Columbus McKinnon : CMCO FY 2024 Annual Report
CMCO
Fiscal Year 2024 Annual Report
PURPOSE
Together We Create Intelligent Motion Solutions That Move the
World Forward and Improve Lives
MISSION
We provide expert, professional-grade solutions, and products, building the
trust of customers by solving their high-value problems
VISION
To become the global leader in safe and productive intelligent motion solutions
VALUES
Our values drive everything we do at Columbus McKinnon
Connect Safety to Everything You Do
Take personal responsibility. Care for our people. Build products everyone can trust.
Be Easy to Do Business With
Focus on the customer. Listen. Simplify.
Deliver On Your Commitments
Aim for greatness. Do your best. Hold yourself accountable.
Think Differently
Be proactive with ideas. Ask questions. Be part of the solution.
Win As a Team
Embrace diversity. Respect each other. Celebrate success.
Act With Integrity
Do the right thing. Extend trust. Appreciate differences.
"Together our family of trusted brands,
known for superior quality, safety, reliability
and productivity, position us to provide
intelligent motion solutions for our
customers' unique material handling needs."
Dear Shareholders and Friends,
Fiscal 2024 was a defining year for Columbus McKinnon, proving that our platform could once again perform in a dynamic macroeconomic environment. We delivered record financial performance and made significant progress advancing our commercial, operational and transformation initiatives. Our results are a testament to our business model and the growing impact of our transformation.
I'm proud of what our talented and diligent team has accomplished. Grounded in purpose-driven performance, we are dedicated to improving the lives of our customers, the communities we serve and the associates who work at Columbus McKinnon. We are committed to being the leading and most trusted provider of material handling solutions focusing on safety, efficiency and productivity. Our team comes to work every day with one united purpose: creating intelligent motion solutions that move the world forward and improve lives.
David Wilson
Director, President & Chief Executive Officer
Over the last year, we acted with speed and agility amid unprecedented conditions. The team excelled, even in the context of the lingering effects of the pandemic, heightened geopolitical risk, labor shortages, the highest level of inflation experienced in decades and market fears of recessionary conditions weighing on investors and customers.
While it's not possible to know exactly what this next year will hold, we do know that our customers will depend on us to deliver, both on behalf of themselves and their customers. Our associates, who share my passion for serving our customers and strive to win each day, position us to deliver after another year of record results.
We are executing on what we can control and have significantly improved our operating performance over the last year as we have focused on the areas that are most important to our customers. We shortened our lead times, improved our on-time delivery and reduced our past due backlog to normalized levels. These accomplishments translate into an improved customer experience and enable us to capture additional share of wallet with existing customers and grow with new customers.
We took advantage of identified opportunities across our geographies and end markets and invested to position ourselves for the future. We are making significant strides towards differentiating our business and enhancing our core capabilities.
We are growing, strategically repositioning our company and generating cash, which provides dry powder to reinvest into our growth framework where we have multiple levers to drive more scale. We believe that increasing scale will become a compounding advantage as we execute our strategy over time.
2024 Annual Report
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Transformation To A Secular Growth Company
Our success and our momentum are years in the making. Four years ago, we believed that implementing our transformation and growth strategy would further differentiate our business and drive superior results. Building on a foundation of nearly ı50 years of being a market leader in lifting for material handling, we are transforming into more holistic provider of intelligent motion solutions for material handling. We've embraced change and innovation while staying true to our roots of excellence and continuous improvement.
Over time, we've expanded our platform from lifting to include linear motion, controls and automation, and most recently precision conveyance. With the addition of the precision conveyance platform, we expanded our total addressable market ("TAM") by $5 billion to a total of $20 billion.
CMBS GROWTH FRAMEWORK
Our strategic plan's core growth framework defines our balanced and disciplined approach to prioritizing and delivering organic and inorganic growth. We're confident that by leveraging this framework we will deliver attractive growth, financial performance and shareholder value over time. montratec® is the latest example of our M…A strategy, centered on compelling economics, patented technology and access to attractive end markets.
The key principles of our strategic framework include being market led, customer-centric and operationally excellent. At our core, we are a people and values driven organization that embraces innovation. The Columbus McKinnon Business System ("CMBS"), which incorporates our 80/20 methodology, is key to strengthening core competencies, driving operational muscle memory, enabling scale and creating competitive advantages.
