Amherst, NY - Columbus McKinnon Corporation, a leading designer, manufacturer and marketer of material handling products, today announced financial results for its fiscal 2013 fourth quarter and full year, which ended March 31, 2013.
Timothy T. Tevens, President and Chief Executive Officer, commented, “We believe our focus on productivity and operational excellence is demonstrated in our financial performance for the quarter and year. As we grow our market share around the world and further penetrate emerging economies as well as improve our productivity, we expect to continue to strengthen our earnings power.”
He also noted, “Our operating leverage was significant in the year as we recognized the productivity benefits of our Lean Business System and the value of our prior-year’s restructuring efforts.”
Net sales for the fourth quarter of fiscal 2013 were $144.6 million, down $15.0 million, or 9.4%, from the prior-year period. U.S. sales, which comprised 59% of total sales, were down by $5.3 million, or 5.8%, to $85.3 million compared with $90.6 million for the fourth quarter of fiscal 2012. The decline in sales reflected a $5.6 million impact of a business divested in August 2012 and three fewer shipping days. Sales outside of the U.S. were down $9.7 million, or 14.1%, to $59.3 million, reflecting lower sales volume primarily in Western Europe and Canada as well as fewer shipping days. Foreign currency translation had a negative impact of $0.7 million on sales during the quarter. Excluding the effects of foreign currency translation and the divestiture, sales declined by 5.4% in the quarter.
The fluctuation in sales for the fourth quarter of fiscal 2013 compared with fiscal 2012 is summarized as follows:
|($ in millions)|
|$ Change||% Change|
|Foreign currency translation||(0.7||)||(0.5||)%|
Pricing and productivity drove margin improvements
Gross profit remained unchanged from the prior year at $44.2 million for the quarter. However, as a percent of sales, gross margin expanded 290 basis points to 30.6% compared with 27.7% for the fourth quarter of fiscal 2012. Gross margin expanded as pricing and productivity improvements offset the impact of lower volume and inflation.
Selling expenses were $16.4 million, down 5.4%, or $0.9 million, from the same period of the prior year. The divestiture accounted for approximately $0.3 million of the reduction, and the remainder was primarily related to cost containment. As a percent of revenue, selling expenses were 11.3% compared with 10.9% in the same period last year.
General and administrative (G&A) expenses were $12.8 million, relatively unchanged from $12.7 million in the prior-year period. As a percent of sales, G&A was 8.9% of sales compared with 8.0% in the prior year.
Operating income in the fiscal 2013 fourth quarter was up $0.9 million, or 6.3%, to $14.5 million. Operating margin expanded 150 basis points to 10.0%.
As a result of a tax valuation allowance reversal, the Company recognized an income tax benefit of $40.2 million in the quarter.
Net income grew 478.3% to $52.0 million, or $2.64 per diluted share, in the fiscal 2013 fourth quarter. On an adjusted basis, excluding the tax valuation allowance reversal and applying a more normalized tax rate of 38%, earnings per diluted share were $0.37. Further details of the reconciliation of adjusted EPS to GAAP EPS are shown on page 10 of this release.
Strong cash generation and significant financial flexibility
Cash provided by operations during fiscal 2013 was $42.4 million, up $18.8 million over the prior-year period. Cash and cash equivalents grew to $121.7 million at the end of fiscal 2013’s fourth quarter from $89.5 million at March 31, 2012.
Working capital as a percentage of sales was 18.3% at the end of fiscal 2013, up from 17.6% at the end of fiscal 2012 and 17.5% at the end of the trailing third quarter of fiscal 2013. Excluding the impact of the reversal of the deferred tax valuation allowance, working capital as a percentage of sales was 17.1% at the end of fiscal 2013.
Capital expenditures for fiscal 2013 were $14.9 million compared with $13.8 million in the comparable prior year. Approximately $4.0 million was associated with the implementation of a new enterprise management system. The Company expects fiscal 2014 capital spending to be in the range of $20 million to $25 million which is higher than fiscal 2013 due to investments in China as well as capital projects that are expected to further generate productivity improvements.
