Eurozone capacity utilization are leading market
indicators for the Company. U.S. industrial capacity utilization was
78.1% in December 2012, up from 77.2% in December 2011, and improved
from 77.4% in September 2012. Eurozone capacity utilization was 76.8% in
the quarter ended December 31, 2012, a decrease from 79.7% during the
quarter ended December 31, 2011, as well as from 77.9% at the end of
September 2012. The European indicator reflects the modest recession
being experienced in the Eurozone, while the U.S. indicator demonstrates
slower economic growth. The Company’s sales tend to lag these indicators
by one to two quarters.
Teleconference/webcast
Columbus McKinnon will host a conference call and live webcast today at
10:00 a.m. Eastern Time, at which Timothy T. Tevens, President and Chief
Executive Officer, and Gregory P. Rustowicz, Vice President - Finance
and Chief Financial Officer, will review the Company’s financial results
and strategy. The review will be accompanied by a slide presentation,
which will be available on Columbus McKinnon’s website at http://www.cmworks.com/investors.
A question and answer session will follow the formal discussion.
Columbus McKinnon’s conference call can be accessed by calling
210-234-7695 and asking for the “Columbus McKinnon conference call”. The
webcast can be monitored on Columbus McKinnon’s website at http://www.cmworks.com/investors.
An audio recording of the call will be available two hours after its
completion through February 22, 2013 by dialing 203-369-0225.
Alternatively, an archived webcast of the call will be on Columbus
McKinnon’s web site at: http://www.cmworks.com/investors
until February 22, 2013. In addition, a transcript of the call will be
posted to the website once available.
About Columbus McKinnon
Columbus McKinnon is a leading worldwide designer, manufacturer and
marketer of material handling products, systems and services, which
efficiently and ergonomically move, lift, position and secure materials.
Key products include hoists, cranes, actuators and rigging tools. The
Company is focused on commercial and industrial applications that
require the safety and quality provided by its superior design and
engineering know-how. Comprehensive information on Columbus McKinnon is
available on its website at http://www.cmworks.com.
Safe Harbor Statement
This news release contains “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995. Such
statements include, but are not limited to, statements concerning future
revenue and earnings, involve known and unknown risks, uncertainties and
other factors that could cause the actual results of the Company to
differ materially from the results expressed or implied by such
statements, including general economic and business conditions,
conditions affecting the industries served by the Company and its
subsidiaries, conditions affecting the Company's customers and
suppliers, competitor responses to the Company's products and services,
the overall market acceptance of such products and services, the effect
of operating leverage, the pace of bookings relative to shipments, the
ability to expand into new markets and geographic regions, the success
in acquiring new business, the speed at which shipments improve, and
other factors disclosed in the Company's periodic reports filed with the
Securities and Exchange Commission. The Company assumes no obligation to
update the forward-looking information contained in this release.
Financial Tables follow.
COLUMBUS McKINNON CORPORATION
Condensed Consolidated Income Statements - UNAUDITED
(In thousands, except per share and percentage data)
Three Months Ended
December 31, 2012
December 31, 2011
Change
Net sales
$
153,225
$
142,750
7.3%
Cost of products sold
109,428
104,147
5.1%
Gross profit
43,797
38,603
13.5%
Gross profit margin
28.6
%
27.0
%
Selling expense
16,390
15,980
2.6%
General and administrative expense
12,725
11,605
9.7%
Restructuring charges
-
(1,467
)
-100.0%
Amortization
493
485
1.6%
Income from operations
14,189
12,000
18.2%
Operating margin
9.3
%
8.4
%
Interest and debt expense
3,413
3,590
-4.9%
Investment income
(354
)
(275
)
28.7%
Foreign currency exchange loss (gain)
293
(97
)
NM
Other (income) and expense, net
65
(1,399
)
NM
Income before
income tax expense
10,772
10,181
5.8%
Income tax expense
1,193
1,666
-28.4%
Income from continuing operations
9,579
8,515
12.5%
