COLUMBUS MCKINNON CORP
For the period ended Jun 30, 2024. Filed Jul 31, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Jul 31, 2024
CMCO$17.62+6.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2023-12-31; filed 2024-01-31.
0001005229-24-000016
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-07-31.
0001005229-24-000234
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 83 previous paragraphs and 44 current paragraphs.
22 unchanged; 20 reworded; 2 added; 36 removed; 5 previous and 0 current paragraphs rearranged.
Tables are not compared: 0 previous and 0 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (2)
Current report
General and administrative expenses were $26,447,000 and $27,443,000, or 11.0% and 11.7% of net sales, in the fiscal 2025 and 2024 first quarters, respectively. General and administrative expenses decreased by $2,501,000 related to prior year acquisition deal related costs which did not recur and $1,132,000 of net headquarter realignment costs. Additionally, the Company had lower stock based compensation costs of $622,000 compared to the prior year. These cost decreases were offset by $1,852,000 of start-up costs related to the new Monterrey, Mexico facility and $694,000 from the montratec acquisition. The remaining increase is due to higher employee related costs during the three months ended June 30, 2024. Foreign currency translation had a $40,000 favorable impact on general and administrative expenses in the three months ended June 30, 2024.
Current report
Interest and debt expense was $8,235,000 in the first quarter ended June 30, 2024 compared to $8,625,000 in the first quarter ended June 30, 2023. The decrease is a result of a reduction of the Company's long term debt as a result of accelerated principal payments.
Removed paragraphs (36)
Previous report
General and administrative expenses were $26,255,000 and $25,143,000, or 10.3% and 10.9% of net sales, in the fiscal 2024 and 2023 third quarters, respectively. General and administrative expenses increased by $1,137,000 from the montratec acquisition, $930,000 of net business realignment costs, $195,000 of net headquarters relocation costs offset by $1,230,000 final adjustment in the prior year for the Garvey acquisition contingent consideration, and $225,000 of lower net acquisition and deal costs. Foreign currency translation had a $285,000 unfavorable impact on general and administrative expenses in the three months ended December 31, 2023.
Previous report
Interest and debt expense was $9,952,000 in the third quarter ended December 31, 2023 compared to $7,303,000 in the third quarter ended December 31, 2022. The increase is related to higher variable interest rates, as well as increased borrowings to finance the montratec acquisition.
Previous report
Foreign currency exchange gains were $1,155,000 and $3,359,000 in the fiscal 2024 and 2023 third quarters, respectively. This favorable change was primarily due to the strengthening of the Euro in comparison to the U.S. Dollar during the quarter.
Previous report
Other expense was $5,234,000 in the third quarter ended December 31, 2023 compared to $79,000 in the third quarter ended December 31, 2022. As described in Note 10, the Company recorded a settlement charge in the amount of $4,599,000 associated with the process to terminate one of the Company's U.S. pension plans.
Previous report
Nine Months Ended December 31, 2023 and December 31, 2022
Previous report
Net sales in the nine months ended December 31, 2023 were $748,036,000, up $65,639,000 or 9.6% from the nine months ended December 31, 2022 net sales of $682,397,000. Net sales were positively impacted by $28,092,000 due to price increases and $27,728,000 of revenue from the montratec acquisition offset by $240,000 of unfavorable sales volume. Foreign currency translation favorably impacted sales by $10,059,000 for the nine months ended December 31, 2023.
Previous report
Gross profit in the nine months ended December 31, 2023 was $280,523,000, an increase of $29,642,000 or 11.8% from the nine months ended December 31, 2022 gross profit of $250,881,000. Gross profit margin was 37.5% in the nine months ended December 31, 2023 compared to 36.8% in the nine months ended December 31, 2022. The increase in gross profit was due to $15,777,000 of price increases net of manufacturing costs changes including inflation, $13,028,000 as a result of the acquisition of montratec and a $904,000 favorable product liability reserve adjustments. These gross profit increases were offset by $2,714,000 of unfavorable sales mix and $781,000 in current year business realignment costs. The translation of foreign currencies had a $3,428,000 favorable impact on gross profit in the nine months ended December 31, 2023.
Previous report
Selling expenses were $78,400,000 and $77,197,000, or 10.5% and 11.3% of net sales, in the nine months ended December 31, 2023 and December 31, 2022, respectively. Selling expense increased by $4,597,000 due to the montratec acquisition offset by $2,970,000 due to lower net business realignment costs and $1,461,000 of lower employee related costs during the nine months ended December 31, 2023. Foreign currency translation had a $933,000 unfavorable impact on selling expenses in the nine months ended December 31, 2023.
