© 2015 Columbus McKinnon Corporation. All Rights Reserved. Confidential and Proprietary.
2015 Investor and Analyst Day
140 Years Strong
July 7, 2015
2
© 2015 Columbus McKinnon Corporation
These slides contain (and the accompanying oral discussion will contain) “forward-looking
statements” within the meaning of the Private Securities Litigation Reform Act of 1995. 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.
Safe Harbor Statement
© 2015 Columbus McKinnon Corporation. All Rights Reserved. Confidential and Proprietary.
2015 Investor and Analyst Day
140 Years Strong
July 7, 2015
Timothy T. Tevens President and Chief Executive Officer
4
© 2015 Columbus McKinnon Corporation
Market Capitalization $501.7 million Annual Dividend $0.16
Recent Price $25.00 Dividend Yield 0.6%
52 Week High-Low $29.69 - $20.16 Institutional Ownership 93.3%
Shares Outstanding 20.1 million Insider Ownership 3.5%
Average Daily Volume (3 mos.)
48,918 Employee Count (approx.) 2,750
Book Value per Share $13.39 Fiscal Year End March 31
Market data as of 6/30/15 (Source: Bloomberg); shares outstanding as of 5/26/15; book value per share, employee count and institutional ownership as of
3/31/15; insider ownership as of most recent filing
Founded: 1875 IPO: 1996 NASDAQ: CMCO
Columbus McKinnon Corporation
LIFT SECURE
Easily and Safely
5
© 2015 Columbus McKinnon Corporation
Op
era
tio
na
l E
xc
ell
en
ce
Pe
op
le E
xc
ell
en
ce
Ne
w P
rod
uc
ts &
Se
rvic
es
Ne
w M
ark
ets
, G
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ies
an
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istr
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ha
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els
Superior Customer Satisfaction
Helping our customers succeed
Innovation, quality, safety and continuous improvement in all aspects of performance
Our people and our diverse backgrounds
Our
Goal
Our
Initiatives
Our
Values
Our
Mission
“To be the global leader in helping customers lift,
position and secure materials easily and safely.”
A healthy company with the highest integrity which values all stakeholders
140 Years Strong
6
© 2015 Columbus McKinnon Corporation
Customer Intimacy
Know the customer
Operational Excellence
Customer Intimacy
Strong global brands
Broad product offering
7
© 2015 Columbus McKinnon Corporation
Superior Customer Satisfaction
Geographic Market
Expansion
Acquisitions and Strategic Alliances
Global Product Development and Key Vertical Markets
Operational Excellence
Grow
Profitably
Strategic Imperatives
8
© 2015 Columbus McKinnon Corporation
Leverage Existing Footprint
APAC Latin America EMEA
From strength in
China
From strength in
Mexico and Brazil
From strength in
Europe and S. Africa
9
© 2015 Columbus McKinnon Corporation
Invest in Product Development
Voice of Customer
New Technologies
Revised Product
Development Process
Market-driven New Products
- Tied to customer intimacy
- Increased cadence
of new products
10
© 2015 Columbus McKinnon Corporation
Achieve World Class Performance
Customer
People Operations
Continuous Improvement
11
© 2015 Columbus McKinnon Corporation
Operational Excellence
Objectives FY14 Actual FY15 Actual World Class
Customer Satisfaction - Total 5.1 3.5 2.5
Internal Defect Rate 1.02% 0.85% 0.75%
Inventory Turns 4.26 4.3 6.0
On-time Deliveries 88.0% 90.2% 98.0%
Warranty Costs 0.34% 0.33% 0.35% - 0.30%
Productivity 11.2% 31% +10% - +15%
Safety RW/LT 1.88 1.52 0.50
Continuous Improvement
12
© 2015 Columbus McKinnon Corporation
Positive Culture
Safety focus
Productivity
Great Place to Work
People Development
Succession planning
Training and development programs
• Global and regional leadership development
• Career path planning
Develop Our Culture and People
Americas
EMEA
APAC
13
© 2015 Columbus McKinnon Corporation
Americas
APAC EMEA
Global Support
Product Development and Vertical
Markets
Acquisitions
Business Systems
Global Sourcing
CM Lean Business System
14
© 2015 Columbus McKinnon Corporation
70
75
80
85
90
95
100
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
% On-Time Deliveries
3
4
5
6
7
8
9
10
11
12
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
Customer Complaints/1000 Lines
0.80%
1.00%
1.20%
1.40%
1.60%
1.80%
2.00%
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
Internal Defect Rate
Many Strategic Accomplishments
Global vertical market roll-out
Completed value added acquisitions
• STB, Unified Industries
I. Profitable Revenue Growth
II. Global Organization
III. Operational Excellence
Enhanced China operations capability
• Completed Hangzhou expansion
• Allows for product localization
Continued positive operational performance
New product development leadership
SAP installation 26% complete
15
© 2015 Columbus McKinnon Corporation
Key Takeaways
Ability to drive growth independent of the business cycle
Global reach of our markets
Extensive breadth of our products and services
Future expectations:
Growth, margin expansion and cash generation
© 2015 Columbus McKinnon Corporation. All Rights Reserved. Confidential and Proprietary.
