Q4 2024 Columbus McKinnon Corporation Earnings Call

Operator: Good morning. Welcome to Columbus McKinnon's full year and fourth quarter fiscal 2024 earnings conference call. My name is Sherry. I will be your conference operator today. As a reminder, this call is being recorded. I would now like to turn the call over to Kristine Moser, Vice President of Investor Relations. Please go ahead.

Good morning, welcome to Columbus, Mckinnon full year and fourth quarter fiscal 'twenty 'twenty four earnings conference call. My name is Sherry I will be your conference operator today as a reminder, this call is being recorded I would now like to turn the conference over to Kristy, both serve vice president of Investor.

Kristy: <unk>. Please go ahead.

Kristy: Thank you.

Kristine Moser: Good morning, and welcome everyone to Columbus McKinnon's fourth quarter and full year fiscal 2024 earnings conference. The earnings release and presentation are available for download on our Investor Relations website at investors.cmcl.com.

Speaker Change: Good morning, and welcome everyone to Columbus, Mckinnon fourth quarter and full year fiscal 2024 earnings conference call. The earnings release and presentation are available for download on our Investor Relations website at investors that see M. C O dot com on the call with me today are David Wilson, our President and Chief.

Kristine Moser: On the call with me today are David Wilson, our President and Chief Executive Officer, and Greg Rustowicz, our Chief Financial Officer. In a moment, David and Greg will walk you through our financial and operating performance for the quarter. Before we begin our remarks, please let me remind you that we have our safe harbor statement on slide 2. During the course of this call, management may make forward-looking statements in regards to our current plans, beliefs, and expectations.

David J. Wilson: Officer, and Greg rest with our Chief Financial Officer in a moment, David and Greg will walk you through the financial and operating performance for the quarter.

Kristine Moser: 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.

David J. Wilson: 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 for future performance and are subject to a number of risks and uncertainties and other factors that can.

David J. Wilson: 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.

Speaker Change: 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 I'll turn the call over to David.

Kristine Moser: 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, I'll turn the call over to David.

David J. Wilson: Thank you, Kristine. Good morning, everyone.

Thank you Christy and good morning, everyone fiscal 2024 was another record year for Columbus Mckinnon as we grew sales by 8% to over $1 billion for the first time in our history and expanded adjusted EBITDA margins by 60 basis points to our highest level ever or 16, 4% we expanded.

David J. Wilson: Fiscal 2024 was another record year for Columbus McKinnon as we grew sales by 8% to over $1 billion for the first time in our history and expanded adjusted EBITDA margins by 60 basis points to our highest level ever, or 16.4%. We expanded gross margin, benefited from leverage on our growth, and remained focused on performance improvement through the Columbus McKinnon Business System and 80-20 Action. In fact, it was a record year for sales, gross profit, gross margin, operating profit, and adjusted EBITDA.

Speaker Change: Gross margin benefited from leverage on our growth and remain focused on performance improvement through the Columbus Mckinnon business system, and 80 20 actions.

Speaker Change: In fact, it was a record year for sales gross profit gross margin operating profit and adjusted EBITDA margin.

David J. Wilson: These results are a testament to the effectiveness of our strategy, solid execution by our global CMCO associates, and the growing impact of our transformation. We delivered high single-to double-digit sales growth across each area of our business, including automation, precision conveyance, lifting, and linear motion. And this sales growth came from both our project and short cycle business. With healthier supply chain dynamics and improved operating performance, we delivered in areas that were most important to our customers. Over the past year, we improved our on-time delivery by 12% and reduced our past-due backlog by 73% from its peak, which is now back to normalized pre-COVID levels. Importantly, this translates to an improved customer experience.

unknown: These results are a testament to the effectiveness of our strategy solid execution by our global <unk> associates and the growing impact of our transformation.

unknown: We delivered high single to double digit sales growth across each area of our business, including automation precision can vance lifting and linear motion in the year.

unknown: And this sales growth came from both our project and short cycle businesses.

unknown: With healthier supply chain dynamics and improved operating performance, we delivered in areas that are most important to our customers over the past year, we improved our on time delivery, 12% and reduced our past due backlog by 73% from its peak, which is now back to normalized pre COVID-19 levels.

unknown: Importantly, this translates to an improved customer experience and we expect that to be a tailwind to our business as we increase our share of wallet with existing customers and grow with new customers.

David J. Wilson: And we expect that to be a tailwind to our business as we increase our share of wallet with existing customers and grow with new customers. For example, in our North American hoist business, where we experienced the greatest supply chain challenge, current lead times have improved by approximately 50% since early fiscal 24, and we improved on-time delivery to those reduced lead times by 30% within the year.

unknown: For example, in our North American hoist business, where we experienced the greatest supply chain challenges current lead times have improved by approximately 50% since early fiscal 'twenty four.

unknown: And we improved on time delivery to those reduced lead times by 30% within the year.

David J. Wilson: These improvements and others position us to continue to build on our net promoter score following a 25-point improvement in fiscal year 24, including double-digit improvements across all product lines in the Americas. Adjusted gross margin expanded by a robust 80 basis points year-over-year in fiscal 24. And, in the fourth quarter, we delivered 70 basis points of adjusted gross margin expansion, even as we lagged the 110 basis point improvement we delivered in the prior year.

unknown: These improvements and others position us to continue to build on our net promoter score. Following a 25 point improvement in fiscal year, 'twenty, four including double digit improvements across all product lines in the Americas.

Speaker Change: Adjusted gross margin expanded by a robust 80 basis points year over year in fiscal 'twenty for <unk>.

Speaker Change: And in the fourth quarter, we delivered 70 basis points of adjusted gross margin expansion, even as we lap the 110 basis point improvement we delivered in the prior year.

David J. Wilson: We are proud of the progress that we have made on adjusted gross margin expansion, even as we navigated a few unique items in Q4 that Greg will cover. This gives us further confidence in our ability to deliver additional gross margin expansion in fiscal 2025 and remain on track for our long-term objective. Our fiscal 2024 record performance is the result of the hard work and strong execution of our 3,500 Columbus McKinnon team members.

Speaker Change: We are proud of the progress that we've made on adjusted gross margin expansion, even as we navigated a few unique items in Q4 that Greg will cover.

Speaker Change: This gives us further confidence in our ability to deliver additional gross margin expansion in fiscal 2025 and remain on track for our long term objectives.

Speaker Change: Our fiscal 2020 for record performance is the result of the hard work and strong execution of our 3500 Columbus Mckinnon team members.

David J. Wilson: I am proud of how our nimble and innovative team has continued to deliver on behalf of both our customers and shareholders over time and across a variety of economic environments. However, while we've made solid progress, we still have significant opportunities in front of us to enhance the customer experience, optimize our business, and grow profitably. And we are growing, strategically repositioning our company, and generating cash, which provides dry powder to reinvest in our growth framework, where we have multiple levers to drive more scale.

Speaker Change: I am proud of how our nimble and innovative team has continued to deliver on behalf of both our customers and shareholders over time and across a variety of economic environments.

Speaker Change: While we've made solid progress, we still have significant opportunities in front of us to enhance customer experience optimize our business and grow profitably.

Speaker Change: And we are growing strategically repositioning our company and generating cash which provides dry powder to reinvest in our growth framework, where we have multiple levers to drive more scale, we believe that increasing scale will become a compounding advantage as we execute our strategy over time.