Income from discontinued operations -
net of tax
-
-
Net income
$
9,579
$
8,515
12.5%
Average basic shares outstanding
19,451
19,313
0.7%
Basic income per share:
Income from continuing operations
0.49
0.44
Income from discontinued operations
-
-
Net income
$
0.49
$
0.44
11.4%
Average diluted shares outstanding
19,697
19,488
1.1%
Diluted income per share:
Income from continuing operations
0.49
0.44
Income from discontinued operations
-
-
Net income
$
0.49
$
0.44
11.4%
COLUMBUS McKINNON CORPORATION
Condensed Consolidated Income Statements - UNAUDITED
(In thousands, except per share and percentage data)
Nine Months Ended
December 31, 2012
December 31, 2011
Change
Net sales
$
452,710
$
432,373
4.7
%
Cost of products sold
322,687
318,897
1.2
%
Gross profit
130,023
113,476
14.6
%
Gross profit margin
28.7
%
26.2
%
Selling expense
49,204
47,515
3.6
%
General and administrative expense
39,448
33,956
16.2
%
Restructuring charges
-
(1,037
)
-100.0
%
Amortization
1,481
1,515
-2.2
%
Income from operations
39,890
31,527
26.5
%
Operating margin
8.8
%
7.3
%
Interest and debt expense
10,418
10,651
-2.2
%
Investment income
(1,017
)
(824
)
23.4
%
Foreign currency exchange loss
147
121
21.5
%
Other income, net
(429
)
(1,880
)
-77.2
%
Income before
income tax expense
30,771
23,459
31.2
%
Income tax expense
4,504
5,898
-23.6
%
Income from continuing operations
26,267
17,561
49.6
%
Income from discontinued operations -
net of tax
-
409
-100.0
%
Net income
$
26,267
$
17,970
46.2
%
Average basic shares outstanding
19,406
19,256
0.8
%
Basic income per share:
Income from continuing operations
1.35
0.91
Income from discontinued operations
-
0.02
Net income
$
1.35
$
0.93
45.2
%
Average diluted shares outstanding
19,620
19,526
0.5
%
Diluted income per share:
Income from continuing operations
1.34
0.90
Income from discontinued operations
-
0.02
Net income
$
1.34
$
0.92
45.7
%
COLUMBUS McKINNON CORPORATION
Condensed Consolidated Balance Sheets - UNAUDITED
(In thousands)
December 31, 2012
March 31, 2012
ASSETS
Current assets:
Cash and cash equivalents
$
111,937
$
89,473
Trade accounts receivable
78,710
88,642
Inventories
101,531
108,055
Prepaid expenses and other
9,111
10,449
Total current assets
301,289
296,619
Net property, plant, and equipment
60,765
61,709
Goodwill
106,061
106,435
Other intangibles, net
14,281
15,791
Marketable securities
23,699
25,393
Deferred taxes on income
3,033
2,824
Other assets
6,614
6,636
Total assets
$
515,742
$
515,407
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Notes payable to banks
$
-
$
112
Trade accounts payable
30,310
40,991
Accrued liabilities
51,603
61,713
Current portion of long-term debt
1,108
1,093
Total current liabilities
83,021
103,909
Senior debt, less current portion
2,881
3,749
Subordinated debt
148,345
148,140
Other non-current liabilities
92,035
99,143
Total liabilities
326,282
354,941
Shareholders’ equity:
Common stock
194
193
Additional paid-in capital
191,945
189,260
Retained earnings
52,162
25,895
ESOP debt guarantee
(657
)
(975
)
Accumulated other comprehensive loss
(54,184
)
(53,907
)
Total shareholders’ equity
189,460
160,466
Total liabilities and shareholders’ equity
$
515,742
$
515,407
COLUMBUS McKINNON CORPORATION
Condensed Consolidated Statements of Cash Flows - UNAUDITED
(In thousands)
Nine Months Ended
December 31, 2012
December 31, 2011
Operating activities:
Net income
$
26,267
$
17,970
Adjustments to reconcile net income to net cash provided by
operating activities:
Gain from discontinued operations
-
(409
)
Depreciation and amortization
9,116
8,609
Deferred income taxes and related valuation allowance
153
378
Gain on sale of real estate/investments
(431
)
(1,909
)
Gain on re-measurement of investment
-
(850
)
Stock based compensation
2,474
2,246
Amortization of deferred financing costs
226
289
Changes in operating assets and liabilities:
Trade accounts receivable
9,330
(775
)
Inventories
4,129
(14,011
)
Prepaid expenses
(345
)
2,440
Other assets
415
332
Trade accounts payable
(8,835
)
927
Accrued and non-current liabilities
(16,212
)
(1,774
)
Net cash provided by operating activities
26,287
13,463
Investing activities:
Proceeds from sale of marketable securities
4,907
5,747
Purchases of marketable securities
(2,724
)
(4,503
)
Capital expenditures
(7,139
)
(10,464
)
Purchase of businesses, net of cash acquired
-
(3,356
)
Proceeds from sale of assets
2,357
1,971
Net cash used for investing activities from continuing operations