Global Product Development
Jeffrey S. Armfield
Executive Director,
Global Product Strategy and Development
17
© 2015 Columbus McKinnon Corporation
3
Productivity, Safety & Quality Wins
Technical
Performance
Serviceability
Global
Compliance
Ergonomics
Automation
Readiness
Lighter, Smaller
Products
18
© 2015 Columbus McKinnon Corporation
3
Disciplined Approach
Market
Needs
Market
Feedback
Product
Planning
Product
Development
Cross-Functional, Measurable, Repeatable
Revenue
and
Profit
Product
Launch
19
© 2015 Columbus McKinnon Corporation
3
Emphasis on People and Process
Market
Needs
Market
Feedback
Product
Planning
Product
Development
Strategic Product
Management
Voice of Customer and
Watch the Work
Knowledge Based
Engineering Metrics
Market Performance
Metrics
Speed to Market
20
© 2015 Columbus McKinnon Corporation
Successful Launch: 2-Ton Single Reeve Lodestar
Smaller hoist
Faster lift speed
Onsite observation
Extensive testing
Feb. 2015 launch
well received
Market Needs
Market
Feedback
Product
Planning
Product
Development
21
© 2015 Columbus McKinnon Corporation
Improvements Address Market Needs
Higher speed
Quieter and lower power consumption
Improved safety; unique clutch positioning
Improved serviceability; easier access to
components
Longer life
Enhanced gear box and technology
Heavy duty motors
Lifetime warranty
Targets Industrial & Entertainment Markets
22
© 2015 Columbus McKinnon Corporation
Successful Launch: Universal Trolley System
Universal adaptability
Range of motion
options
Consolidate
multiple systems
Extensive testing
May 2015 launch
Market Needs
Market
Feedback
Product
Planning
Product
Development
23
© 2015 Columbus McKinnon Corporation
Innovations Address Market Needs
Universal design fits most hoists & beams
Modular design
Manual, geared, powered
One to three tons
Various height applications
Improves minimum radius curve
Various wheel diameters
Lower cost / higher performance
Long service life
Low maintenance; permanently lubricated
ball bearings
Targets Industrial Markets
24
© 2015 Columbus McKinnon Corporation
Future focus areas: Explosion proof, variable speed, automation, remote access
Leveraging deep application/engineering knowledge
Targeting geographies
Ethnography: Watch the work
24
What’s Ahead
© 2015 Columbus McKinnon Corporation. All Rights Reserved. Confidential and Proprietary.
Create Demand:
End User Focused
Gene P. Buer
Vice President,
Global Services and Vertical Markets
26
© 2015 Columbus McKinnon Corporation
Create Demand
Vertical Markets
Deep industry and customer knowledge
Create end-user pull – build demand for products and systems
Channel utilization – connecting high value-add channel partners to users
Developing application-specific products and systems
Global Services
Turnkey systems and asset management services
Premium customers
Total Cost of Ownership (TCO)
Leveraging entire portfolio to deliver best-in-class solutions
Customer Intimacy Critical to Strategy
27
© 2015 Columbus McKinnon Corporation
Broad and Diverse Vertical Markets
28
© 2015 Columbus McKinnon Corporation
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
Global Target Market Opportunity(1)
Addressable market with current portfolio: ~$2.0 billion
Potential opportunity with product line expansion: +~$1.8 billion
Combined sales represent ~9% of the total global market 1 Company estimates 2 Represents percent of current addressable market
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
Total Target Market
($ in millions)
Current Addressable Market (CAM) Potential Target Market with New Products Columbus McKinnon FY 2015 Sales
38% 5% 11% 15% 12% 21% 19% 10% 9%
Estimated market share of CAM(1,2):
29
© 2015 Columbus McKinnon Corporation
Vertical Market Strategy
Develop
Implement
Intelligence
Leverage relationships
Gather Voice of Customer (VOC), watch the work
Assess the competition
Scale
Customer specific solutions
Deepen customer relationships
Deliver solutions
Train and educate users
Approach similar customers
Modify to suit
Deepen vertical market knowledge
Customer Intimacy Model
30
© 2015 Columbus McKinnon Corporation
Key Verticals:
Entertainment