David J. Wilson: We believe that increasing scale will become a compounding advantage as we execute our strategy over time. We remain focused on using our significant cash flow generation to deleverage our business. Our net leverage ratio now sits at 2.4 times, and we're on track to reduce this ratio to approximately two times by the end of fiscal year 2025. Turning to slide four, we exited the year with momentum, delivering order growth of 5% in the fourth quarter and 3% on an organic basis. Water growth on a sequential basis was up 12%.

Speaker Change: We remain focused on using our significant cash flow generation to deleverage our business. Our net leverage ratio now sits at two four times and we are on track to reduce this ratio to approximately two times by the end of fiscal year 2025.

Speaker Change: Turning to slide four we exited the year with momentum delivering order growth of 5% in the fourth quarter and 3% on an organic basis.

Speaker Change: Order growth on a sequential basis was up 12%.

David J. Wilson: Year over year, orders grew across the Americas, EMEA, and APAC, demonstrating the resilience of demand in these geographies despite the broader macroeconomic and geopolitical headwinds. In the fourth quarter, precision conveyance continued to be a particular area of strength, with order growth of 25% year over year. Excluding Montretek, precision conveyance orders were up 13%.

Speaker Change: Year over year orders grew across the Americas, EMEA and APAC, demonstrating the resilience of demand in these geographies, despite the broader macroeconomic and geopolitical headwinds.

Speaker Change: In the fourth quarter precision conveyance continued to be a particular area of strength with order growth of 25% year over year.

Speaker Change: Excluding mantra tech precision conveyance orders were up 13% lifting orders were up 6% with particular strength in North America, which was up 17%, reflecting early green shoots resulting from our enhanced operational performance as discussed earlier.

David J. Wilson: Lifting orders were up 6%, with particular strength in North America, which was up 17%, reflecting early green shoots resulting from our enhanced operational performance, as discussed earlier. Overall, demand for both our project and short cycle businesses remained healthy. Short cycle orders were up mid-single digits, project orders were down slightly due to the timing of a few larger orders falling into the first quarter, but overall, the project order pipeline remains healthy, reflecting our customer-centric focus, targeted end-market growth initiatives, and end-channel diversification efforts.

Speaker Change: Overall demand for both our project and short cycle businesses remained healthy short cycle orders were up mid single digits project orders were down slightly due to timing of a few larger orders falling into the first quarter, but overall the project order pipeline remains healthy, reflecting our customer centric focus targa.

Speaker Change: Good end market growth initiatives and channel diversification efforts.

David J. Wilson: While still early, we see a growing pipeline of project activity this quarter and have already had wins in categories benefiting from megatrends that provide tailwinds to our business, such as pharma, e-commerce, and electrification. Additionally, we just closed a deal with a large ship-to-home prescription distribution company in North America for our Montrotec asynchronous conveyance solution.

Speaker Change: While still early we see a growing pipeline of project activity this quarter and have already had wins in categories benefiting from mega trends that provide tailwind to our business such as pharma ecommerce and electrification.

Speaker Change: Additionally, we just closed a deal with a large ship to home prescription distribution company in North America for our mantra Tech asynchronous conveyance solutions.

David J. Wilson: Our momentum with MontraTech is building, and we remain excited by the potential for that technology as we expand our coverage. While we're 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' experience. Through our acquisitions and our commercial growth initiatives, we are adding new customers and expanding into new end markets, markets that have attractive tailwinds.

Speaker Change: Our momentum with mantra Tech is building and we remain excited by the potential for that technology as we expand our coverage.

Speaker Change: While we're 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' experience.

Speaker Change: Through our acquisitions and our commercial growth initiatives, we are adding new customers and expanding into new end markets markets that have attractive tailwind.

David J. Wilson: That being said, in the context of an uncertain environment, we took a prudent approach to guidance for the year, which Greg will share more about shortly. Our continued focus 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, and the remainder was the result of the continued normalization of overall backlog.

Speaker Change: That being said in the context of an uncertain environment, we took a prudent approach to guidance for the year, which Greg will share more about shortly.

Speaker Change: Our continued focus on improving operational performance and enhancing customer experience has resulted in a 6% decrease in our backlog from the prior quarter.

Speaker Change: Roughly half of the impact was driven by a reduction in past due backlog and the remainder was the result of the continued normalization of overall backlog.

David J. Wilson: As a reminder, we expect Backlog to further normalize from current levels as we demonstrate the permanency of our improved customer lead times and customers adjust their ordering behavior. While this may impact the near term, we expect to benefit from improved customer satisfaction, and we believe this will result in increased wallet share over time. On slide five, in addition to customer experience, we continue to make significant progress on all aspects of our transformation, including delivering on productivity enhancements and simplifying our business.

Speaker Change: As a reminder, we expect backlog to further normalize from current levels as we demonstrate the permanency of our improved customer lead times and customers adjust their ordering behavior.

Speaker Change: While this may impact the near term, we expect to benefit from improved customer satisfaction and we believe this will result in increased wallet share over time.

Speaker Change: On slide five in addition to customer experience, we continue to make significant progress on all aspects of our transformation, including delivering on productivity enhancements and simplifying our business.

David J. Wilson: As you know, all aspects of our business are guided by this strategic framework, which is secured by the foundation of CMBS and leads to our transformation as we successfully leverage our growth framework. During the year, we made progress with our footprint simplification plan, which is a core element of our 80-20 process. We have now fully integrated our Santiago facility into our new Center of Excellence in Monterrey, Mexico, and our ULIC facility into our Rupert Hall, Germany facility.

Speaker Change: As you know all aspects of our business are guided by the strategic framework, which is secured by the foundation of <unk> and leads to our transformation as we successfully leverage our growth framework.

Speaker Change: During the year, we made progress with our footprint simplification plan, which is a core element of our 80 20 process.

Speaker Change: We have now fully integrated our Santiago facility into a new center of excellence in Monterrey, Mexico.

Speaker Change: And are you look facility into our <unk>, Germany facility.

David J. Wilson: We are pleased with the early results. We continue to execute against this simplification plan and look forward to sharing more details when appropriate. As a reminder, this is expected to contribute an additional 200 basis points 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. Turning to slide six.

Speaker Change: We are pleased with the early results, we continue to execute against the simplification plan and look forward to sharing more details when appropriate.

Speaker Change: As a reminder, this is expected to contribute an additional 200 basis points to gross margin over time.

Speaker Change: We are encouraged by the progress we are making and by the potential of our business as we advance Columbus Mckinnon strategic transformation.

Speaker Change: Turning to slide six I.

David J. Wilson: I'm pleased with the growth, market repositioning, and margin expansion that our talented 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 adjusted EBITDA margins by 450 basis points. Despite this material progress, we have higher ambitions and are working to deliver another 50% top-line growth and another 460 basis points of adjusted EBITDA margin expansion within our strategic planning period.

Speaker Change: I am pleased with the growth market repositioning and margin expansion that our talented team has been able to deliver since we began this journey just a few years ago.

Speaker Change: We increased our sales by nearly 60% and expanded our adjusted EBITDA margin by 450 basis points.

Speaker Change: Despite this material progress we have higher ambitions and are working to deliver another 50% topline growth and another 460 basis points of adjusted EBITDA margin expansion within our strategic planning period.

David J. Wilson: This margin expansion reflects operating leverage on growth, the execution of footprint simplification plans, and benefits from other gross margin expansion leverage. Our fiscal 2024 results, our differentiated business model, and the continued execution of our strategy give us confidence that we will stay on track to achieve our long-term financial objectives. Looking to slide seven, as we enter fiscal 2025, our strategic priorities will remain deliberately consistent as we execute on the most important initiatives that will enable us to achieve our financial objectives.