Gross debt at the end of fiscal 2013 was $152.1 million. Debt, net of cash, at March 31, 2013 was $30.4 million, or 11.2% of net total capitalization, compared with $63.6 million, or 28.4% of net total capitalization, at March 31, 2012.
Fiscal 2013 Review
Net sales for fiscal 2013 were $597.3 million, up slightly from $591.9 million for the prior year as U.S. sales more than offset the slight decline in sales outside of the U.S. U.S. sales were up $13.0 million, or 3.9%. Sales outside of the U.S., representing 42% of total sales, decreased by $7.7 million, or 3.0%, in fiscal 2013. Foreign currency translation had a $17.1 million negative impact on sales in fiscal 2013. Net of foreign currency translation, revenue outside of the U.S. grew 3.6%.
Gross profit increased 10.5% to $174.2 million and gross profit margin expanded 260 basis points to 29.2% in fiscal 2013 due to improved pricing, higher sales volumes, and productivity improvements.
Selling expenses were $65.6 million, an increase of $0.7 million, or 1.2%, compared with the prior-year period. As a percent of sales, selling expenses were 11.0% in fiscal 2013, unchanged from the prior-year period. G&A expenses increased $5.6 million, or 12.0%. As a percent of sales, G&A expenses were 8.8% in the current period, compared with 7.9% in the prior-year period. Increased G&A in fiscal 2013 was due to higher variable compensation costs, higher employee benefit costs, including pension and group medical costs, and the implementation in the Company’s new enterprise management system.
Operating income grew 20.4% to $54.4 million, while operating margin expanded 150 basis points to 9.1% in fiscal 2013. Operating leverage achieved during fiscal 2013 was 173.5%.
Net income for fiscal 2013 grew $51.3 million, or 190.3%, to $78.3 million. On a per diluted share basis, earnings in fiscal 2013 grew 188.4% to $3.98 compared with $1.38 for the prior-year period. On an adjusted basis, excluding the tax valuation allowance reversal and applying a more normalized tax rate of 38%, earnings per diluted share were $1.34. Further details of the reconciliation of adjusted EPS to GAAP EPS are shown on page 10 of this release.
Continued growth in emerging economies and strong performance in key vertical markets to offset slow economic growth
We continue to invest in global emerging markets where we expect them to grow at a faster rate than the developed markets of the world. We are also focusing our resources on global vertical markets such as oil & gas, heavy OEM, mining and entertainment where our products and knowledge are needed to help these customers perform their work in a safe and productive way. Backlog was $99.0 million at March 31, 2013 compared with $95.4 million at December 31, 2012. 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 March 31, 2013, approximately $33.0 million of backlog, or 33.3%, was scheduled for shipment beyond June 30, 2013.
Both U.S. and Eurozone capacity utilization are leading market indicators for the Company. U.S. industrial capacity utilization was 77.1% in March 2013, up from 76.2% in March 2012, and slightly improved from 77.0% in December 2012. Eurozone capacity utilization was 77.2% in the quarter ended March 31, 2013, down from 79.9% during the quarter ended March 31, 2012, but improved from 76.9% in the quarter ended December 31, 2012. The European indicator reflects the modest recession being experienced in the Eurozone, while the U.S. indicator demonstrates moderate economic growth. The Company’s sales tend to lag these indicators by one to two quarters.
Mr. Tevens concluded, “We continue to focus on driving productivity in our facilities through our lean system, capital projects, training programs and safety initiatives. We believe these efforts will continue to result in productivity improvements and operating leverage and positively impact the bottom line. As a global company, we work as a team to continually build upon the strong reputation of our brands, increase our market presence, provide responsive customer service and innovate in our product and service offerings. We expect to continue to grow through our organic initiatives as well as through acquisitions. Importantly, we believe that our continuous improvement activities will create greater earnings power in the future to build our balance sheet which will facilitate our growth initiatives.”