Oil & Gas
Construction
Automotive
Heavy OEM
Regional Focus on Targeted Verticals
Americas APAC EMEA
Key Verticals:
Entertainment
Oil & Gas
Construction
Mining
Key Verticals:
Entertainment
Oil & Gas
Automotive
Heavy OEM
Power
31
© 2015 Columbus McKinnon Corporation
Global Services Turnkey Solutions
Comprehensive project management
Engineering services
Installation and commissioning
Complete documentation
Operator and maintenance training
Optimizing Facility Uptime
Objective: Highest Uptime and Lowest TCO
32
© 2015 Columbus McKinnon Corporation
Global Services Case Study
Global Heavy Equipment OEM
Product: Axle assemblies for
wheel loaders
Systems to optimize design and layout
Unified aluminum rail workstations
CM Lodestar chain hoists
On-site project management
Lifetime service program
Results: Reduced installation time, lowered rolling
resistance, higher duty cycle and longer life cycle
33
© 2015 Columbus McKinnon Corporation
Global Services Asset Management
Baseline audits
Equipment repairs and upgrades
Preventative maintenance and fleet standardization
Operator training
Asset management software
Lowest Life-cycle Cost
Objective: Highest Uptime and Lowest TCO
34
© 2015 Columbus McKinnon Corporation
Focus on Automotive and
Heavy Equipment OEMs
Frequent lifts
Heavy / critical lifts
Targeting Fortune 100
companies
Leveraging successes to
broaden and deepen market
penetration
Where Do We Go From Here?
© 2015 Columbus McKinnon Corporation. All Rights Reserved. Confidential and Proprietary.
Acquisitions:
Expanding Market Opportunity
Alan S. Korman
Vice President
General Counsel and Corporate Development
36
© 2015 Columbus McKinnon Corporation
Drive Growth and Add Value
Deepen reach into key vertical markets
Increase presence in geographic markets
Access to new technologies/expand product portfolio
Add $200-300 million revenue
37
© 2015 Columbus McKinnon Corporation
Energized Approach
Regional business leaders engaged
Identify key criteria unique to regions
Help identify candidates
Increasing targets in the funnel
Broaden the target pool into adjacencies
Driving evaluation and decision-making process
Ability to respond rapidly to opportunities
38
© 2015 Columbus McKinnon Corporation
Strategically Driven Acquisitions
Strategic Objectives
Expand addressable market
Deepen market penetration
Leverage channel strength
Screening Criteria
Size: $50 - $200 million revenue; willing and able to go larger
Profitability: Margins > corporate average with synergies
Unique competitive advantages: IP
Price Discipline
ROIC > WACC
Generally accretive within one year
EBITDA multiples vary given synergies
Value
Creation
39
© 2015 Columbus McKinnon Corporation
Approach in Action
• Candidate search
• Filter through criteria Identify
• Analyze targets against criteria
• Review market and industry info
• Determine next steps
Evaluate
• Key stakeholders
• Formulate message
• Designate contact team
Approach
40
© 2015 Columbus McKinnon Corporation
Unified Industries - February 2014
Leading light rail designer and manufacturer
Efficient work station lifting systems
Focused on selling to “Big 3” automotive
Facility in Howell, MI
Broader offering for general industry
New solutions into APAC, India
Value Creation: sell through all regions,
manufacture locally (China and Germany)
2013 revenue: $12.4 million
41
© 2015 Columbus McKinnon Corporation
Stahlhammer Bommern (STB) – Dec. 2014
STB Large Capacity
Ramshorn Hook
Leading European manufacturer of heavy-
load hooks, rigging tools and engineered
components
Expanded lifting hook capacity to 2,000 tons
Increased eye, shank and ramshorn lifting
hook offerings
Primarily serves Europe
Value Creation – rigging product extension
into Americas
2014 revenue: €14.5 million
42
© 2015 Columbus McKinnon Corporation
Energized Process
Diverse mix of candidates
Public and private ownership
Domestic and international companies
Developed and emerging markets
Hoists, rigging tools, winches, workstations, motion control
Near-term actionable opportunities
Strong Pipeline of Candidates
© 2015 Columbus McKinnon Corporation. All Rights Reserved. Confidential and Proprietary.
