This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk04: building, and we remain excited in the resilience of our customer relationships, the visibility we have into our customers. Through our acquisitions and our commercial growth initiatives, we are adding new customers and expanding into new end markets, markets that have attractive tailwinds.
spk07: That being said, our continued focus
spk04: on improving operational performance and enhancing customer experience has resulted in a 6% decrease in our backlog from the prior quarter. Roughly half of the impact was driven by a reduction in past due backlog.
spk07: As a reminder, we expect backlog to further While this may impact the near term, we expect to benefit from improved customer satisfaction, and we believe this will result in We continue to make significant progress on all aspects of our
spk04: We continue to execute against this simplification plan and look forward to sharing more details when appropriate. to gross margin over time. We are encouraged by the progress we are making and by the potential of our business as we advance Columbus McKinnon's strategic transformation.
spk07: Market repositioning and margin expansion that our team has been able to deliver since we began this journey just a few years ago. We increased our sales by nearly 60% and expanded our points. Despite this material progress, we have higher ambition operating leverage on growth, the execution of footprint simplification plans, and benefits from other gross margin expansion levers. Our fiscal 2020 results are differentiated business model.
spk04: And the continued execution of our strategy can give us confidence that we will stay on track to achieve our goals.
spk07: initiatives that will enable us to achieve our financial objectives our footprint simplification plans and delivering profit offerings and open those solutions to new end markets and geographies leveraging the power of Columbus McKinnon's growing scale and global reach. With that, I'll turn it over to Greg to take us through the financial results. Thank you, David. Good morning, everyone.
spk05: Turning to slide eight, we delivered record net sales up 5% from the prior year period. was in line with the guidance we provided last quarter, which speaks to the strong execution from the team, 0.9% of the increase. As a reminder, Montrotech has variability from period to period, given the project nature of the business. Foreign currency translation was a benefit this quarter of 1.3 million, or 0.55%. Sales growth in the quarter was largely driven by precision conveyance, which was up 23% overall, and 9% of these remains healthy for this platform, and we saw strong order growth of 25% and 13% excluding the impact of the Montrotech acquisition. Our lifting platform also contributed to sales growth in the quarter as it was up 4% driven by strength in our project business. Driven by both volume and price, primarily in our precision conveyance platform as just referenced. Outside of the US, sales increased by 5.8%. This was primarily the result of Montrotech revenue and the favorable benefit of FX as we saw slight volume declines that were offset by pricing gains.
spk07: On slide nine, gross profit increased 3.1 million, 3.4% versus the prior year . even as we absorb 2.8 million of Monterey, Mexico's startup costs and factory consolidation costs in Europe with the EULA Germany consolidation.
spk05: We recorded gross margin of 35.5% in the fourth quarter. On 110 basis point, adjusted gross margin expansion realized they had a project in backlog prior to the acquisition that experienced higher purchase component costs, which we couldn't contractually pass through. American lifting business. We have since implemented CMBS-aligned
spk07: actions to address these issues.
spk05: For the full year, we delivered record adjusted gross margin of 37.3%, which is on the trajectory to our 40% gross margin goal. Moving to slide 10, RSG and DNA expense in the quarter increased 4.2% driven by the Montrotech acquisition, which added $2.9 million in the quarter, 23.1%, up 60 basis points due to the investment in R&D. DNA expense as a percentage of sales was down 10 basis points this quarter.
spk07: This percentage would have been even lower
spk05: by 80 basis points without the fees and expenses related to the term loan B repricing, which were 1.2 million.
spk07: And my rate in Mexico plant startup cost, which were 1.1 million.