Previous report
General and administrative expenses were $79,407,000 and $68,441,000, or 10.6% and 10.0% of net sales, in the nine months ended December 31, 2023 and December 31, 2022, respectively. General and administrative expenses increased by $2,765,000 of net acquisition deal related costs, $2,607,000 from the montratec acquisition, $1,852,000 of higher stock compensation costs, $1,569,000 of net headquarters relocation costs, and $283,000 of net business realignment costs. The remaining increase of $2,482,000 is largely due to higher incentive compensation costs, lease costs and medical costs. These increases were offset by a $1,230,000 final adjustment in the prior year for the Garvey acquisition contingent consideration. Foreign currency translation had a $637,000 unfavorable impact on general and administrative expenses in the nine months ended December 31, 2023.
Previous report
Interest and debt expense was $28,788,000 compared to $20,274,000 in the nine months ended December 31, 2023 and December 31, 2022, respectively. The increase is related to higher variable interest rates, as well as increased borrowings to finance the montratec acquisition.
Previous report
Foreign currency exchange loss was $1,074,000 compared to a foreign currency gain $1,152,000 in the nine months ended December 31, 2023 and December 31, 2022, respectively. This unfavorable change was due to the strengthening of the U.S. Dollar in comparison to the Euro and other currencies where our businesses operate during the first two quarters of fiscal 2024. The Company has begun to recover some of the prior quarters losses in the third quarter as the Euro is strengthening against the U.S. dollar.
Previous report
Other expense was $5,840,000 in the nine months ended December 31, 2023 compared to other income of $1,999,000 in the nine months ended December 31, 2022. As described in Note 10, the Company recorded a settlement charge in the amount of $4,599,000 associated with the process to terminate one of the Company's U.S. pension plans. As described in Note 13, in fiscal 2023, the Company received a tax indemnification reimbursement received from STAHL's former owners in accordance with the share purchase agreement.
Previous report
During the nine months ended December 31, 2022, the rate was unfavorably impacted 5 percentage points due to settlement of income tax assessments related to tax periods prior to the Company’s acquisition of Stahl Cranesystems GmbH (“STAHL"). In accordance with the tax indemnification clause of the share purchase agreement, the Company received full reimbursement from STAHL’s prior owner which was recorded as a gain in Other (income) expense, net on the Condensed Consolidated Statements of Operations during the period. The tax rate for the nine months ended December 31, 2022 also reflects an unfavorable impact of 4 percentage points due to the recording of a U.S. state tax valuation allowance. The valuation allowance primarily relates to changes in the Company’s expectations regarding its ability to more likely than not utilize certain state net operating losses prior to their expiration.
Previous report
The Company estimates that the effective tax rate related to continuing operations will be approximately 24% to 26% for fiscal 2024.
Previous report
Forward-Looking Statements
Previous report
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are subject to the safe harbor created thereby under the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical or current fact, included in this Form 10-Q are forward-looking statements. Forward-looking statements reflect our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. These statements can be identified by the use of forward-looking words, such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “will,” “should,” “can have,” “future,” “likely” and other words and terms of similar meaning (including their negative counterparts or other various or comparable terminology). For example, all statements we make relating to our plans and objectives for future operations, growth or initiatives, strategies, pending acquisitions, our expected amount of capital expenditures for fiscal 2024, our expected effective tax rate for fiscal 2024, or the expected outcome or impact of pending or threatened litigation are forward-looking statements. All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expected, including:
Previous report
•the cyclical nature of our business and general macroeconomic conditions;
Previous report
•increased competition with respect to our business, including with respect to our material handling and precision conveyance products;
Previous report
•our ability to successfully integrate our acquisitions;
Previous report
•price fluctuations and trade tariffs on steel, aluminum, and other raw materials purchased to manufacture our products and our ability to pass on price increases to our customers;
Previous report
•the scarcity or unavailability of the raw materials and critical components we use to manufacture our products and the impact of such scarcity or unavailability on our ability to operate our business;
Previous report
•our ability to successfully manage our backlog;
Previous report
•our ability to maintain relationships with the independent distributors we use to sell our products;
Previous report
•our ability to continue to attract, develop, engage, and retain qualified employees;
Previous report
•changing interest rates;
Previous report
•our ability to manage our indebtedness, including compliance with debt covenant restrictions in our Term Loan B, AR Securitization Facility and our New Revolving Credit Facility (each as defined herein);
Previous report
•our ability to manage the risks of conducting operations outside of the United States, including currency fluctuations, trade barriers, labor unrest, geopolitical conflicts, more stringent labor regulation, tariffs, political and economic instability and governmental expropriation;
Previous report
•potential product liability, as our products involve risks of personal injury and property damage;
Previous report
•compliance with federal, state and local environmental protection laws, including regulatory measures meant to address climate change, which may be burdensome and lower our margins;
Previous report
•our ability to adequately protect our intellectual property and refrain from infringing on the intellectual property of others;
Previous report
•our ability to adequately manage and rely on our subcontractors and suppliers;
Previous report
•our ability to adequately protect our information technology systems from cyberattacks or other interruptions;
Previous report
•our ability to comply with the U.S. Foreign Corrupt Practices Act and other anti-corruption laws; and
Previous report
•our ability to retain key members of our management team.