Americas:
Leverage Market Position to Grow
Kurt Wozniak
Vice President, Americas
44
© 2015 Columbus McKinnon Corporation
140-Year History
69%
31%
Americas Rest of World
FY 2015 Total Sales $579.6 million
History:
1875 Company founded as Moore Manufacturing Company
1899 Name changed to Chisholm and Moore Manufacturing
Company
1917 Columbus Chain merged with McKinnon Chain, forming
Columbus McKinnon Chain
1928 Acquired Chisholm Moore (CM brand)
1929 Incorporated Columbus McKinnon Corporation
1976 Acquired Midland Forge
1979 Acquired Dixie Industries
1995 Shaw-Box, Chester Hoist and Budgit brands added with
Lift-Tech acquisition
1996 Duff-Norton, Coffing Hoists, Little Mule and Yale brands added
with Yale Industrial Products acquisition
2009 Divested American Lifts business
2012 Divested Gaffey division of CES
2014 Acquired Unified Industries
45
© 2015 Columbus McKinnon Corporation
Americas Strategy for Growth
Strategy:
Broaden product offerings
Build customer and industry knowledge
Leverage CM Lean Business System
Objectives:
Grow market share
Increase penetration into target verticals
Improve productivity and drive
continuous improvement
46
© 2015 Columbus McKinnon Corporation
FY2011 FY2012 FY2013 FY2014 FY2015
17% 17% 16% 17% 16%
83% 83% 84% 83% 84%
Moderate Economic Recovery
Americas Sales Divested ~$20 million in
revenue from crane business
in FY2013
Acquired Unified in Feb 2014;
had $12 million in revenue
in 2013
Moderate economic recovery
in U.S.
Challenged in Brazil by political
environment and recession
$398 $400
$357
$401 $408
US Other
47
© 2015 Columbus McKinnon Corporation
Leading Market Share
Largest installed base of
hoists in North America
72% of net U.S. sales are
products where CMCO
has the #1 position
Built leadership in
Canada, Mexico, Brazil
48
© 2015 Columbus McKinnon Corporation
Customer Intimacy Critical for Success
Greater intimacy with customers and end users
Well-established brands
Broad product portfolio and semi-customization
Operational excellence
Memorable customer experiences
Columbus McKinnon University
In-depth product training to channel partners / end users
In-Stock Guarantee
Rapid response
Improved on-time delivery
~ 280 SKUs
49
© 2015 Columbus McKinnon Corporation
Growth Opportunity in LATAM
Entered Mexico
1975: Acquired 50% interest in Endor
1995: Purchased remaining 50%
Expanded sales footprint:
Assembly and distribution centers
Panama, Brazil, Uruguay
2014: Recife, Brazil
Localized products add value
50
© 2015 Columbus McKinnon Corporation
Major Manufacturing Base
10 out of 18 global manufacturing facilities
in North America
51
© 2015 Columbus McKinnon Corporation
Rationalized North America Footprint
Reduced manufacturing square footage
• 2008: 1.6 million square feet
• 2015: 1.0 million square feet
Reduced principal manufacturing facilities
• 2008: 14
• 2015: 10
Operational excellence
• Component shipments to assembly warehouses
• Kata methodology
CM Lean Business System
52
© 2015 Columbus McKinnon Corporation
Vertical market strategy
Deepen customer knowledge
Increase application expertise
Train users in safe and productive lifting
Customer intimacy
Direct interaction
CMCO University
Enhanced customer experience
Duplicate Global Services successes
Drive Demand Independent of Economic Cycles
© 2015 Columbus McKinnon Corporation. All Rights Reserved. Confidential and Proprietary.