Speaker Change: This margin expansion reflects operating leverage on growth the execution of footprint simplification plans and benefits from other gross margin expansion levers.

Speaker Change: Our fiscal 2024 results, our differentiated business model and the continued execution of our strategy give us confidence that we will stay on track to achieve our long term financial objectives.

Speaker Change: Looking to slide seven as we enter fiscal 2025, our strategic priorities remain deliberately consistent as we execute on our most important initiatives that will enable us to achieve our financial objectives.

David J. Wilson: Specifically, we are focused on enhancing the customer experience and further differentiating our customer value proposition, driving operational excellence at our factories, executing our footprint simplification plan, and Delivering Profitable Growth. I remain confident in the long-term trajectory of Columbus McKinnon. We are delivering improvements in all areas of the business and are just beginning to scratch the surface in terms of the value our precision conveyance business can deliver as we integrate our offerings and open those solutions to new end markets and geographies, leveraging the power of our growing scale and global reach. With that, I'll turn it over to Greg to take us through the financial results.

Speaker Change: Specifically, we are focused on enhancing customer experience and further differentiating our customer value proposition.

Speaker Change: Driving operational excellence at our factories.

Speaker Change: Executing our footprint simplification plans.

And delivering profitable growth.

Speaker Change: I remain confident in the long term trajectory of Columbus Mckinnon.

Speaker Change: We are delivering improvements in all areas of the business and are just beginning to scratch the surface in terms of the value of our precision conveyance business can deliver as we integrate our offerings and open those solutions to new end markets and geographies leveraging the power of Columbus Mckinnon is growing scale and global reach.

With that I'll turn it over to Greg to take us through the financial results.

Gregory P. Rustowicz: Thank you, David. Good morning, everyone.

Greg: Thank you David good morning, everyone.

Gregory P. Rustowicz: Turning to slide 8, we delivered record net sales in the fourth quarter of $265.5 million, up 5% from the prior year period. This was in line with the guidance we provided last quarter, which speaks to the strong execution from the team. We realized pricing gains of $5.7 million, or 2.3%, while volume was flat. The Montcrotech acquisition contributed $4.9 million to sales, or 1.9% of the increase. As a reminder, Montrotec has variability from period to period, given the project nature of the business.

Greg: Turning to slide eight we delivered record net sales in the fourth quarter of $265 $5 million up 5% from the prior year period.

Greg: This was in line with the guidance, we provided last quarter, which speaks to the strong execution from the team.

Greg: We realized pricing gains of $5 7 million or two 3% while volume was flat.

Speaker Change: The <unk> acquisition contributed $4 $9 million of sales or one 9% of the increase.

Speaker Change: As a reminder, mantra tech has variability from period to period, given the project nature of the business.

Gregory P. Rustowicz: Foreign currency translation was a benefit this quarter of $1.3 million, or 0.5%. Sales growth in the quarter was largely driven by precision conveyance, which was up 23 percent overall and 9 percent excluding Montrotec. As David discussed, our pipeline of opportunities remains healthy for this platform, and we saw strong order growth of 25% in Q4 and 13% excluding the impact of the MontraTech acquisition. Our lifting platform also contributed to sales growth in the quarter as it was up 4% driven by strength in our project business. In the U.S., sales increased 3.7 percent, driven by both volume and price, primarily in our precision conveyance platform, as just referenced. Outside of the U.S., sales increased by 5.8 percent.

Speaker Change: Foreign currency translation was a benefit this quarter of $1 3 million or 5%.

Speaker Change: Sales growth in the quarter was largely driven by precision conveyance, which was up 23% overall and 9% excluding mantra tech.

Speaker Change: As David discussed our pipeline of opportunities remains healthy for this platform and we saw strong order growth of 25% in Q4 and 13% excluding the impact of the mantra Tech acquisition.

Speaker Change: Our lifting platform also contributed to sales growth in the quarter as it was up 4% driven by strength in our project business.

Speaker Change: In the U S sales increased three 7% driven by both volume and price primarily in our precision conveyance platform has just referenced.

Speaker Change: Outside of the U S sales increased by five 8%. This was primarily the result of mantra Tech revenue and the favorable benefit of FX as we saw slight volume declines that were offset by pricing gains.

Gregory P. Rustowicz: 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. On slide nine, gross profit increased $3.1 million, or 3.4% versus the prior year, driven primarily by a favorable sales mix, even as we absorb $2.8 million of Monterrey, Mexico startup costs and factory consolidation costs in Europe with the Uelich Germany consolidation. We recorded a gross margin of 35.5% in the fourth quarter.

Speaker Change: On slide nine gross profit increased $3 1 million or three 4% versus the prior year, driven primarily by favorable sales mix, even as we absorbed $2 8 million, our Monterrey, Mexico startup cost and factory consolidation costs in Europe, with a eulich, Germany consolidation.

Speaker Change: We recorded gross margin of 35, 5% in the fourth quarter on an adjusted basis gross margin was 36, 6% up 70 basis points year over year, which is on top of the 110 basis point adjusted gross margin expansion realized in the prior year.

Gregory P. Rustowicz: On an adjusted basis, gross margin was 36.6%, or 70 basis points year over year, which is on top of the 110 basis point adjusted gross margin expansion realized in the prior year. Price, net of material inflation, and other manufacturing cost changes continues to be accretive to gross profit.

Speaker Change: Price net of material inflation and other manufacturing cost changes continues to be accretive to gross profit. However, there were a couple of items that resulted in lower gross margins than we expected first we had lower than expected revenue recognized at <unk> in the quarter, which impacted fixed cost absorption.

Gregory P. Rustowicz: However, there were a couple of items that resulted in lower gross margins than we expected. First, we had lower-than-expected revenue recognized at Matrotech in the quarter, which impacted fixed-cost absorption. In addition, they had a project in backlog prior to the acquisition that experienced higher purchase component costs, which we couldn't contractually pass through. Finally, we had some inventory cleanup items in our North American lifting business. We have since implemented CMBS-aligned corrective actions to address these issues.

Speaker Change: In addition, they had a project in backlog prior to the acquisition that experienced higher purchase component costs, which we couldnt contractually passed through.

Speaker Change: Finally, we had some inventory cleanup items in our north American lifting business, we have since implemented <unk> aligned corrective actions to address these issues.

Gregory P. Rustowicz: For the full year, we delivered a record-adjusted gross margin of 37.3%, which is on the trajectory to our 40% gross margin goal. Moving to slide 10, RSG&A expense in the quarter increased $4.2 million to $61.4 million. This was driven by the Montrotec acquisition, which added $2.9 million in the quarter, as well as $1.3 million of increased R&D investment. RSG&A cost as a percent of sales was 23.1%, up 60 basis points due to the investment in R&D.

Speaker Change: For the full year, we delivered record adjusted gross margin of 37, 3%, which is on the trajectory to our 40% gross margin goal.

Speaker Change: Moving to slide 10, our SG&A expense in the quarter increased $4 2 million to $61 4 million.

Speaker Change: This was driven by the <unk> acquisition, which added $2 9 million in the quarter as well as $1 $3 million of increased R&D investments.

Speaker Change: Our SG&A costs as a percent of sales was 23, 1% up 60 basis points due to the investment in R&D G&A expense as a percent of sales was down 10 basis points this quarter.

