Columbus McKinnon Corporation

Greetings and welcome to the Columbus McKinnon Corporation First Quarter Fiscal Year 2020 Financial Results. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during a conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Deborah Palowski, Investor Relations for Columbus McKinnon. Thank you, Ms. Palowski. You may begin.

Thanks, Doug, and good morning, everyone. We certainly appreciate your time today and your interest in Columbus McKinnon. Joining me on the call are Mark Morelli, our President and CEO, and Greg Rustowicz, our Chief Financial Officer. You should have a copy of the first quarter fiscal 2020 financial results, which we released this morning before the market, and if not, you can access the release as well as the slides that will accompany our conversation today at our website, cmworks.com. If you'll turn to slide two in the deck, I will first review the safe harbor statement. If you are aware, we may make some forward-looking statements during the formal discussions as well as during the Q&A session. These statements apply to future events that are subject to risks and uncertainties as well as other factors that could cause actual results to differ materially from what is stated here today. These risks and uncertainties and other factors are provided in the earnings release as well as with other documents filed with Securities and Exchange Commission. These documents can be found on our website or at fdc.gov. During today's call, we will also discuss some non-GAAP financial measures. We believe those will be useful in evaluating our performance. You should not consider the presentation of this additional information in isolation or as a substitute for results prepared in accordance with GAAP. We have provided reconciliation of non-GAAP measures with comparable GAAP measures in the tables that accompany today's release and the slides for your information. So with that, if you would turn to slide three, I'll turn it over to Mark to begin. Mark?

Thanks, Deb, and good morning, everyone. First quarter of fiscal 20 is further evidence that our blueprint for growth strategy is expanding margins and driving earnings power. Net income for the quarter was up 141%. On an adjusted basis, earnings per diluted share was up nearly 10%. Margin expansion continued to drive earnings growth. This validates the effectiveness of our Blueprint for Growth strategy and the deployment of our business operating system, which we call EPAS, or Earnings Power Acceleration. EPAS provides the tools we use to execute our plan. Since implementing EPAS in 2017, we've consistently expanded margins and ROIC. In fact, we achieved record adjusted EBITDA margin of 16.7% this past quarter, surpassing last year's previous record by 100 basis points. We made solid progress on ROIC as well, which reached 11.5%. We had record gross margin up 10 basis points from the prior record last year as pricing more than offset tariffs and inflation. Contributing to the improvement was $500,000 in savings from the consolidation of our Ohio facility. The simplification of our business with Phase 2 of the Blueprint for Growth Strategy is reducing our cost structure and improving our operating leverage. We had outstanding operating leverage for the quarter as adjusted operating income increased on lower revenue based due to divestitures. After adjusting for divestitures and the changes in foreign currency exchange rates, operating margin expanded 140 basis points to more than 13%. Looking at slide four, we're doubling down on phase two of our strategy this year. This phase is focused on simplifying the business, operational excellence, and ramping the growth engine. Our efforts continue to deliver results, and we believe there is significant runway for further improvement. Simplifying our business continues to drive earnings growth. In fact, $3.4 million in operating profit in the quarter was from the 80-20 process, an important tool in our operating system to help us simplify the business. There was also $1 million of RSG&A savings delivered by our more streamlined organizational structure. Additionally, operating margin increased by 30 basis points as a result of the divestitures identified during our simplification process. On the operational excellence side, our better cost discipline is improving our cost structure. During the quarter, we realized 150 basis point reduction in the RSG&A as a percentage of sales. The combination of simplification and operational excellence is driving our efforts to reduce our operating footprint. In addition to divesting non-core businesses, we're able to consolidate into one facility in Ohio. As I mentioned earlier, this provided $500,000 in savings in the quarter, and we're on track to achieve $2 million in savings this fiscal year. We're also moving forward with the consolidation of our footprint in China that we announced at our investor day in June. We expect this to cost about $1.5 million and have about a one-year payback. We're encouraged by the progress we're making and ramping our growth engine as well. I've met recently with several of our key accounts. Both Columbus McKinnon and our customers are seeing mutual growth opportunities and our engagement is paying off. Several accounts in the U.S. and the Middle East are realizing strong growth as they penetrate new markets. Product innovation is also ramping our growth engine and expanding addressable markets. Through product innovation that focuses on safety and productivity, we expand our markets and increase our opportunities to grow at higher margins. Let me give you a couple examples. We expect to accelerate sales of our new wire rope hoist platform with the recent launch of CraneKit. Customers can now use our online configurator, which we call Compass, to enter basic design parameters and configure a standard crane package. For many customers, a basic industrial crane fits their needs. Our online system now allows them to get the crane designed, quoted, and delivered quickly and easily with all components included. This allows our customer to be more productive as this reduces their engineering effort and shortens lead times for delivery and installation. We're also expanding our addressable market and enhancing our position as a listing specialist by launching a new offering of explosion-proof cranes. Our stall brand is a leader in explosion-proof cranes and now has certification in the U.S., allowing us to compete more effectively in the LNG and petrochemical industries. Smart movement is a key element of our growth strategy. We're the sole provider of a Magnetek brand four-quadrant digital DC drive that improves safety and incorporates diagnostics. This digital drive is an ideal solution for older cranes that have DC motors and upgrades them to a digital system. This retrofit to existing cranes allows for many features of a modern crane offering greater productivity and safety. This drive is helping us to grow with retrofits in the steel and waste to energy market segments. With that, let me turn it over to Greg to cover our financial results.