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Columbus McKinnon's stock soars after strong earnings report

Columbus McKinnon's stock shot up by 22 percent Tuesday to its highest level in nearly a decade after the Amherst material handling equipment maker reported sales and profits that far surpassed what analysts were expecting in the first quarter.

The earnings report painted a picture of a company that is on a path toward much stronger financial performance after its shares slumped badly from the spring of 2015 through June 2016.

The company's profits jumped by 82 percent, while its sales grew by 37 percent, mainly because of a European acquisition last year that accelerated Columbus McKinnon's focus under new CEO Mark D. Morelli on more lucrative highly engineered products. The company also paid down a small portion of its debt and generated twice as much cash from its operations.

"We had a great quarter," Morelli said during a conference call.

"We've created a new cadence within the organization," he said. "The company has a significant opportunity ahead of us."

The strong earnings report pushed Columbus McKinnon's stock up by $5.62 per share to $31.42, its highest level since 2007.

Among the highlights:

* Columbus McKinnon's profits jumped by 82 percent and nearly doubled to $11.7 million, or 51 cents per share, compared with $6.4 million, or 32 cents per share. Excluding one-time items, its profits rose to $12.6 million, or 55 cents per share, which was more than the 32 cents per share that analysts were expecting.

*The company's sales rose by 37 percent to $204 million, roughly 13 million more than the $191 million that analysts forecast. While much of that increase was due to its acquisition of Stahl CraneSystems, the company's revenues from its existing businesses grew for the second straight quarter, rising by 8 percent.

Stronger demand within the construction, utility, steel and entertainment industries contributed to much of the sales increase.

*Columbus McKinnon paid down nearly $14 million of its debt, which had swelled following the Stahl acquisition. The company now has $408 million in debt and Morelli said he expects the company to pay down more than $35 million in debt between now and March 2018.

"I'm confident we will be able to de-lever very quickly," said Gregory P. Rustowicz, Columbus McKinnon's chief financial officer.

Under Morelli, who took over as CEO earlier this year, Columbus McKinnon has been putting less of an emphasis on legacy industrial products in favor of a greater focus on more highly engineered products that are both more profitable and help differentiate Columbus McKinnon from its competitors.

With Columbus McKinnon's backlog of orders up 12 percent from the end of March, Morelli said he expects the current fiscal year to be "solid." While revenues during the summer quarter are expected to be in line with the first quarter, Morelli said the profitability of those sales will be "somewhat lower" because of a different sales mix.

 

 

 

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