Gregory P. Rustowicz: G&A expense as a percent of sales was down 10 basis points this quarter. This percentage would have been even lower by 80 basis points without the fees and expenses related to the Term Loan B repricing, which were $1.2 million, and Monterrey, Mexico plant startup costs, which were $1 million. Turning to slide 11.

Speaker Change: This percentage would have been even lower by 80 basis points without the fees and expenses related to the term loan B repricing, which were $1 2 million in Monterrey, Mexico plant startup costs, which were $1 million.

Speaker Change: Turning to slide 11.

Gregory P. Rustowicz: We generated operating income of $25.4 million in the quarter for 9.6% of sales. Operating income was impacted by $5.6 billion of pro forma items, including the Monterrey, Mexico, new factory startup costs and the fees and expenses paid for the debt refinancing previously mentioned. Adjusted operating income was $31.1 million, or 11.7% of sales. On an adjusted basis, operating income grew $1.9 million, or 6.6%, and adjusted operating margin expanded by 20 basis points compared to the prior year.

Speaker Change: We generated operating income of $25 4 million in the quarter were nine 6% of sales operating income was impacted by $5 6 billion of pro forma items, including the Monterrey, Mexico, New factory startup costs and the fees and expenses paid for the debt refinancing previously mentioned adjusted.

Speaker Change: Operating income was $31 1 million or 11, 7% of sales on an adjusted basis operating income grew $1 9 million or six 6% and adjusted operating margin expanded by 20 basis points compared to the prior year.

Gregory P. Rustowicz: As you can see on slide 12, we recorded gap earnings per diluted share for the quarter of $0.41, down $0.07 versus the prior year. This was due to the previously mentioned new factory startup costs in Monterey, Mexico, and the term loan fee repricing costs, along with a tax indemnification 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 related to the pre-acquisition time frame. Together, these items impacted GAP EPS by 17 cents per share.

Speaker Change: As you can see on slide 12, we recorded GAAP earnings per diluted share for the quarter of 41 down.

Speaker Change: <unk> seven versus the prior year. This was due to the previously mentioned new factory startup costs in Monterrey, Mexico, and the term loan B repricing costs, along with the tax indemnification payment owed to the former owners of stall as a result of a tax refund we received in the quarter for one of the former.

Speaker Change: <unk> subsidiaries that related to the pre acquisition timeframe.

Speaker Change: Together these items impacted GAAP EPS by <unk> 17 per share.

Gregory P. Rustowicz: Adjusted earnings per diluted share of $0.75 was down $0.05 from the prior year, driven by below-the-line items, including higher interest expense and a swing in foreign exchange from a gain in the previous year to a loss in the current year, which together impacted EPS by $0.08 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%.

Speaker Change: Adjusted earnings per diluted share of <unk> 75.

Speaker Change: It was down <unk> <unk> from the prior year driven by below the line items, including higher interest expense and a swing in foreign exchange from a gain in the previous year to a loss in the current year, which together impacted EPS by <unk> <unk> per share.

Speaker Change: On slide 13, our adjusted EBITDA margin this quarter of 16, 2% improved by 50 basis points from a year ago.

Speaker Change: On a full year basis, we achieved record adjusted EBITDA margin of 16, 4%, a 60 basis point improvement from where we finished fiscal year 'twenty three.

Gregory P. Rustowicz: 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 during the period. This includes cash provided by operating activities of $67.2 million and capital expenditures of $24.8 million. Free cash flow was down $28.6 million year-over-year, driven by $12.2 million of higher capital expenditures, largely related to the opening of our new Monterey, Mexico facility, $8.9 million of higher cash interest, and $6.3 million of higher cash tax.

Speaker Change: Moving to slide 14 free cash flow for fiscal 'twenty four was $42 4 million in the period. This includes cash provided by operating activities of $67 2 million in Capex of $24 8 million.

Speaker Change: 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 Monterrey, Mexico facility and $8 9 million of higher cash interest and $6 3 million of higher cash taxes.

Gregory P. Rustowicz: Pre-cash flow conversion for the quarter was 91%, slightly ahead of our guidance of 90%. Turning to slide 15, her capital structure continues to improve as her 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 25. 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 $50 million of debt in fiscal 25. This is a priority for us, and we are working to accelerate even more debt repayment as business conditions allow.

Speaker Change: Free cash flow conversion for the quarter was 91% slightly ahead of our guidance of 90%.

Speaker Change: Turning to slide 15, our capital structure continues to improve as our net leverage ratio was two four 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 'twenty five.

Speaker Change: 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 $50 million of debt in fiscal 'twenty. Five. This is a priority for us and we are working to accelerate even more debt repayment as business conditions allow.

Speaker Change: Slide 16 provides our new guidance for fiscal year 'twenty five in the first quarter. We are cautiously optimistic regarding fiscal 'twenty five on the back of record performance in fiscal 'twenty for the improvements we are driving throughout the business and our visibility into the order funnel.

Gregory P. Rustowicz: Slide 16 provides our new guidance for FY25 in the first quarter. We are cautiously optimistic regarding FY25 on the back of record performance in FY24, the improvements we are driving throughout the business, and our visibility into the order funnel. While we remain confident in the long-term potential of our business, the near-term macroeconomic backdrop remains uncertain. Given this uncertainty, 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 and the year.

Speaker Change: While we remain confident in the long term potential of our business the near term macroeconomic backdrop remains uncertain.

Speaker Change: Given this uncertainty we have taken a prudent approach to our expectations for fiscal 'twenty five.

Gregory P. Rustowicz: We expect low single-digit sales growth year-over-year. We also expect adjusted EPS to grow mid-to-high single-digits. CapEx will be in a range of $20 million to $30 million, which includes $13 million related to the footprint simplification underway at the Monterrey, Mexico facility, and we expect our net leverage ratio to end fiscal 25 at approximately two times. This assumes approximately $33 million of interest expense and $30 million of amortization for the year and an effective tax rate of 25 percent with diluted shares outstanding of $29.4 million.

Speaker Change: With that in mind, we are issuing the following guidance for the quarter and the year, we expect low single digit sales growth year over year. We also expect adjusted EPS to grow mid to high single digits.

Speaker Change: Capex will be in a range of $20 million to $30 million, which includes $13 million related to the footprint simplification underway with our Monterrey, Mexico facility.

Speaker Change: And we expect our net leverage ratio to end fiscal 'twenty five at approximately two times. This assumes approximately $33 million of interest expense and $30 million of amortization for the year and an effective tax rate of 25% with diluted shares outstanding of $29 4 million.

Gregory P. Rustowicz: In the first quarter of fiscal 25, we expect sales to grow in the low single digits and adjusted EPS to be flat to slightly down year-over-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. We remain confident in our long-term trajectory and our ability to create value for our shareholders as we continue to grow revenue, expand margins, and deliver free cash flow. Operator, we are now ready to take questions.

In the first quarter of fiscal 'twenty, five we expect sales to grow in the low single digits and adjusted EPS to be flat to slightly down year over year.

Speaker Change: 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.

Speaker Change: Again, our guidance reflects our early views on fiscal 'twenty five as well as trends. We are currently seeing we remain.

Speaker Change: Confident in our long term trajectory and our ability to create value for our shareholders. As we continue to grow revenue expand margins and deliver free cash flow. Operator, we are now ready to take questions.

Speaker Change: Thank you.

Speaker Change: To ask a question. Please press star one on your telephone keypad.