Europe, Middle East & Africa:
Deepening Market Presence
Dr. Ivo Celi
Vice President, EMEA
54
© 2015 Columbus McKinnon Corporation
Gained Market Presence
54
($ in millions)
28%
72%
EMEA Rest of World
FY 2015 Total Sales $579.6 million History:
1904 Yale established first sales offices in Europe
1996 Acquired Yale Europe
1999 Acquired Camlok Lifting Clamps, UK
2000-2007 Expanded sales network: The Netherlands, Spain,
Hungary, Italy. Added train maintenance and
engineering products in South Africa
2008 Acquired Pfaff: Eengineering solutions
2010-2012 Founded subsidiaries in Russia, Middle East, Turkey
2012 Acquired Yale Lifting Solutions in South Africa
2013 Acquired Hebetechnik, Austria
2014 Acquired Stahlhammer Bommern
55
© 2015 Columbus McKinnon Corporation
EMEA Strategy for Growth
Strategy:
Deepen customer intimacy in
vertical markets
Expand regional reach
Leverage rigging products, market
channels, services and solutions
Objective:
Grow market share
Leverage market disruption to
take share
56
© 2015 Columbus McKinnon Corporation
Deepening Presence in a Challenging Environment
Challenged by two recessions…
FY 2011 FY 2012 FY 2013 FY 2014 FY 2015
€118 €127 €129
€123 €128
EMEA Sales (€ in millions)
…but better times appear to be on the horizon
57
© 2015 Columbus McKinnon Corporation
Manual hoist leader
• Tripled addressable market with additional products
• Electric chain hoist, explosion proof products, rigging tools
Local presence
• Establishing sales and services in local markets
Addressing key vertical markets
• Expanding reach into industrial, oil & gas and construction in Turkey, Middle East
• South African mining strike behind us – growing again
Linking EMEA
• SAP installed in most countries
• Centralized services
Customer Intimacy
58
© 2015 Columbus McKinnon Corporation
Driving Growth
Geographic presence
• Growing in Austria, Hungary, Italy, Poland
• Growing in Russia despite upheaval
Product expansion
• Explosion proof hoists
• Unified product: light rail systems
• STB high-capacity hooks
Acquisitions
• Hebetechnik: Direct sales skills and unique on-site service capabilities
• STB: New and expanded product offerings
• Yale Mining: Deeper penetration in mining vertical
59
© 2015 Columbus McKinnon Corporation
Expanding Channels to Market
60
© 2015 Columbus McKinnon Corporation
Hoist Business
Shortened lead times
Reduced costs in logistical processes
Increased capacity 30% utilizing same headcount
Increased productivity 10% year to date
Motion Control: Underway
Consolidating operations
Reducing headcount, square footage,
administrative redundancies
Maintaining capacity
Improving margins
CM Lean Business System
61
© 2015 Columbus McKinnon Corporation
Rail Technology
Precision motion-controlled lifting system
Supports manufacturing, inspection,
maintenance and repairs for diesel and
high speed rail
Includes mobile lifting jacks, lifting
platforms, complete under-floor lifting
systems
Specialty Application Success
62
© 2015 Columbus McKinnon Corporation
Long history of solving material handling problems
Profitable products targeting vertical markets
Acquire additional profitable businesses
Develop new and improved products
Expand sales presence
Further develop channels to market
Focus on developing regions
Growing Excellent Presence
© 2015 Columbus McKinnon Corporation. All Rights Reserved. Confidential and Proprietary.
Asia Pacific:
Expand Beyond China
Benjamin AuYeung
Managing Director, APAC
64
© 2015 Columbus McKinnon Corporation
Solid Foundation for Market Leadership
History:
1992 Established low cost manufacturing
operations for Americas
2010 Initiated 10-year plan to sell into China:
From importing to localized
Manual to powered hoists
Build out sales network and
partnerships
2014 Completed facility expansion
Localizing powered products
Expanded partnerships
3%
97%
APAC Rest of World
FY 2015 Total Sales $579.6 million
65
© 2015 Columbus McKinnon Corporation
Growth Opportunity: Asia Pacific
Strategy
Localized products
Cost competitive
Leverage strong brand
Premium markets value quality
and Total Cost of Ownership
Objective:
Accelerate growth rate to capture
$100 million revenue opportunity
66
© 2015 Columbus McKinnon Corporation
Gaining Traction
FY2011 FY2012 FY2013 FY2014 FY2015
$7.4 $8.1 $10.9 $11.4
$14.6
($ in millions)
