Columbus McKinnon, battered by the slump in its industrial markets, lost $1.3 million during its second quarter as the Amherst material handling products maker focuses on cutting its costs and paying down its debt.
"Mostly, it's a pretty woeful industrial economy right now," said Robert L. Montgomery, Columbus McKinnon's executive vice president and chief financial officer. "We continue trying to reduce fixed costs, but we can't quite keep up with the down economy."
The loss, which equaled 9 cents per share, included a $700,000 charge for costs associated with the closing of plants in Arkansas and British Columbia, but Columbus McKinnon also was hurt by shrinking profit margins as the company booked fewer sales and competition intensified at its auto assembly plant design business. The company earned $4.4 million, or 31 cents per share, a year ago.
While Columbus McKinnon executives said Tuesday that they were reluctant to make any detailed forecasts for the coming months, they indicated that they expect their cash flow to slow during the current quarter and their profits to remain under pressure.
"We will be above break-even, but not hugely above it," Montgomery said.
In response, Columbus McKinnon is eliminating its 7 cent per share dividend to conserve cash that company officials believe can be used more effectively by reducing the company's $375 million in long-term debt.
The company also is slashing its capital spending to $6 million or $7 million this quarter from about $12 million normally, said Timothy T. Tevens, Columbus McKinnon's chairman, president and chief executive officer.
And Columbus McKinnon is not ruling out further plant closings as a way to reduce costs. "There is more work to be done in plant rationalization activities," Tevens said.
"We continue to focus on cost control," Montgomery said. "We have focused very heavily in these turbulent times on collecting cash, bringing it in and paying down debt."
The company is continuing with its efforts to sell its automotive assembly line design business, but Tevens said there were no new developments to report.
The manufacturing recession, which was firmly in place even before the Sept. 11 terrorist attacks, helped push Columbus McKinnon's sales down by 9 percent to $171.6 million during the quarter ended Sept. 30, compared with $189 million the year before.
The company's industrial products business saw its sales fall by 15 percent to $103.2 million, while its operating profits plunged by 37 percent as the unit sold less of its most profitable products.
Sales at its industrial solutions business slid by 20 percent to $14 million, while its operating profits plummeted by 75 percent as the lower volumes squeezed profit margins.
The company's automotive solutions business, which is up for sale, was the only Columbus McKinnon unit to increase its revenues, gaining nearly 10 percent to $54.4 million. But increased competition within that business caused its operating profits to plunge by 97 percent to $67,000.