Speaker Change: <unk> will indicate your line is in the question queue. You May press star two if he would like to remove your question from the queue and for participants using speaker equipment may be necessary to pick up your handset before pressing the star keys.

Operator: Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from Matt Summerville with D. A. Davidson. Please proceed.

Speaker Change: Our first question is from Matt Summerville with D. A Davidson. Please proceed.

Matt J. Summerville: Thanks. A couple questions. Could you maybe talk about 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? You know, are you seeing anything in your more, you know, quote, canary end markets that are giving you maybe a little bit of pause, giving your commentary, utilizing the word prudent several times, and then add follow up? Thank you. Yeah.

Matt J. Summerville: Thanks couple of questions could you maybe talk about.

Matt J. Summerville: 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.

Speaker Change: Are you seeing anything in your more.

Speaker Change: Primary end markets that are giving you.

Speaker Change: Maybe a little bit of pause given your commentary utilizing the word prudent several times and then as a follow up thank you.

David J. Wilson: Thanks, Matt, and good morning. So as it relates to Q4, our progression was an increasing order rate throughout the quarter. And so we saw a strong February and a strong March, finishing at 258 million orders for the quarter. And then as we entered this quarter, we had a pretty solid April, followed by a slightly softer May. And we really don't have, you know, too many notable concerns relative to the quarter's run rate of orders at this point.

Speaker Change: Yeah, Thanks, Matt and good morning, so as it relates to Q4, our progression was an increasing order rates throughout the quarter and so we saw a strong February and a strong march finishing at $258 million of orders for the quarter and then as we entered this quarter we had a.

Speaker Change: Pretty solid April followed by a slightly softer.

Speaker Change: And we really don't have.

Speaker Change: Too many notable concerns relative to the quarter's run rate of orders at this point our channel inventory levels are at targeted levels.

David J. Wilson: Our channel inventory levels are at targeted levels. The, you know, demand and inquiry levels remain encouraging. 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 toward our full year guide.

Speaker Change: The demand in inquiry levels remain encouraging.

Speaker Change: But as we've identified although.

Speaker Change: We're optimistic we're cautiously optimistic given the broader macro.

Speaker Change: Economic uncertainties, and we're taking a prudent view towards our full year guide.

Matt J. Summerville: And then just as a follow-up, Greg, in your prepared remarks, you talked about, I don't want to call them one-time items, but you talked about a couple of headwinds, maybe, that hit adjusted gross margin in the quarter. Could you quantify the magnitude of that headwind? Going back and reviewing the transcript from the third quarter, you seemed pretty confident in your ability to hit 38% adjusted gross margin. But you came in at 36.6. So, I'm just trying to understand what would have maybe closed that gap, if you will.

Speaker Change: And then just as a follow up Greg in your prepared remarks, you talked about I don't want to call them. One time items that you talked about a couple of headwinds maybe that hit adjusted gross margin in the quarter could you quantify the magnitude of that headwind going back and reviewing the transcript from the third quarter.

Speaker Change: <unk> seen.

Greg: Pretty confident in your ability to hit 38% adjusted gross margin came in at 36, six so I'm just trying to understand what would have maybe.

Greg: Close that gap.

Greg: If you will yes. So thanks, Matt so essentially both of those items were about $4 million of margin impact and it had to do once again with monster tech volumes being lower in absorption.

Gregory P. Rustowicz: Yeah, so thanks Matt. So essentially both of those items were about four million dollars of margin impact And it had to do once again with Montrotec volumes being lower and absorption being off but also there was a the project that I mentioned where we weren't able to pass through the cost increase for one of the components that they don't normally buy but it was needed for this project and So as I mentioned we addressed that and then in the US lifting business it had to do with some cleanup items that once again We don't it's not something that we accept and we've made changes from a people in a process perspective to deal with Got it.

Speaker Change: Being off but also there was a project that I mentioned, where we weren't able to pass through.

Speaker Change: Cost increase for one of the components that they don't normally buy but it was needed for this project.

Speaker Change: So as I mentioned, we address that and then in the U S lifting business. It had to do with some cleanup items that once again, we don't it's not something that we accept and we've made changes from a people and a process perspective to deal with us.

Matt J. Summerville: Got it. Thanks, Greg.

Greg: Got it thanks, Greg.

Operator: Our next question is from Steve Ferazani with Sidoti and Company. Please proceed.

Speaker Change: Our next question is from Steve <unk> with Sidoti <unk> Company. Please proceed.

Steve Ferazani: Morning, David. Morning, Greg.

Speaker Change: Good morning, David morning, Greg.

Speaker Change: My follow up the last question because when I think about your guidance that.

Steve Ferazani: I just want to follow up on the last question, because when I think about your guidance, that EPS improvement for fiscal 25 on low single-digit revenue growth, it looks like you get there just on lower interest expense. So are you not assuming any further gross margin improvement or SG&A reduction? Because that sort of gets you there just with the $5 million interest expense reduction.

Steve Ferazani: That EPS improvement for fiscal 'twenty five.

Steve Ferazani: On low single digit revenue growth it looks like you get there just on lower interest expense so.

Steve Ferazani: So youre not assuming any further gross margin improvement or or SG&A, our SG&A reduction because that sort of gets you. There just with the $5 million interest expense reduction I think good morning, Steve. This is David I think that that would get us to the low end of the guide.

Steve Ferazani: I think

Speaker Change: Yes, we do.

Speaker Change: Expect to expand gross margins, we have our overall goal to get to 40% in the next several years and we continue to look at our cost structure. We are.

David J. Wilson: We do have our merit increases that are going to take effect in July on the SG&A side, but once again, we're continuing to work that part of the equation as well too.

David J. Wilson: Increase our ability to scale our costs, but also to look at where we might have the ability to reduce that cost going forward.

David J. Wilson: Well once again are.

David J. Wilson: Meant to be kind of a prudent look at where things sit today.

Speaker Change: Are you expecting any benefits.

Speaker Change: Near term from from Mexico, and Germany facility consolidation or is that longer term.

Speaker Change: Yes, so I'll start out at least with the German piece of it so that consolidation was for a very small facility that came with the dorner acquisition in <unk>, Germany.

Speaker Change: And so the savings there was a little bit of savings in this past fiscal year not much to speak about but the savings are very immaterial going forward just given the size of it but we think that having that now under our <unk> fab.

Speaker Change: Factory will give us much more control and visibility and.

And I think the ability to make sure we've got the right inventory and that we're able to drive volume David do you want to address Mexico, Yes, I would add that Youll look Germany facility consolidation is the former dorner manufacturing location in Germany that we consolidated into our <unk> distribution center for the.

The broader European organization, and then for mantra Tech the I'm, sorry for the Monterrey facility.

Speaker Change: We are going to be in a transition year. This year as we probably have a period of duplicative costs and then some benefits as we go forward and so it's going to be a bit lumpy. If there is a benefit it will be backend loaded and I would say that the majority of our 200 basis points of margin expansion that we anticipate from this overall project is largely back.

Speaker Change: And loaded in our strategic planning period.

Speaker Change: So we'll talk more about that as it's appropriate but that is the rough phasing that I would like you're thinking about.

Speaker Change: Okay.

Speaker Change: And then to the top line growth Youre expecting so.

Speaker Change: Four to five quarters book to Bill spend under one.

Speaker Change: You confirm it about $30 million reduced backlog by about $30 million. This year to get to low single digit growth are you expecting further backlog reduction beyond 30 million next year to get you there and I guess just to add on to that question. What is what do you consider normalized backlog now right.