In fiscal 2024, we continued to make progress on our transformation, delivering on productivity enhancements and simplifying our business. We are simplifying our portfolio and our footprint, while investing in the best products to address targeted applications and enable profitable growth in attractive markets. As a reminder, our simplification efforts are expected to contribute over 200 basis points to gross margin over time.
We are encouraged by the progress we are making and the potential of our transformation. Beyond this material progress, we have higher ambitions for continued growth and margin expansion over the long-term.
Net Sales ($M)
Adjusted Gross Margin1
Adjusted EBITDA Margin1
$907 $936 $1,014
$650
FY21 FY22 FY23 FY24
37.3%
.1% 36.5%
34.1%
FY21 FY22 FY23 FY24
.4% 15.8% 16.4%
11.9%
FY21 FY22 FY23 FY24
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2024 Annual Report
Deliberately Curated Portfolio
Our products are engineered to help our customers work smarter while improving the safety, uptime and productivity of their operations. Our innovative, intelligent solutions combine equipment used to lift, move and position materials with industry-leading control and automation technology. Working together, this technology is helping our customers solve high-value problems that are critical to their business.
Whether our customers need a hoist, a linear actuator or a conveyance solution, we can simplify and automate their materials handling and intralogistics processes.
The diversification, breadth of our offering and markets we serve provide a natural balance and added resilience to our business. That balance also provides multiple levers to enable sustained growth and deliver on our operational and financial objectives.
As we build scale and deepen our offerings, we expect to realize synergies from bringing our platforms together:
We are still in the early innings of harnessing these capabilities, and the value creation opportunity ahead gives us further confidence in our ability to deliver our long-term objectives.
Each platform serves an important role in our strategy, including delivering strong, consistent free cash flow or above-market growth.
Automation
Our Magnetek® digital power and motion control solutions leverage automation technology that can be customized to meet industry-specific demands. These intelligent solutions are available from ceiling to floor and can be integrated across our entire product portfolio. Our solutions include AC and DC motor controls, radio remote controls, crane components, collision avoidance, diagnostic and analytic technology, overhead crane automation and other custom- engineered solutions.
Lifting
Since 1875, our lifting products and equipment, which are designed for intelligent motion, have helped people in industries around the world. Whether loads need to be lifted or positioned manually or with power, we offer an extensive range of solutions to fit the needs of any application. Products available include manual and powered chain hoists, wire rope hoists, enclosed track systems and workstation cranes, crane kits, below-the hook lifting devices, chain and rigging.
Precision Conveyance
With a comprehensive portfolio of high- precision conveyance and accumulation systems, we offer highly customizable products that solve intralogistics challenges faced by customers worldwide, improving efficiency, reducing labor costs and enhancing overall productivity. Our conveyance offering includes fabric belt, flexible chain, sanitary, and stainless-steel conveyors. We also provide pallet system conveyors, accumulation conveyors, transport systems, and interlink equipment and processes.
Linear Motion
Our advanced linear motion solutions, including linear actuators, screw jacks, super cylinders, rotary unions and control systems, can meet the most challenging lifting, positioning and transfer demands. These technologies are crucial in optimizing production processes and increasing efficiency in a variety of industries.
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Track Record of Strong Financial Results
+8%
Sales Growth
+80 bps
Adjusted Gross
Margin Expansion1
+60 bps
Adjusted Operating Margin Expansion1
+60 bps
Adjusted EBITDA Margin Expansion1
$67.2
Cash Provided by
Operating Activities
2.4x
Net Leverage Ratio1
Our team delivered another record year of performance on a variety of top and bottom-line metrics, reflecting the solid progress we are making with our transformation. These results provide another proof point on the path to achieving our long-term financial objectives. Our team continues to execute on commercial and operational initiatives to improve productivity, reduce lead times and enhance customer experience in order to scale our business and deliver top-tier financial results.
We grew sales by 8% to over $ı billion dollars for the first time in our history. We delivered high-single to low-double-digit sales growth across each area of our business, including automation, precision conveyance, lifting and linear motion in the year. Exiting the year, we delivered order growth of 5% in the fourth quarter, positioning us to deliver sales growth in fiscal 2025.