spk05: Turning to slide 11, we generated operating income of $25.4 million in the quarter for the debt refinancing previously mentioned. Adjusted operating margin expanded by 20 basis points compared to the prior year. We mentioned new factory startup costs in Monterrey, Mexico, and the term loan B repricing costs, along with a tax Payment owed to the former owners of Stahl as a result of a tax refund we received in the quarter for one of the former Stahl subsidiaries that were related to the pre-acquisition time frame. Together, these items impacted GAAP EPS by 17 cents per share. Adjusted earnings per diluted share of 75 cents was down 5 cents from the prior year in a swing in foreign exchange from a gain in the previous year to a loss in the current year, which together impacted EPS by 80 cents per share. On slide 13, our adjusted EBITDA margin this quarter of 16.2% improved by 50 basis points from a year ago. On a full year basis, we achieved a record adjusted EBITDA margin of 16.4%, a 60 basis point improvement from where we finished fiscal year 23. Moving to slide 14, free cash flow for fiscal 24 was 42.4 million in the period. This includes cash provided by operating activities of 67.2 million and capex of $24.8 million. Free cash flow was down $28.6 million year over year, driven by $12.2 million of higher capex, largely related to the opening of our new Monterey, Mexico facility, and $8.9 million of higher cash interest and $6.3 million of higher cash taxes. Free cash flow conversion for the quarter was 91%,
spk07: slightly ahead of our guidance of 90%.
spk05: In slide 15, our capital structure continues to improve as our net leverage ratio was 2.4 times on a financial covenant basis. In addition, we were opportunistic in March and repriced our term loan B. We expect this to generate approximately $2.5 million of interest expense savings in fiscal year 2025.
spk07: We also continued our accelerated debt reduction plan as we paid down another $20 million of debt in the fourth quarter. We are planning to pay down an additional $15 million of debt in fiscal year 2025. This is one of the prices that conditions allow. Slide 16 provides optimistic regarding fiscal 25 on the record for fiscal 2024.
spk05: Improvements we are driving throughout the while we remain confident in the long-term potential of our business Near-term macroeconomic backdrop remains uncertain Given the sense certainly we have taken a prudent approach to our expectations for fiscal 25 With that in mind we are issuing the following guidance for the quarter in the year. I We expect low single-digit sales growth year-over-year. We also expect adjusted EPS related to the footprint simplification underway with the Monterey, Mexico facility. And we expect our net leverage ratio to end fiscal 2015 for the year. And again, an effective tax rate of 25% with diluted shares outstanding of 29.4 million every year. This assumes approximately 9 million of interest expense and 8 million of amortization in the quarter and an effective tax rate of 25% with diluted shares outstanding of 29.2 million. Again, Our guidance reflects our early views on fiscal 25, as well as trends we are currently seeing.
spk07: Operator, we are now ready to take questions. Thank you. If you would like to ask a question, please press star one on your telephone keypad.
spk06: question queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the start keys. Our first question is from Matt Summerville with ZAD Davidson.
spk07: Please proceed. Thanks. A couple questions. Could you maybe talk about
spk00: order cadence as you progress through the fiscal fourth quarter and what you've seen from an incoming order rate standpoint in April and May. And, you know, are you seeing anything in your more, you know, quote, canary end markets that are giving you a... Q4, our progression was an increase in many
spk04: notable concerns relative to the quarter's run rate of orders at this point. Our channel inventory, but as we've identified, although we're optimistic, we're cautiously optimistic given the broader macroeconomic uncertainties, and we're taking a prudent view
spk07: Thank you. wins may be that hit adjusted gross margin in the quarter.
spk00: Could you quantify the magnitude of that headwind?
spk07: Going back and, you know, pretty confident in your ability to hit 38% adjusted gross margin, we came in at 38%. So, I'm just trying to understand, you know, what would have made the . Well, yeah. about four million dollars of market impact. and with moderate or an absorption being off It's not something that we've seen in the past. We've seen it in the past. It's not something that we've seen in the past. We've seen it in the past. fiscal 25 It looks like you get there just on lower interest expense. So are you assuming any further grossing?
spk02: Because that sort of gets you there just with the $5 million grossing.
spk05: interest in the equation as well to increase our ability to scale out. But, you know, the savings are very immaterial.
spk04: For Montratech, sorry, for the Monterey facility.
spk02: And then to the top line growth, if you look at historical terms, pre-
spk07: COVID, we had customers . of what might be a new normalization level with new ordering patterns. And if demand remains as it has been, So probably the midpoint of our guide, you would say that we would customers which were Revenue recognition there Coming back, you know, maybe in a later quarter
spk04: In addition to the core components to the portfolio, the really circled and addressed and both from a process and from a people standpoint of taking corrective action to ensure that that's behind us.
spk00: During the year, compared to your expectations, I guess, when you bought it.
spk07: And does that, I guess, the reverend, The quarter for the year, very much in line.