Speaker Change: So our backlog if you look at historical terms pre COVID-19 in our lifting business is about $80 million below where it is today $80 million to $90 million below where it would be today and that is.

Speaker Change: That is at a time when orders were placed more frequently.

Speaker Change: And through Covid and with the longer lead times, we experienced in the wake of Covid, we had customers that would place orders earlier and with longer lead times and so that leads to an elevated backlog that you carry we think there is maybe $50 million.

Speaker Change: Of backlog, there that might be above what might be a new normalized level with new ordering patterns.

Speaker Change: And if demand remains as it has been over the last two quarters. So if you look at Q4 orders and you look at Q3 orders.

Speaker Change: And annualize that that's roughly $980 million run rate.

Speaker Change: And so probably at the midpoint of our guide you would say that we would be.

Speaker Change: Leading to draw down about $50 million of backlog given flat order performance. We're obviously encouraged with the demand in the pipeline, but we remain cautiously optimistic given.

Speaker Change: The macroeconomic environment.

Speaker Change: And just to add on the team has done a tremendous job of reducing past due backlog over the past year were down about $18 million versus a year ago and even in this quarter, we're down about $7 5 million. So essentially we're back to.

Speaker Change: A more normal level and no longer an issue for us and the combination of those things really drives a focus on customer experience and picking up more market share opportunity with our customers, which we're laser focused on.

Speaker Change: And our assumptions don't assume a diminishing demand. It's just the timing of that demand given some of the macroeconomic uncertainty.

Speaker Change: Understood that's really helpful. Thanks, David Thanks, Greg.

Steve Ferazani: Thanks, Steve.

Speaker Change: Our next question is from Walt Liptak with Seaport Research. Please proceed.

Speaker Change: Well, please check and see if your line is muted.

Speaker Change: Okay, we will come back to work and our next question will be from Jon Cohen Tang. Please proceed Jon.

David J. Wilson: Good morning, Steve. This is David.

Speaker Change: Good morning, Thank you for taking my questions.

Speaker Change: I guess, if we could dive a little bit more into <unk>, what happened in the quarter.

Did you push out some of the.

Deliveries and revenue recognition there.

Coming back maybe in the later quarter number one and number two the I guess the part that you Couldnt pass through on the pricing is that something that's going to be an issue going forward is that or is that just a onetime issue on the contract.

Speaker Change: Was involved here.

David J. Wilson: Yeah, we do expect to expand gross margins. We have our overall goal to get to 40% in the next several years, and, you know, we continue to look at our cost structure. We do have our merit increases that are going to take effect in July on the RSG&A side, but once again, we're continuing to work that part of the equation as well to increase our ability to scale our costs but also to look at where we might have the ability to reduce that cost going forward. Well, once again, our guidance is...

Speaker Change: Yes.

John: John Yes, we did see some revenue recognition timing adjustments in the quarter as we bring them into the fold on our our.

John: Policies in approach.

Steve Ferazani: Are you expecting any benefits near-term from the Mexico and Germany facility consolidation, or is that longer-term?

John: The.

Gregory P. Rustowicz: Yeah, so I'll start out at least with the German piece of it. So that consolidation was for a very small facility that came with the Dorner acquisition in Jülich, Germany. And so the savings, there was a little bit of savings in this past fiscal year, not much to speak about, but the savings are very immaterial going forward just given the size of them. But we think that having that now under our Wuppertal factory will give us much more control and visibility and, I think, the ability to make sure we've got the right inventory and that we're able to drive volume. David, do you want to address Mexico?

David J. Wilson: Yeah, I would add that ULIP Germany Facility Consolidation is the former Dorner manufacturing location in Germany that we consolidated into our Wuppertal Distribution Center for the broader European organization. And then for Montretek, sorry, for the Monterey facility, we are going to be in a transition year this year as we probably have a period of duplicative costs and then some benefits as we go forward. And so it's going to be a bit lumpy.

John: The impact of this project was a onetime impact of large project for a major European auto manufacturer, where the team had agreed to provide some robotics equipment, which was third party supplied in addition to the core components of the portfolio.

David J. Wilson: If there is a benefit, it'll be back-end loaded. And I would say that the majority of our 200 basis points of margin expansion that we anticipate from this overall project is largely back-end loaded in our strategic planning period. So we'll talk more about that as it's appropriate, but that is the rough phasing that I would like you to think about.

Steve Ferazani: And then to the top line growth you're expecting, so four to five quarters of book-to-bill spend under one.

Speaker Change: The pricing that was established for that was under where the cost was and it was something that this is a pre acquisition contract and it was something that we have appropriately circled and addressed in both from a process and from a people standpoint have taken corrective action to ensure that that's behind us.

David J. Wilson: You converted about 30 million and reduced backlog by about 30 million this year. To get to low single-digit growth, are you expecting further backlog reduction beyond 30 million next year to get you there? And I guess just to add on to that question, what do you consider normalized backlog now?

Speaker Change: Okay, Great and then how did mantra.

David J. Wilson: So our backlog, if you look at historical terms pre-COVID in our lifting business, is about $80 million below where it is today, $80 to $90 million below where it would be today. And that is at a time when orders were placed more frequently. And through COVID and with the longer lead times we experienced in the wake of COVID, we had customers that would place orders earlier and with longer lead times.

Speaker Change: During the year compared to your expectations I guess yeah.

Speaker Change: When we bought it and does it does that I guess the Rev Rec.

Speaker Change: Your next quarter should be a little bit stronger just just for much of anything you probably would've expected.

David J. Wilson: And so that leads to an elevated backlog that you carry. We think there's maybe $50 million of backlog there that might be above what might be a new normalized level with new ordering patterns. And if demand remains as it has been over the last two quarters, so if you look at Q4 orders and you look at Q3 orders and annualize that, that's roughly a $980 million run rate. And so, probably at the midpoint of our guide, you would say that we would be needing to draw down about $50 million of backlog given flat order performance. We're obviously encouraged by the demand in the pipeline, but we remain cautiously optimistic given the macroeconomic environment.

John: Quarter, sorry for the year very much in line John So they.

John: They delivered $32 6 million for the 10 months that we owned them and if you annualize that that's a $39 million right and so they.

John: If you think about what we bought we bought a $30 million business that we said was going to grow 30% per year. So we're very much on a $40 million clip even with.

This lighter quarter in the fourth quarter their gross margins were at 42, 4% 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's in line with our expectations for the first 10 months of ownership. It is a bit lumpy given the phasing of projects in the <unk>.

Speaker Change: Pipeline and we're really encouraged with the demand potential for that business as we.

Speaker Change: Unlock its exposure globally with our reach.

Speaker Change: And we're we're accessing some really attractive markets that have great potential and so.

Speaker Change: We feel good about the business, we feel good about its trajectory.

Speaker Change: There are some.

Speaker Change: Periodic impacts here that were experience here in this quarter and I anticipate that the next quarter will be.

Similar in margin sorry, similar in <unk>.

Speaker Change: Revenue, but improved in terms of margin.

David J. Wilson: And just to add, the team has done a tremendous job of reducing past-due backlog over the past year. We're down about $18 million versus a year ago, and even in this quarter, we're down about $7.5 million. So, essentially, we're back to a more normal level, and it's no longer an issue for us.

David J. Wilson: And the combination of those things really drives a focus on customer experience and picking up more market share opportunities with our customers, which we're laser focused on. And our assumptions don't assume diminishing demand. It's just the timing of that demand, given some of the macroeconomic uncertainty.