We expanded gross margin by 50 basis points to 37.0%, or 80 basis points, to 37.3% on an adjusted basis,ı benefitting from leverage on our growth and remaining focused on performance improvement through CMBS and 80/20 actions.
We expanded Adjusted EBITDA Marginı by 60 basis points to ı6.4%, our highest level ever. These results are a testament to the effectiveness of our strategy, solid execution by our global CMCO associates and the growing impact of our transformation.
We generated net cash provided by operating activities of $67.2 million and Free Cash Flowı of $42.4 million with Free Cash Flow Conversionı of ‹ı%. We remain focused on using our significant cash flow generation to de- leverage our business. Our Net Leverage Ratioı was 2.4x as of year end and we believe we are on track to reduce this ratio to approximately 2.0x by the end of fiscal 2025.
While we've made solid progress, we still have significant opportunities in front of us to enhance customer experience, optimize our business, grow profitably and expand our margins.
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2024 Annual Report
Enabling Great People to Achieve Greatness
We believe that our team members are the foundation of our business and it's their hard work, passion, commitment and experience that drive our success. Our 3,500 team members are our greatest resource and key to implementing our transformation, commercial and operational initiatives.
We have built an open culture where great people have the opportunity to achieve their potential. We empower our people to deliver on our purpose to improve lives, deliver an exceptional customer experience and grow our business. We encourage candid feedback, a broad range of opinions, innovative thinking, and, importantly, passion about serving customers.
We strive to create an environment that embraces diverse backgrounds and perspectives. Our commitment to fostering a diverse, equitable and inclusive environment begins at the top. We are committed to creating a culture where associates are encouraged to achieve their career goals through ongoing development and objective performance management and promotion processes that recognize results regardless of age, background, race, ethnicity, ability, religion, gender or sexual orientation.
We embrace six key values to support a transformation-based culture with a high degree of employee engagement. We focus on not only rewarding results but delivering those results while embracing our mission and demonstrating our core values.
We invest resources to attract, develop, engage, reward and retain top talent. We have defined leadership development programs at a variety of levels tailored to harness our talent and provide succession planning opportunities deep into the organization. We believe our global team members include industry leading talent, bringing together diverse backgrounds and innovative ideas that fuel our continuous innovation.
ATTRACT
ENGAGE AND RETAIN
•
Critical Talent
•
Retention Metrics
• Emerging Talent … Branding
•
Survey Action Planning
•
Recruiting … Selection
•
Values Awards
Process
DEVELOP
REWARD
•
Succession Readiness
•
HR Technology Expansion
•
Career Development
Project Diamond
•
Rotational Program
•
Salary Structures
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The Communities We Serve
We know that when we invest in running a responsible, sustainable company, we make our business stronger, more agile and more resilient. This encourages good business practices and a focus on safety that enables us to deliver strong and consistent results over time. Taking care of our team, customers, shareholders and the communities we serve is essential to support sustained growth. As a global leader in intelligent motion solutions, we remain focused on positively contributing to the planet we all share.
We launched our sustainability program in 2020 and are made strides in formalizing our program with a commitment to strong governance and processes. In fiscal 2024, we continued to advance our strategy and delivered positive change through purpose-driven performance. We are focused on making a tangible impact on behalf of our customers and are improving lives by providing intelligent motion solutions whileachieving outstanding business results.
Our sustainability program establishes structure and objectives around three key areas employing a double materiality approach:
Addressing corporate social responsibility in ways that create value for our business and stakeholders is a hallmark of our strategy. Each of our sustainability priorities seeks to aligns our business with societal objectives and creates a discrete shared value proposition. We believe sustainable solutions fortify our future, mitigate risks to our business and support superior financial returns.
With an ever-changing customer environment and intense competition for talent and profitable growth, investments in a team capable of delivering a best-in-class experience for our customers help us grow, differentiate and strengthen our business. These investments position us for the long-term, enabling us to grow and create value for our stakeholders.
While we're proud of the steps we've taken in fiscal 2024, we recognize that this is a journey. As the landscape around us continues to evolve, we remain steadfast in our view that embracing corporate social responsibility principles will result in growth and value creation for our business and our shareholders over time.
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2024 Annual Report
Disclaimer
Columbus McKinnon Corporation published this content on 10 June 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 10 June 2024 20:48:03 UTC.