Previous report
While we believe that the forward-looking statements in this Form 10-Q are reasonable, we caution that it is very difficult to predict the effect of known factors, and, it is impossible for us to anticipate all factors that could affect our actual results. Important factors that could cause actual results to differ materially from our expectations are disclosed under the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Form 10-Q. All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements as well as other cautionary statements that are made from time to time in our other filings with the SEC and public communications. You should evaluate all forward-looking statements made in this Form 10-Q in the context of these risks and uncertainties.
Previous report
We caution you that the important factors referenced above may not contain all of the factors that are important to you. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the outcomes or affect us or our operations in the way we expect. The forward-looking statements included in this Form 10-Q are made only as of the date hereof and are based on our current expectations. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise except to the extent required by applicable law.
Reworded paragraphs (20)
Previous wording
Founded in 1875, we have grown to our current size and leadership position through organic growth and acquisitions. We developed our leading market position over our 149-year history by emphasizing technological innovation, manufacturing excellence and superior customer service. In accordance with our strategic framework, we are building out our business system (CMBS) and growth framework to be market-led, customer-centric, and operationally excellent with our people and values at the core. We believe this will transform Columbus McKinnon into a top-tier Intelligent Motion Solutions company. We expect our strategy will enhance shareholder value by expanding EBITDA margins and return on invested capital ("ROIC").
Current wording
Founded in 1875, we have grown to our current size and leadership position through organic growth and acquisitions. We developed our leading market position over our 150-year history by emphasizing technological innovation, manufacturing excellence and superior customer service. In accordance with our strategic framework, we are building out our business system (CMBS) and growth framework to be market-led, customer-centric, and operationally excellent with our people and values at the core. We believe this will transform Columbus McKinnon into a top-tier Intelligent Motion Solutions company. We expect our strategy will enhance shareholder value by expanding EBITDA margins and return on invested capital ("ROIC").
Previous wording
Our revenue base is geographically diverse with approximately 44% derived from customers outside the U.S. for the nine months ended December 31, 2023. We believe this diversity balances the impact of changes that occur in local economies, as well as benefits the Company by providing access to growing emerging markets. We monitor both U.S. and Eurozone Industrial Capacity Utilization statistics as well as the ISM Production Index as indicators of anticipated demand for our products. In addition, we continue to monitor the potential impact of other global and U.S. trends including, industrial production, trade tariffs, raw material cost inflation, interest rates, foreign currency exchange rates, and activity of end-user markets around the globe.
Current wording
Our revenue base is geographically diverse with approximately 43% of net sales derived from customers outside the U.S. for the three months ended June 30, 2024. We believe this diversity balances the impact of changes that occur in local economies, as well as benefits the Company by providing access to growing emerging markets. We monitor both U.S. and Eurozone Industrial Capacity Utilization statistics as well as the ISM Production Index as indicators of anticipated demand for our products. In addition, we continue to monitor the potential impact of other global and U.S. trends including, industrial production, trade tariffs, raw material cost inflation, interest rates, foreign currency exchange rates, and activity of end-user markets around the globe.
Previous wording
On May 31, 2023, the Company completed its acquisition of montratec GmbH ("montratec"), a leading automation solutions company that designs and develops intelligent automation and transport systems for interlinking industrial production and logistics processes. montratec product offerings complement both Dorner and Garvey, and further the Company's shift to intelligent motion and serve as a platform to expand capabilities in advanced, higher technology automation solutions.