APAC Sales
Sales by APAC into APAC:
36% 5-year CAGR in China
18% 5-year CAGR in
rest of Asia
Strong trend continued in
Q4 FY15: Sales up 23%
Focus on growing in
key vertical markets
* Excludes $6.5 million rail project and road project sold into Taiwan from EMEA
$11
$17 $17*
$19 $19
Sales by APAC into APAC
67
© 2015 Columbus McKinnon Corporation
Beijing
Guangzhou
Hangzhou
Shenyang
Wuhan
Shanghai
Chengdu
Xi An
Solid Market Coverage
China: 8 offices, 26 engineers/sales reps/sales support personnel
Offices located in main industrial hubs in China
Sales teams are located in offices across China:
Provide regional coverage
Improve customer intimacy
68
© 2015 Columbus McKinnon Corporation
Deeper Reach Through Partners
FY2011
FY2012
FY2013
FY2014
FY2015
10 21 26
35 30
30
37 43
47
Signed Potential
Two-step approach:
Establish and test
Formalize agreement
69
© 2015 Columbus McKinnon Corporation
Wide Range of Partners in China
Crane builders System integrators
(value-added resellers)
Specialist traders (industry-specific)
EPCs
General traders (manual hoists)
Our
Focus
70
© 2015 Columbus McKinnon Corporation
Growing Beyond China
ABC approach
Application-based
customer solutions
Broaden Asian-ized
products
Coverage and distribution
development
Identify and reach out to
acquisition targets
Hoist / component / system
Korea/Japan/India/China
71
© 2015 Columbus McKinnon Corporation
India Thailand
Singapore
Korea
Japan
Expanding Southern Footprint
Leverage experience building
China model for developing
emerging markets
India
Indonesia
ASEAN Trio (Thailand,
Malaysia and Singapore hub)
Established 3 offices with
9 sales personnel and
1 support staff
Move faster in talent
development
72
© 2015 Columbus McKinnon Corporation
Expand Partnerships Rest of Asia
Partners Singapore 3
Thailand 4
Indonesia 5
Malaysia 3
India 5
Philippines 2
Australia 3
Japan 5
South Korea 4
Total 34
Use two-step partner approach
Curr
ent
Focus
Over 30
additional
potential
partners
73
© 2015 Columbus McKinnon Corporation
Collaboration
Managing Projects
Building relationships with major players
Establishing references and reputation
In discussions to build multi-plant solutions
Large Automotive Opportunity
74
© 2015 Columbus McKinnon Corporation
China, Japan, U.S. and Europe
Success with Automotive OEMs
75
© 2015 Columbus McKinnon Corporation
Leveraging global reputation
Relationships
Products
Global Services
Hire additional in-country sales
and application engineers
Significant Heavy Equipment OEM Presence
Collaboration
Managing Projects
76
© 2015 Columbus McKinnon Corporation
Success with Global and Local OEMs
Facility upgrade projects and new builds
77
© 2015 Columbus McKinnon Corporation
Accelerate Growth Rate
Vertical market strategy clearly works
Engineering capability is critical to success
Next steps:
Accelerate development of engineering competency
Deploy in-country sales engineers and service technicians
Retain more application engineers (China/Singapore/India)
Create wire rope hoist solution for mass market in China
Entry into China market challenging…
…but gained invaluable know-how to drive higher growth
© 2015 Columbus McKinnon Corporation. All Rights Reserved. Confidential and Proprietary.
Driving Value:
Achieving Financial Goals
Gregory P. Rustowicz
Chief Financial Officer
79
© 2015 Columbus McKinnon Corporation
FY 2011 FY 2012 FY 2013 FY 2014 FY 2015
$524.1
$591.9 $597.3 $583.3 $579.6
5.3%
7.6%
9.1% 9.6% 9.8%
25.4% 26.6%
29.2% 31.0% 31.6%
Expanded Margins in Challenging Environment
Operating Margin(1)
($ in millions)
Gross Margin(1)
(1) Gross margin for FY11 and FY15 and operating margin for FY11, FY14 and FY15 as shown are adjusted to exclude unusual items and are Non-GAAP financial
measures. Please see supplemental slides for a reconciliation from GAAP financial measures to the Non-GAAP financial measures provided above
Net Sales
80
© 2015 Columbus McKinnon Corporation
Target: 12% to 14% operating margin goal
At historic peak sales of ~$630 million (FY 2009 normalized)
While making strategic growth investments
Achieved average operating leverage of 53% since FY 2011
Expecting operating leverage of 30% to 40%
Margin Goal Achievable
Incremental revenue + $50 million
Operating leverage @ 40%
Incremental operating income = $20 million
FY2015 adjusted operating income + $57 million