John So: And just to add on John and just a reminder to folks on the call. So we bought monster Tac may 31st last year. So we have two more months and then we will be anniversarying the.

Steve Ferazani: I understand. That's really helpful.

John So: The mantra Tech acquisition, and so and we break out acquisitions sales in the upcoming quarter it'll only be for the two months and the rest of the <unk> revenue. That's delivered in June will be part of our normal.

John So: Price volume and mix calculations.

Speaker Change: And if you think about it the $32 $6 million of sales that David referenced for our mantra. That's gen. Only 10 months of ownership under Columbus Mckinnon.

Speaker Change: Really excited about their progress.

Speaker Change: Got it. Thank you, Greg if I could sneak in one more just the <unk>.

Operator: Thanks, David. Thanks, Greg. Thanks, Steve.

Speaker Change: <unk> of the revenue guidance for this coming year can you just breakdown, what youre, implying there between price and volume and whatever.

Speaker Change: Alex has left a mantra for those two months.

Speaker Change: Yes, So we would expect as David mentioned the acquisition piece of it to be relatively comparable to this past quarter.

John So: We have John we have as we've talked about in past quarters, we do expect pricing to normalize our material cost inflation has now come in quite a bit and for the most part we're just seeing a little bit of carryover inflation.

John So: Price increases that are vendors pass through back in fiscal 'twenty four.

John So: So pricing once again is going to be a more normal level and we would expect that volume with just taken a prudent approach with all the uncertainty that's out there that volume is.

Speaker Change: We're going to be relatively flat to maybe up a little bit.

Speaker Change: Got it thank you.

Walter Liptak: Our next question is from Walt Liptak with Seaport Research. Please proceed. Well, please check and see if your line is muted. Okay, we will come back to the wall, and our next question will be from John Tanwanteng. Please proceed, John.

Speaker Change: And our last question will be from Walt Liptak with Seaport Research. Please proceed.

Jonathan E. Tanwanteng: Good morning. Thank you for taking the time to answer my questions. I guess if we could dive a little bit more into Montrotec and what happened in the quarter, did you push out some of the deliveries and revenue recognition there coming back, you know, maybe in a later quarter, number one, and number two, the, I guess, the parts that you couldn't pass through on the pricing. Is that something that's going to be an issue going forward, or is that just a one-time issue with the

Walter Liptak: Hi, Thanks.

Speaker Change: Can you hear me now guys, yes, yes, we can good morning, well.

Gregory P. Rustowicz: Yeah, good morning, John. Yes, we did see some revenue recognition timing adjustments in the quarter as we, you know, bring them into the fold on our policies and approach. The impact of this project was a one-time impact, a large project for a major European auto manufacturer where the team agreed to provide some robotics equipment which was third-party supplied in addition to the core components of the portfolio. The pricing that was established for that was under where the cost was, and it was something that this was a pre-acquisition contract, and it was something that we had appropriately

Speaker Change: Okay. Good morning.

Walter Liptak: I'm wondering you talked a little bit about the convenience order growth.

Walter Liptak: And it seems like 13%.

Walter Liptak: Order growth is.

Speaker Change: Kind of a pretty good start pretty good visibility for the year can you provide maybe a little bit more detail what are you seeing from the.

David J. Wilson: Okay, great. And how did Mantra Tech do in the year compared to your expectations, I guess, when you bought it? And does that, I guess, the RevRec

Speaker Change: The funnel quoting environment et cetera.

Speaker Change: The funnel is really encouraging in the U S. We have roughly a $33 million funnel of active engineered or quotes that excludes the build to order opportunities that we typically see come into the business on a Norden every course.

Speaker Change: It's full of attractive opportunities across pharma e-commerce electrification.

Speaker Change: The food and Bev.

Speaker Change: And.

Speaker Change: We're.

Speaker Change: Youre seeing that funnel increase and its size and activity around project discussions increase as well.

We do have.

Speaker Change: In the rearview mirror.

Speaker Change: Slowdown that we saw in the packaging industry as well as in the robotic space that impacted the business over the last 18 months.

Speaker Change: In addition to the challenges that we saw from a demand perspective in e-commerce.

Speaker Change: And what we're seeing generally is that those overhangs are alleviating and the funnel is.

Speaker Change: Is advancing so we're encouraged by the funnel.

Speaker Change: And.

Speaker Change: The opportunities are.

Speaker Change: Our attractive in those industries that I mentioned.

Speaker Change: And maybe just add on.

Speaker Change: We're very excited about the fact that we just won an order for a mantra tech system in the U S to a dorner customer thats very sizable with the potential for several more yes. This is express scripts and it's an opportunity that has multiple lines associated with it.

Speaker Change: Okay, great yeah, thanks for pointing that out.

Speaker Change: In your prepared comments you alluded to I think some.

Speaker Change: I don't know if its.

The strategic work that Youre doing with the conveyor.

Speaker Change: Part of the business.

Speaker Change: Dorner Garvey businesses may be monitored tech I Wonder if you could help us understand that if that's correct.

Speaker Change: You can understand what's going on on the selling strategies too.

Speaker Change: Keep this order growth going.

Speaker Change: Yeah of course, well so if you recall when we purchased the company as we talked about the global reach that we could achieve through the total organization of Columbus Mckinnon and so we've really worked to integrate the garvey and the doner selling organizations and theyre largely selling both portfolios at this point and.

Gregory P. Rustowicz: The quarter, I'm sorry, for the year, very much in line, John, so we, you know, they delivered $32.6 million for the 10 months that we owned them. And if you annualize that, that's a $39 million raise. And so, you know, if you think about what we bought, we bought a $30 million business that we said was going to grow 30% per year. So we're very much on a $40 million clip, even with the

Speaker Change: As we think about adding mantra tech and the reach of that organization to the mix now we have a large European team that can help us to bring product both from North America to Europe and now the European team can leverage the north American channels that we have and as Greg just highlighted capturing the opportunities that we see in North America.

Gregory P. Rustowicz: And just to add on, John, and just a reminder to folks on the call, so we bought Montrotec on May 31st last year, so we have two more months, and then we'll be anniversarying the Montrotec acquisition, and so when we break out acquisition sales in the upcoming quarter, it'll only be for the two months, and the rest of the Montrotec revenue that's delivered in June will be part of our normal price And if you think about it, you know, the $32.6 million in sales that David referenced for Montrotec, that's in only 10 months of ownership under Columbus McKinnon. So, you know, I am really excited about their progress.

Speaker Change: We also have a growing presence in Asia with the opportunity to sell this product through our southeast Asian.

Speaker Change: Hub and <unk>.

Speaker Change: We have a manufacturing facility for dorner debt is in Malaysia, and we have a pretty.

Speaker Change: <unk> established presence commercially to sell that product and now, bringing the mantra tech and Garvey portfolio into that mix is something we expect to leverage. So we've done some good work not only from a channel reach standpoint, but also from a product and technology integration standpoint, we were recently at a show with.

Speaker Change: Customers in Europe, where we're demonstrating the interconnect ability of dorner and mantra Tech solutions to solve very application specific problems that exist in fast growing markets and our customers are pretty excited about it. So I think theres a lot of opportunities for us to leverage those technologies across the landscape.

Speaker Change: Unlock the potential of this precision conveyance portfolio.