(2,599
)
(10,605
)
Net cash provided by investing activities from discontinued
operations
-
409
Net cash used for investing activities
(2,599
)
(10,196
)
Financing activities:
Proceeds from stock options exercised
232
1,733
Net payments under lines-of-credit
(52
)
(238
)
Repayment of debt
(592
)
(488
)
Payment of deferred financing costs
(684
)
-
Change in ESOP guarantee
318
324
Net cash (used for) provided by financing activities
(778
)
1,331
Effect of exchange rate changes on cash
(446
)
(2,704
)
Net change in cash and cash equivalents
22,464
1,894
Cash and cash equivalents at beginning of year
89,473
80,139
Cash and cash equivalents at end of period
$
111,937
$
82,033
COLUMBUS McKINNON CORPORATION
Additional Data - UNAUDITED
December 31, 2012
December 31, 2011
March 31, 2012
Backlog, as reported (in millions)
$95.4
$110.3
$114.2
Backlog, excluding divestiture (in millions)
$95.4
$104.2
$109.6
Trade accounts receivable
days sales outstanding
46.7
days
50.6
days
50.6
days
Inventory turns per year
(based on cost of products sold)
4.3
turns
4.0
turns
4.3
turns
Days' inventory
84.9
days
91.4
days
85.5
days
Trade accounts payable
days payables outstanding
25.2
days
33.2
days
32.3
days
Working capital as a % of sales
17.5
%
17.5
%
17.6
%
Debt to total capitalization percentage
44.6
%
46.6
%
48.8
%
Debt, net of cash, to net total capitalization
17.6
%
28.9
%
28.4
%
Shipping Days by Quarter
Q1
Q2
Q3
Q4
Total
FY 13
63
63
60
62
248
FY 12
63
64
58
65
250
Columbus McKinnon Corporation Gregory P. Rustowicz, 716-689-5442 Vice
President - Finance and Chief Financial Officer greg.rustowicz@cmworks.com or Investor
Relations: Kei Advisors LLC Deborah K. Pawlowski,
716-843-3908 dpawlowski@keiadvisors.com
Press Release $CMCO Columbus McKinnon Corporation
AMHERST, N.Y.--(BUSINESS WIRE)-- Columbus McKinnon Corporation (NASDAQ: CMCO), a leading designer, manufacturer and marketer of material handling products, today announced financial results for its fiscal 2013 third quarter, which ended December 31, 2012.
Timothy T. Tevens, President and Chief Executive Officer, commented, “We continue to have solid growth in emerging economies, specifically in China, as our brand strength helps to drive demand. Investments in Asia that require our equipment are also driving demand. U.S. order growth was flat in the third quarter compared with the prior year due to the uncertain economic climate that currently exists.”
Net sales for the third quarter of fiscal 2013 were $153.2 million, up $10.5 million, or 7.3%, from the prior-year period. U.S. sales, which comprised 54% of total sales, increased $4.3 million, or 5.4%, to $83.1 million. End user and channel partner demand, as well as two additional shipping days, were the main drivers of higher U.S. sales this quarter when compared with the prior year. Sales outside of the U.S. were up $6.2 million, or 9.7%, to $70.2 million, reflecting positive growth in emerging economies, the completion of large engineered projects and the additional shipping days. Foreign currency translation had a negative impact of $2.0 million, or 1.4%, on sales during the quarter. Excluding the impact of foreign currency effects, sales outside of the U.S. increased by 12.9%. Acquisitions and divestitures had a negative impact of $2.6 million on sales when compared with the prior-year period. Excluding the effects of foreign currency translation and acquisitions and divestitures, revenue grew by 10.6% in the quarter.
The fluctuation in sales for the third quarter of fiscal 2013 compared with fiscal 2012 is summarized as follows:
$
Change
%
Change
Volume and pricing drive margin improvements
Gross profit increased to $43.8 million, or 28.6% of net sales, for the fiscal 2013 third quarter from $38.6 million, or 27.0% of net sales, in fiscal 2012’s third quarter. Improved gross profit was driven by volume and mix of $2.6 million combined with improved pricing of $3.8 million, which more than offset material cost inflation. Foreign currency translation had a $0.6 million unfavorable impact on gross profit.
Selling expenses were $16.4 million, up 2.6%, or $0.4 million, from the third quarter of fiscal 2012. Increased costs were related to the Company’s expansion into South Africa, as well as Turkey, Morocco and Dubai. As a percent of revenue, selling expenses were 10.7% compared with 11.2% in the same period last year.