Total operating income = $77 million
Operating margin: 12.2% $77 million/$630 million
81
© 2015 Columbus McKinnon Corporation
FY2002 FY2015 ∆
Sales $480 million $579.6 million + 21%
Major Manufacturing Facilities 20 14 - 30%
Manufacturing--Square Feet 2,691,200 1,608,000 - 40%
Number of FTE 2,716 2,747 + 1%
Four-year Productivity Gains: $12.8 million
Lean Activities: Continuous process globally
ERP System: 26% complete on March 31, 2015
Driving ease of commerce
Localizing Products in China: Expanded capacity in China by ~40%
Transferred Western-designed products
Reduced product costs
Efficient Operations
82
© 2015 Columbus McKinnon Corporation
CM Lean Business System
Lean methodology applied throughout operations
Company-wide culture
Never-ending process: Consistently about 100 ongoing projects
Continuously improving and applying experience gained
Six key initiatives
Associate involvement and development Operational effectiveness
Supply chain material flow Workplace safety and organization
Quality management system Continuous flow
83
© 2015 Columbus McKinnon Corporation
Duff Norton, CMEP, CMIP,
UK, Misc. EU
France and Brazil
US H&R
Global Master Data Governance & Clean Up
FY 2015 FY 2016 FY 2017 FY 2018
26% Global
Revenue 30% Global
Revenue 78% Global
Revenue
Implementations:
Remaining Material Locations To Be Determined:
Hangzhou, Canada, Mexico, CES, Austria, Hungary, Sarasota, Unified, South Africa
Business Driven
Implementation
Plan
Global ERP Implementation Plan
84
© 2015 Columbus McKinnon Corporation
Benefits of Global Collaboration
Ease of Commerce
Better Data and Faster Decisions
Working Capital
Improvement
Improved Global
Operational Efficiencies
Global ERP
85
© 2015 Columbus McKinnon Corporation
FY09 FY10 FY11 FY12 FY13 FY14 FY15
$48.0
$22.6
$(9.3)
$9.8
$27.5
$8.7
$21.0
(1) Operating free cash flow is defined as cash provided by operating activities minus capital expenditures
(2) Fiscal 2010 and fiscal 2011 include $10.8 million and $4.5 million of cash payments related to restructuring charges, respectively
Note: Operating free cash flow is a non-GAAP measure. See supplemental slides for operating free cash flow reconciliation and other important disclaimers regarding operating free cash flow
Note: Cumulative operating free cash flow uses FY 2009 as a starting point
Note: Figures for individual years may not add up to cumulative totals due to rounding
($ in millions)
Operating Free Cash Flow (1)
(2) (2)
Strong Cash Generation
Cumulative Operating Free
Cash Flow (1)
FY09 FY10 FY11 FY12 FY13 FY14 FY15
$48.0
$70.6 $61.3
$71.1
$98.6 $107.3
$128.3
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© 2015 Columbus McKinnon Corporation
FY11 FY12 FY13 FY14 FY15
16.9% 17.6% 18.3%
21.7% 20.8%
FY11 FY12 FY13 FY14 FY15
49.1 50.6 50.5 52.9
49.2
Working Capital as a Percent of Sales
Receivable Days Outstanding
(1) FY15 working capital as a percent of sales excludes STB acquisition which was acquired on December 30, 2014
(1)
Emphasis on Working Capital
Days Payable Outstanding
FY11 FY12 FY13 FY14 FY15
31.8 32.3 31.1
29.2 29.4
Inventory Turns
FY11 FY12 FY13 FY14 FY15
4.7x 4.3x 4.3x 4.5x
4.0x
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© 2015 Columbus McKinnon Corporation
FY11 FY12 FY13 FY14 FY15 FY16E
$12.5 $13.8 $14.9
$20.8
$17.2
Low CapEx Requirements
FY11 FY12 FY13 FY14 FY15
114% 116% 123%
156%
118%
Normal capital spend ~$10-$12 million
Extraordinary investments in productivity and capacity
Invested $19 million in SAP since FY2011
Invested $6.4 million for China plant expansion
FY16 estimate includes $5.5 million for NA sales and training operations/
Corporate headquarters
(1) $18-$22
CapEx / D & A CapEx
(1) Guidance provided on May 28, 2015
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© 2015 Columbus McKinnon Corporation
FY11 FY12 FY13 FY14 FY15
4.8%
10.9%
13.9% 12.8% 11.2%
0.5x
1.0x
1.2x 1.3x 1.1x
FY11 FY12 FY13 FY14 FY15
ROIC/WACC
(1) ROIC is defined as income from operations, net of 30% tax rate, for the
trailing 12 months divided by the average of debt plus equity less cash
(average capital) for the trailing 13 months.
(2) Average capital within the ROIC calculation for FY 2011 through FY
2013 removes the effect of the deferred tax asset valuation allowance,
which was reversed in FY 2013.