Jonathan E. Tanwanteng: Got it. Thank you. Greg, if I could sneak in one more. Just the components of the revenue guidance for this coming year, can you just break down what you're implying there between price and volume and whatever else is left at Monster Tech for those two moments? Yeah, so we would expect

Speaker Change: Okay, yes, thanks for that that sounds great.

Speaker Change: If we just switch gears to sort of the cautious outlook that you talked about I think you referenced macro but I wonder if you can be more specific is it.

Speaker Change: Europe macros.

Speaker Change: U S macro.

Speaker Change: What are you seeing in Europe.

Speaker Change: Yes.

Speaker Change: Thanks.

So we've seen a stabilization and in fact, a slight improvement in the macro in Europe over the last three months and so that's a recent trend, but as you look at the general position globally sustained.

Speaker Change: Higher.

Speaker Change: Interest rates and the risk of continued inflation.

Speaker Change #100: The global geopolitical landscape and some uncertainty around that the election cycle and potential uncertainty around that.

Gregory P. Rustowicz: Yeah, so we would expect, as David mentioned, the acquisition piece of it to be relatively comparable to this past quarter. And we have, John, we have, as we've talked about in previous quarters, we do expect pricing to normalize. Our material cost inflation has now come in quite a bit, and for the most part, we're just seeing a little bit of carryover inflation from price increases that our vendors passed through back in fiscal 24.

Gregory P. Rustowicz: So pricing, once again, is going to be at a more normal level, and we would expect that, you know, volume, with just taking a prudent approach with all the uncertainty that's out there, is going to be relatively flat to maybe up a little bit.

Speaker Change #100: We thought it was prudent for us as we look at the potential for disruption to demand pattern associated with that environment to take a prudent view on our on our outlook for the year.

Speaker Change #100: Okay.

Okay, alright, thanks, so much.

Speaker Change #101: 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.

Operator: And our last question will be from Walt Liptak with Seaport Research. Please proceed.

David J. Wilson: Great. Thank you Sherry and thank you to all on the call for joining US today, our team is executing our strategic plan, improving our customers' experience and making significant progress on our simplification initiatives.

David J. Wilson: I'd like to extend my personal thanks to our entire team for their dedication and relentless execution that enabled us to deliver record results in fiscal year 'twenty four.

Walter Liptak: Thanks. Can you hear me now, guys? Yes. Yes, we can. Good morning, all. Okay, good morning. So I wonder, you talked a little bit about conveyance order growth, and it seems like 13% order growth is, you know, kind of a pretty good start, pretty good visibility for the year. Can you provide maybe a little bit more detail? You know, what are you seeing from the funnel, the quoting environment, et cetera?

David J. Wilson: Our high single digit sales growth and mid teens adjusted operating income growth in a dynamic environment throughout the year offer meaningful proof points that highlight the power of our transformation.

David J. Wilson: Yeah, the funnel is really encouraging. In the U.S., we have roughly a 33 million dollar funnel of active engineered ore quotes. That excludes the build-to-order opportunities that we typically see come into the business on an ordinary course. It's, you know, full of attractive opportunities across pharma, e-commerce, electrification, food, and Bev. And, you know, we're seeing that funnel increase in its size and activity around project discussions increase as well. But we do have, in the rearview mirror, a slowdown that we saw in 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.

David J. Wilson: And what we're seeing generally is that those overhangs are alleviating, and that the funnel is, you know, advancing. So we're encouraged by the funnel, and the opportunities are attractive in those industries that I mentioned.

Gregory P. Rustowicz: And maybe, Walt, just to add on, we're very excited about the fact that we just won an order for a Montretec system in the U.S. from a Dorner customer that's very sizable, with the potential for several more. Yeah, this is Express Scripts, and it's an opportunity that has multiple lines associated with it.

Walter Liptak: Okay, great. Yeah, thanks for pointing that out. You know, in your prepared comments, you alluded to, I think, you know, some, I don't know if it's strategic work that you're doing with the conveyor part of the business, the Dorner, Garvey businesses, maybe MontraTech. I wonder if you can help us understand that, if that's correct, and you know, if you can understand what's going on in the selling strategies, you know, to, you know, keep this order growth going.

David J. Wilson: Yeah, of course, Walton. So, if you recall, when we purchased the companies, we talked about the global reach that we could achieve through the total organization of Columbus McKinnon. And so we've really worked to integrate the Garvey and the Dorner selling organizations, and they're largely selling both portfolios at this point. And as we think about adding MontraTech and the reach of that organization to the mix, now we have a large European team that can help us to bring products from North America to Europe. And now, the European team can leverage the North American channels that we have.

Gregory P. Rustowicz: And, as Greg just highlighted, capturing the opportunities that we see in North America. We also have a growing presence in Asia, with the opportunity to sell this product through our Southeast Asian hub. And as you know, we have a manufacturing facility for Dorner in Malaysia, and we have a pretty well-established presence commercially to sell that product. And now, bringing the MontraTech and Garvey portfolio into that mix is something we expect to leverage.

Gregory P. Rustowicz: So we've done some good work, not only from a channel reach standpoint, but also from a product and technology integration standpoint. We were recently at a show with customers in Europe where we were demonstrating the interconnectability of Dorner and MontraTech solutions to solve very application-specific problems that exist in fast-growing markets, and our customers were pretty excited about it. So I think there are a lot of opportunities for us to leverage those technologies across the landscape and unlock the potential of this precision conveyance portfolio.

Walter Liptak: Okay, yeah, thanks for that. That sounds great.

Speaker Change #102: While we are taking a prudent view regarding guidance for fiscal 2025, we remain highly confident in our potential over the longer term.

David J. Wilson: If we just switch gears to sort of the cautious outlook that you talked about, I think you referenced macro, but I wonder if you can be more specific. Europe macro, U.S. macro, you know, what are you seeing in Europe? And or or here. Thanks.

David J. Wilson: I think, you know, we've seen a stabilization and, in fact, a slight improvement in macroeconomic conditions in Europe over the last three months, and so that's a recent trend, but as you look at the general position globally, sustained higher interest rates and the risk of continued inflation, the global geopolitical landscape and some uncertainty around that, the election cycle and potential uncertainty around that. We thought it was prudent for us, as we look at the potential for disruptions to demand patterns associated with that environment, to take a prudent view on our outlook for the year.

Speaker Change #102: Our deliberately curated portfolio of businesses generate 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.

Speaker Change #102: Powered by our attractive and improving financial performance and our position as a market leader with improving scale and compounding growth, we remain confident in our ability to deliver shareholder value over time.

Walter Liptak: Okay. All right. Thanks much.

Speaker Change #102: Thanks for investing your time with US today as always please reach out to Christie if you have any questions.

David J. Wilson: 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.

David J. Wilson: Great. Thank you, Sherry, and thank you to all on the call for joining us today. Our team is executing our strategic plan, improving our customers' experience, and making significant progress on our simplification initiative. I'd like to extend my personal thanks to our entire team for their dedication and relentless execution that enabled us to deliver record results in fiscal year 24. Our high single-digit sales growth and mid-teens adjusted operating income growth in a dynamic environment throughout the year offer meaningful proof points that highlight the power of our transformation.

Operator: Thank you. This concludes today's conference call. You may now disconnect.

David J. Wilson: 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 as a market leader with improving scale and compounding growth, we remain confident in our ability to deliver shareholder value over time. Thanks for investing your time with us today. As always, please reach out to Kristi if you have any questions. Thank you.

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Speaker Change #103: Thank you. This concludes today's conference call you may now disconnect.

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