Columbus McKinnon Corporation

Greetings and welcome to Columbus McKinnon third quarter fiscal year 2024 financial results. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Christy Moser, Vice President, Investor Relations and Treasurer.

Thank you, Rob. And good morning, everyone, to Columbus McKinnon's fiscal third quarter 2024 earnings conference call. The earnings release and presentation are available for download on our investor relations website and investorrelations.cmco.com. On the call with me today are David Wilson, our president and chief executive officer, and Greg Rustowitz, our chief financial officer. In a moment, David and Greg will walk you through our financial and operating performance for the quarter. But before we begin our remarks, Please let me remind you that we have our safe harbor statement on slide two. During the course of this call, management may make forward-looking statements in regards to our current plans, beliefs, and expectations. These statements are not guarantees of future performance and are subject to a number of risks and uncertainties and other factors that can cause actual results and events to differ materially from the results and events contemplated by these forward-looking statements. I'd also like to remind you that management will refer to certain non-GAAP financial measures. You can find reconciliations of the most directly comparable GAAP financial measures on the company's investor relations website and in its filings with the Securities and Exchange Commission. Please see our earnings release and our filings with the Securities and Exchange Commission for more information. Today's prepared remarks will be followed by a question and answer session. With that, let me turn it over to David.

Thank you, Christy, and good morning, everyone. The third quarter was another quarter of strong net sales as we leveraged our playbook for growth and gained traction with commercial initiatives. In fact, we delivered over 1 billion of net sales on a trailing 12-month basis for the first time in our history. With continued category resilience and healthier supply chain dynamics, we improved operating performance in areas that matter most to our customers and reduced our lead times. This improvement in operational performance enabled us to further reduce our past two backlog levels and delivered improvements in customer experience. In the third quarter, we drove 10% top-line growth, which translated to even stronger growth in operating profit. As we expanded gross margin, benefited from leverage on our growth, and remained focused on performance improvement through CMBS and our 80-20 process. Adjusted gross margin expanded by a robust 160 basis points year over year, even as we lapped pricing actions from the prior year. Improvements over time have been driven by progress in capacity planning, material costs, direct labor productivity, factory overhead rates, pricing, and the acquisition of Montrotech. Although we delivered strong margin expansion year over year, It fell a bit short of our own expectations due to a few unique items that Greg will unpack shortly. While those dynamics had an impact in the third quarter, we expect to accelerate year over year adjusted gross margin expansion in the fourth quarter. We have line of sight to 200 plus basis points of expansion with potential upside opportunities and remain on track for our 40% gross margin target in 2027. That exceptional operating performance is all thanks to the hard work and strong execution of our 3,500 Columbus McKinnon team members. I couldn't be more proud of how our nimble and innovative team has continued to deliver on behalf of both our customers and our shareholders. More consistent and improving execution by our team, combined with our differentiated business model, has delivered a strong record of performance over time and across a variety of economic environments. While we're growing and generating cash, which provides dry powder to reinvest in our growth framework where we have multiple levers to drive scale. We also remain focused on using our significant cash flow generation coupled with adjusted EBITDA growth to naturally deleverage our business. Our net leverage ratio now sits at 2.6 times and we're on track to achieve approximately 2.3 times by the end of the fiscal year. We're off to a solid start in the fourth quarter, powered by the resilience of our differentiated business, growing momentum with our commercial initiatives, and strong track record of our execution. If you'll turn to slide four, we delivered order growth of 8% in the third quarter, positioning us to deliver on our fourth quarter sales guidance, which Greg will discuss shortly. Orders remain strong across all geographies, and we saw particular strength in EMEA, as demand remained resilient despite the broader macroeconomic and geopolitical headwinds. Underpinning our growth was strength in precision conveyance and lifting, which were up 23% and 7% respectively. Even excluding Mantra Tech, precision conveyance was up 9%. Overall, demand for both our project and short cycle businesses remained healthy. Project orders grew double digits in Q3, reflecting our customer-centric focus targeted end-market growth initiatives, and channel diversification efforts. And on a quarter-to-date basis through last week, short-cycle orders continue to expand and are up 11% versus the same period last year. We are capitalizing on megatrends within the vertical market, leading to project wins in areas related to electric and hybrid vehicle advancements, e-commerce and package delivery solutions, farmers' ship-to-home trends, and increasing demand for prepackaged meals, where we are delivering customized solutions for our customers to address their unique needs and exact specifications. As we lean into customization, an increasing proportion of our portfolio requires unique equipment and parts, creating recurring revenue streams for our business that will also be a tailwind to gross margin over time. While still early, we see a growing pipeline of project activity this quarter, And I've already had wins in categories benefiting from megatrends that provide tailwinds to our business, such as pharma automation and logistics. While we are not immune to the macroeconomic environment, we remain cautiously optimistic about our near-term outlook, given the resilience of our customer relationships, the visibility we have into our sales funnel, and our efforts to improve our customers' experiences. Through our acquisitions and our commercial growth initiatives, we are adding new customers and expanding into new markets, markets that have attractive tailwinds. This has muted impacts from pockets of softness in industrial capex spending. Importantly, we remain encouraged by our funnel for both short cycle and large project orders. As I mentioned earlier, we remain highly focused on improving our operational performance and enhancing our customers' experience. As a result of these efforts, our backlog decreased by 6% from the prior quarter, driven by reductions in past due backlog, which decreased 26% in the period. Going forward, we expect backlog to further normalize from current levels. While this may impact near-term shipment flexibility, we expect to benefit from improved lead times and customer satisfaction levels, which we believe will create tailwinds to order frequency, and volume over the midterm. In addition to customer experience, we continue to make significant progress on all aspects of our transformation, delivering on productivity enhancements and simplifying our business, including foundational progress with the footprint rationalization plan that we mentioned in our last Investor Day. As part of that effort in January, we opened our state-of-the-art manufacturing center of excellence in Monterrey, Mexico, pictured on slide five. a 165,000 square foot facility that will enable productivity enhancements and growth over time. This investment is directly aligned with our 80-20 process and will cultivate a culture of innovation as we expand our R&D capabilities in the region. We expect to incur approximately 26 million of capex associated with this phase of the project. We also expect factory consolidation costs of approximately 2 million related to the closure of our Santiago, Mexico facility and our consolidation of that facility into Monterey in the fourth quarter. We expect to achieve productivity benefits related to this investment over the course of fiscal 25, but we anticipate that those benefits will be offset by overlapping production costs while we ramp production volume in the new factory. Pulling up on slide six, We're encouraged with the progress we're making and by the potential of our business as we advance our strategic transformation to become the global leader in intelligent motion solutions for material handling. We remain highly focused on executing our strategic plan and achieving both the near and long-term objectives we've established for the business. I remain confident in the long-term trajectory of Columbus McKinnon powered by our differentiated business model, track record of execution, an encouraging funnel of opportunities, and our acquisition strategy. We are just beginning to scratch the surface in terms of the value our precision conveyance business can deliver. The expansion of our total addressable market through our proven playbook provides a long and attractive runway for growth with a focus on targeted sectors that are benefiting from tailwinds associated with megatrends related to automation and the scarcity of labor resources, the near-shoring of manufacturing capacity, infrastructure and defense spending, as well as electrification. Our continued execution, growing momentum, and the strength of our business model give us confidence that we will remain on track to meet our long-term financial objectives. With that, I'll turn it over to Greg to take us through the financial results. Thank you, David.