(3) Source: Bloomberg
(2) (2) (2)
Return on Invested Capital (ROIC)(1)
FY11 FY12 FY13 FY14 FY15
10.0% 11.4% 11.1% 9.9% 10.1%
WACC(3)
Creating Shareholder Value
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© 2015 Columbus McKinnon Corporation
Redeemed $150 million 7 7/8% Senior Subordinated Notes
in February 2015
Secured new $125 million delayed-draw term loan and new
$150 million revolving credit facility
New term loan plus cash on hand financed redemption of Notes
Cash interest expense savings of ~$7.6 million
Contributes ~$0.27 per diluted share(1) in FY2016
More flexible capital structure
Pre-payable debt
(1) Applies a 30% tax rate and reflects the Company’s policy of a fixed interest ratio of 50% to 70%
Recent Capital Structure Improvements
90
© 2015 Columbus McKinnon Corporation
FY11 FY12 FY13 FY14 FY15
$154.4 $153.1 $152.1 $152.3
$126.7
$13.5 $14.2
$13.8 $13.5
$12.4
Strong Balance Sheet ($ in millions)
Cash and Cash Equivalents Total Debt
Interest Expense
FY11 FY12 FY13 FY14 FY15
$80.1 $89.5
$121.7 $112.3
$63.1
FY11 FY12 FY13 FY14 FY15
$162.1 $160.5
$240.0
$291.3 $268.7
FY11 FY12 FY13 FY14 FY15
48.8% 48.8%
38.8% 34.3% 32.0%
Shareholders Equity Debt/Total Capitalization
(1) Reflects impact of foreign currency translation adjustment ($29.9 million) and change in pension liability and OPEB net of tax ($20.2 million)
(1)
© 2015 Columbus McKinnon Corporation. All Rights Reserved. Confidential and Proprietary.
140 Years Strong
Timothy T. Tevens
President and Chief Executive Officer
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© 2015 Columbus McKinnon Corporation
Strong Balance Sheet
and Financial Flexibility
to Execute Plans
1/3 of sales in developing markets
and 2/3 in developed markets
Organic growth (trend line):
- U.S. & Western Europe at GDP+
- Emerging Markets at double digits
Acquisitions: $200 - $300 million
Continued introduction of new
products: 20% of sales
$1B in Revenue
Operating margin: 12% - 14%
Working capital/sales: 17%
Inventory turns: 6x
DSO: < 50 days
Profitable & Efficient
Long-Term Objectives
© 2015 Columbus McKinnon Corporation. All Rights Reserved. Confidential and Proprietary.
2015 Investor and Analyst Day
140 Years Strong
July 7, 2015
© 2015 Columbus McKinnon Corporation. All Rights Reserved. Confidential and Proprietary.
Supplemental Slides
95
© 2015 Columbus McKinnon Corporation
Year Ended
March 31,
2011 2012 2013 2014 2015
Gross Profit $ 126,052 $ 157,718 $ 174,231 $ 181,048 $ 181,607
Add back:
Restructuring-related costs 3,900 - - - -
Unusual product liability claims 2,900
European facility consolidation costs - - - - 1,176
Acquisition inventory step-up expense and real
estate transfer taxes - - - - 543
Non-GAAP adjusted gross profit $ 132,852 $ 157,718 $ 174,231 $ 181,048 $ 183,326
Sales $ 524,065 $ 591,945 $ 597,263 $ 583,290 $ 579,643
Adjusted gross margin 25.4% 26.6% 29.2% 31.0% 31.6%
Adjusted gross profit is defined as gross profit as reported, adjusted for unusual items. Adjusted gross profit is not a measure determined in accordance with generally accepted
accounting principles in the United States, commonly known as GAAP, and may not be comparable to the measure as used by other companies. Nevertheless, Columbus McKinnon
believes that providing non-GAAP information such as adjusted gross profit is important for investors and other readers of the Company’s financial statements, and assists in
understanding the comparison of the current quarter’s gross profit to the historical period’s gross profit.
Adjusted Gross Margin Reconciliation
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© 2015 Columbus McKinnon Corporation
Year Ended
March 31,
2011 2012 2013 2014 2015
Operating income $ 18,572 $ 45,144 $ 54,371 $ 54,350 $ 54,648
Add back:
Restructuring-related costs 6,200 - - - -
Unusual product liability claims 2,900 - - - -
Atypical merger and acquisition expense - - - 1,657 -
European facility consolidation costs - - - - 1,726
Acquisition inventory step-up expense and real
estate transfer taxes - - - - 659
Non-GAAP adjusted operating income $ 27,672 $ 45,144 $ 54,371 $ 56,007 $ 57,033
Sales $ 524,065 $ 591,945 $ 597,263 $ 583,290 $ 579,643
Adjusted operating margin 5.3% 7.6% 9.1% 9.6% 9.8%
Adjusted operating income is defined as operating income as reported, adjusted for unusual items. Adjusted operating income is not a measure determined in accordance with
generally accepted accounting principles in the United States, commonly known as GAAP, and may not be comparable to the measure as used by other companies. Nevertheless,
Columbus McKinnon believes that providing non-GAAP information such as adjusted operating income is important for investors and other readers of the Company’s financial
statements, and assists in understanding the comparison of the current quarter’s operating income to the historical period’s operating income.
Adjusted Operating Margin Reconciliation