spk04: So they delivered $32.6 million for the 10 months that we owned them. And a few annual items that we said was going to grow 30% per year. So we're very much on a $40 million clip, even with this lighter core for the fiscal year, including those 10 months, as we mentioned. And so this is very much a business that is performing at a level that in line with our expectations for the first 10 months of ownership. It is a bit lumpy given the phasing of projects. And we're really encouraged with the demand potential for that business as we unlock its exposure globally with our reach. And we're accessing some really attractive markets that have great potential. And so we feel good about the business. We feel good about its trajectory. There are some periodic impacts here that we're experiencing in revenue, but improved in terms of margin.
spk05: And just to add on, John, and just a reminder to folks on the call, so we bought MonitorTech May 31st.
spk07: last year, so we have two more months, and then we'll be in the anniversary of the month tech acquisition. And so when we break out acquisition sales in the upcoming quarter, it'll only be for the two months.
spk05: And the rest of the amount of tech revenue, $2.6 million of sales that David referenced for this past quarter. And we have, John, we have from price increases that our vendors passed through back in fiscal 24. So that volume with just taking a prudent approach with all the uncertainty that's out there, that volume is going to be relatively flat to maybe up
spk07: a little bit. Got it. Thank you.
spk03: Yes, we can. Good morning, Walt. Okay, good morning. Okay, so I wonder, you talked a little bit about the conveyance order growth, and it seems like 13% order growth is... is, you know, kind of a pretty good start, pretty good visibility for the year.
spk07: Can you provide maybe a little bit more detail, you know, what are you seeing from the funnel, the quoting environment, et cetera? Yeah, the funnel is really encouraging. In the U.S., we have roughly 33 million dollars. opportunities that we typically see come into the business on an ordinary course across pharma
spk04: e-commerce on the packaging industry as well as in the robotics space that impacted the business over the last 18 months, you know, in addition to the challenges that we saw from a demand perspective in e-commerce. And what we're seeing generally is that those overhangs are alleviating and that the funnel is advancing. So we're encouraged by the funnel.
spk07: are attractive in those industries that I mentioned. And maybe, Walt, just to add on, we're very excited about the fact that we just won an order for a Montrotech system in the U.S.
spk03: to a Dorner customer that's very sizable with the potential for.
spk07: For prepared comments, you alluded to some, you know, if you could understand what's going on in the selling strategies. you know, to, you know, keep this order growth going. We're largely selling both portfolios at this point. The North American channels that we have, and as Greg just highlighted, capturing with the opportunity to sell this product through our selfie presence commercially to sell that product. And now we're bringing them onto the market. and Garvey portfolio into that mix is something we... We were recently at a show with customers to leverage those technologies across the landscape.
spk03: Okay, yeah, thanks for that. Sounds great. If we just switch gears to sort of the... outlook that you talked about.
spk07: I think you referenced macro, but I wonder if you can be more specific. Is it Europe macros? Is it U.S. macro? You know, what do you think in Europe? in the macro in Europe over the last three months.
spk04: And so that's around that. The election cycle and potential uncertainty around that We thought it was prudent for us as we look at the potential for you to take a prudent view on our outlook for the year.
spk07: Okay. All right. Thanks much.
spk06: Thank you. This will conclude the question and answer session of the earnings call. I will now turn the call back over to Mr. Wilson for closing remarks.
spk07: Great. Thank you, Sherry, and thank you to all on the call for joining us today.
spk04: Our team is executing our strategic plan, improving our customers' experience, and making my personal thanks to our entire team for their dedication and relentless execution that enabled us to deliver record results in fiscal year. Mid-teens adjusted operating income growth in a dynamic environment throughout the year offer meaningful proof points that highlight the power of our transformation. While we are taking a prudent view regarding guidance for fiscal 2025, we remain highly confident in our potential over the longer term. Our deliberately curated portfolio of businesses generates significant cash flow, which enables us to reinvest in our business and de-lever the balance sheet. unlocking further cash flow potential as we invest in businesses with attractive cash-on-cash returns. Powered by our attractive and improving financial performance and our position, we remain confident in our ability to deliver shareholder value over time.
spk06: Thank you. This concludes today's conference call. You may now disconnect.
Disclaimer