General and administrative (G&A) expenses were $12.7 million, or 8.3% of net sales, in the third quarter of fiscal 2013, up 9.7% from the previous fiscal year’s third quarter, when G&A was $11.6 million, or 8.1% of net sales. G&A costs were up in the third quarter of fiscal 2013 due to investments for growth in the Asia Pacific region. Also, the prior-year period had a favorable pension adjustment of $0.6 million.
Operating income in the fiscal 2013 third quarter was up $2.2 million, or 18.2%, to $14.2 million. Operating margin expanded 90 basis points to 9.3%. When adjusting the prior year’s third quarter operating income for the gain realized on the sale of a closed facility, operating income grew 34.7% in the fiscal 2013 third quarter. Operating leverage for the fiscal 2013 third quarter was 34.9% when adjusted for the gain in the prior year’s quarter.
The effective tax rate for the 2013 third quarter was 11.1% compared with 16.4% in the third quarter of fiscal 2012. The effective tax rate for fiscal 2013 is expected be in the range of 13% to 17%, including the impact of the valuation allowance on deferred tax assets. Tax rates for the Company are impacted by the mix of income or loss among taxing jurisdictions, specifically U.S. versus foreign jurisdictions and the impact of various state taxes within the U.S.
Net income grew 12.5% to $9.6 million, or $0.49 per diluted share, in the fiscal 2013 third quarter.
Strong cash generation and significant financial flexibility
Cash provided by operations for the first nine months of fiscal 2013 was $26.3 million, up $12.8 million over the prior-year period. Cash and cash equivalents grew to $111.9 million at the end of fiscal 2013’s third quarter from $89.5 million at March 31, 2012. Mr. Tevens noted, “With our solid cash position and strong cash generation capability, we are well positioned to execute our strategic growth plans and to focus on targeted activities to utilize our excess cash.”
Working capital as a percentage of sales was 17.5% at the end of the third quarter of fiscal 2013, unchanged from the third quarter of fiscal 2012, but improved from 19.4% at the end of the second quarter of fiscal 2013.
Capital expenditures for the first nine months of fiscal 2013 were $7.1 million compared with $10.5 million in the comparable prior-year period. Approximately $0.7 million was associated with the implementation of a new enterprise management system. The Company expects fiscal 2013 capital spending to be in the range of $12 million to $15 million.
Gross debt at the end of this fiscal year’s third quarter was $152.3 million. Debt, net of cash, at December 31, 2012 was $40.4 million, or 17.6% of net total capitalization, compared with $63.6 million, or 28.4% of net total capitalization, at March 31, 2012. At December 31, 2012, the Company had $11.5 million in outstanding letters of credit.
First Nine Months of Fiscal 2013 Review
Net sales for the first nine months of fiscal 2013 were $452.7 million, up 4.7%, or $20.3 million, from the same period in the prior fiscal year. U.S. sales, which drove the growth, were up $21.3 million, or 9.1%. Sales outside of the U.S. decreased by $0.9 million, or 0.5%, in the first nine months of fiscal 2013, representing 44% of total sales. Foreign currency translation had a $16.3 million negative impact on sales in the first nine months of fiscal 2013. Net of foreign currency translation, revenue outside of the U.S. grew 7.7%.
Gross profit increased 14.6% and gross profit margin expanded 250 basis points to 28.7% in the first nine months of fiscal 2013. Driving margin improvement were higher sales volumes, increased pricing, improved productivity, and lower product liability costs. This was partially offset by material inflation and foreign currency translation.
Selling expenses were $49.2 million, an increase of $1.7 million, or 3.6%, compared with the prior-year period. As a percent of sales, selling expenses were 10.9% in the first nine months of fiscal 2013 compared with 11.0% in the prior-year period. G&A expenses increased $5.5 million, or 16.2%. As a percent of sales, G&A expenses were 8.7% in the current period, compared with 7.9% in the prior-year period. Increased G&A in the first nine months of fiscal 2013 were due to expenses associated with the new ERP system implementation, higher employee benefit costs, investments in Asia Pacific and general inflationary increases.
Operating income grew 26.5% to $39.9 million, while operating margin expanded 150 basis points to 8.8% in the first nine months of fiscal 2013.
Net income for the nine-month period ended December 31, 2012 grew $8.3 million, or 46.2%, to $26.3 million. On a per diluted share basis, earnings in the first nine months of fiscal 2013 grew 45.7% to $1.34 compared with $0.92 for the prior-year period.
Company expects growth to moderate
Backlog was $95.4 million at December 31, 2012 compared with $104.2 million at December 31, 2011, when adjusted for the divestiture of the Gaffey crane business. This reduction reflects the shipment of several large engineered orders in the quarter. Although the time to convert the majority of backlog to sales typically averages from one day to a few weeks, backlog can include project-type orders from customers that have defined deliveries that may extend out 12 to 24 months. As of December 31, 2012, approximately $33.2 million of backlog, or 34.8%, was scheduled for shipment beyond March 31, 2013.
Mr. Tevens noted, “We remain optimistic regarding Asia and Latin America as those regions continue to grow despite global economic challenges. We are expecting the recession that Europe is currently experiencing to have a negative impact on sales in the near term and we are also seeing slower growth in the U.S. It does appear, however, that we should see some strengthening in those markets in the second half of 2013 barring major economic or geopolitical issues. We continue to find opportunities to expand our business as the sales operations that we have established in South Africa, Turkey, Morocco and Dubai are proving successful and our operations in Asia Pacific and Latin America continue to build.” Sales to emerging markets, which were approximately 9.0% of total sales in the first nine months of fiscal 2013, have grown 16.5% when compared with the prior-year period.
Both U.S. and Eurozone capacity utilization are leading market indicators for the Company. U.S. industrial capacity utilization was 78.1% in December 2012, up from 77.2% in December 2011, and improved from 77.4% in September 2012. Eurozone capacity utilization was 76.8% in the quarter ended December 31, 2012, a decrease from 79.7% during the quarter ended December 31, 2011, as well as from 77.9% at the end of September 2012. The European indicator reflects the modest recession being experienced in the Eurozone, while the U.S. indicator demonstrates slower economic growth. The Company’s sales tend to lag these indicators by one to two quarters.
Teleconference/webcast
Columbus McKinnon will host a conference call and live webcast today at 10:00 a.m. Eastern Time, at which Timothy T. Tevens, President and Chief Executive Officer, and Gregory P. Rustowicz, Vice President - Finance and Chief Financial Officer, will review the Company’s financial results and strategy. The review will be accompanied by a slide presentation, which will be available on Columbus McKinnon’s website at http://www.cmworks.com/investors. A question and answer session will follow the formal discussion.
Columbus McKinnon’s conference call can be accessed by calling 210-234-7695 and asking for the “Columbus McKinnon conference call”. The webcast can be monitored on Columbus McKinnon’s website at http://www.cmworks.com/investors. An audio recording of the call will be available two hours after its completion through February 22, 2013 by dialing 203-369-0225. Alternatively, an archived webcast of the call will be on Columbus McKinnon’s web site at: http://www.cmworks.com/investors until February 22, 2013. In addition, a transcript of the call will be posted to the website once available.
About Columbus McKinnon
Columbus McKinnon is a leading worldwide designer, manufacturer and marketer of material handling products, systems and services, which efficiently and ergonomically move, lift, position and secure materials. Key products include hoists, cranes, actuators and rigging tools. The Company is focused on commercial and industrial applications that require the safety and quality provided by its superior design and engineering know-how. Comprehensive information on Columbus McKinnon is available on its website at http://www.cmworks.com.
Safe Harbor Statement
This news release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements concerning future revenue and earnings, involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to differ materially from the results expressed or implied by such statements, including general economic and business conditions, conditions affecting the industries served by the Company and its subsidiaries, conditions affecting the Company's customers and suppliers, competitor responses to the Company's products and services, the overall market acceptance of such products and services, the effect of operating leverage, the pace of bookings relative to shipments, the ability to expand into new markets and geographic regions, the success in acquiring new business, the speed at which shipments improve, and other factors disclosed in the Company's periodic reports filed with the Securities and Exchange Commission. The Company assumes no obligation to update the forward-looking information contained in this release.
Financial Tables follow.
Three Months Ended
December 31, 2012
December 31, 2011
Change
Foreign currency exchange loss (gain)
Other (income) and expense, net
Nine Months Ended
December 31, 2012
December 31, 2011
Change
Foreign currency exchange loss
December 31, 2012
March 31, 2012
Nine Months Ended
December 31, 2012
December 31, 2011
December 31, 2012
December 31, 2011
March 31, 2012
Backlog, as reported (in millions)
$95.4
Backlog, excluding divestiture (in millions)
$95.4
$104.2
$109.6
Shipping Days by Quarter
Q1
Q2
Q3
Q4
Total
Columbus McKinnon Corporation
Gregory P. Rustowicz, 716-689-5442
Vice President - Finance and Chief Financial Officer
greg.rustowicz@cmworks.com
or
Investor Relations:
Kei Advisors LLC
Deborah K. Pawlowski, 716-843-3908
dpawlowski@keiadvisors.com
Source: Columbus McKinnon Corporation