Current wording
In fiscal 2024, the Company acquired montratec GmbH ("montratec"), a leading automation solutions company that designs and develops intelligent automation and transport systems for interlinking industrial production and logistics processes. montratec product offerings compliment the previous acquisitions of both Dorner and Garvey, and these acquisitions are collectively expected to accelerate the Company’s shift into a provider of intelligent motion solutions and serve as a platform to expand capabilities in advanced, higher technology automation solutions.
Previous wording
Our principal raw materials and components purchases were approximately $365 million in fiscal 2023 (or 61% of Cost of product sold) and include steel, consisting of rod, wire, bar, structural, and other forms of steel; electric motors; bearings; gear reducers; castings; steel and aluminum enclosures and wire harnesses; electro-mechanical components; and standard variable drives and controls. These commodities are all available from multiple sources. We purchase most of these raw materials and components from a limited number of strategic and preferred suppliers under agreements which are negotiated on a company-wide basis through our global purchasing group. Currently, we are seeing global inflation moderate and availability improve for select raw materials and components.
Current wording
Our principal raw materials and components purchases were approximately $396 million in fiscal 2024 (or 62% of Cost of product sold) and include steel, consisting of rod, wire, bar, structural, and other forms of steel; electric motors; bearings; gear reducers; castings; steel and aluminum enclosures and wire harnesses; electro-mechanical components; and standard variable drives and controls. These commodities are all available from multiple sources. We purchase most of these raw materials and components from a limited number of strategic and preferred suppliers under agreements which are negotiated on a company-wide basis through our global purchasing group. While we are still experiencing some availability issues for select raw materials and components, we are working with our supply base to prioritize shipments and improve availability of key components.
Previous wording
Net sales in the three months ended December 31, 2023 were $254,143,000, up $23,773,000 or 10.3% from the three months ended December 31, 2022 net sales of $230,370,000. Net sales were positively impacted by $15,535,000 of revenue from the montratec acquisition, $6,477,000 due to price increases, offset by 2,403,000 of unfavorable sales volume. Foreign currency translation favorably impacted sales by $4,164,000 for the three months ended December 31, 2023.
Current wording
Net sales in the three months ended June 30, 2024 were $239,726,000, up $4,234,000 or 1.8% from the three months ended June 30, 2023 net sales of $235,492,000. Net sales were positively impacted by $3,546,000 due to price increases, $2,655,000 of revenue from the montratec acquisition, offset by $1,374,000 of unfavorable sales volume. Foreign currency translation unfavorably impacted sales by $593,000 for the three months ended June 30, 2024.
Previous wording
Gross profit in the three months ended December 31, 2023 was $93,897,000, an increase of $11,853,000 or 14.4% from the three months ended December 31, 2022 gross profit of $82,044,000. Gross profit margin was 36.9% in the fiscal 2024 third quarter compared to 35.6% in the fiscal 2023 third quarter. The increase in gross profit was due to $6,736,000 as a result of the acquisition of montratec, $4,562,000 of price increases net of manufacturing costs changes including inflation and $904,000 of favorable product liability reserve adjustments. These increases were offset by unfavorable sales volume mix of $1,179,000 and $585,000 of current year business realignment costs. The translation of foreign currencies had a $1,415,000 favorable impact on gross profit in the three months ended December 31, 2023.
Current wording
Gross profit in the three months ended June 30, 2024 was $89,030,000, an increase of $2,381,000 or 2.7% from the three months ended June 30, 2023 gross profit of $86,649,000. Gross profit margin was 37.1% in the fiscal 2025 first quarter compared to 36.8% in the fiscal 2024 first quarter. The increase in gross profit was due to $3,442,000 of price increases net of manufacturing costs changes including inflation and other cost changes, $799,000 as a result of the acquisition of montratec, and $197,000 due to favorable sales mix. These increases in gross margin were offset by $1,625,000 of start-up costs related to the new Monterrey, Mexico facility and $196,000 of net business realignment costs. The translation of foreign currencies had a $236,000 unfavorable impact on gross profit in the three months ended June 30, 2024.
Previous wording
Selling expenses were $26,552,000 and $25,424,000, or 10.4% and 11.0% of net sales, in the fiscal 2024 and 2023 third quarters, respectively. Selling expense increased by $2,131,000 due to the montratec acquisition offset by $989,000 due to lower net business realignment costs during the three months ended December 31, 2023. Foreign currency translation had a $450,000 unfavorable impact on selling expenses in the three months ended December 31, 2023.
Current wording
Selling expenses were $27,770,000 and $24,981,000, or 11.6% and 10.6% of net sales, in the fiscal 2025 and 2024 first quarters, respectively. Selling expenses increased by $909,000 related to the montratec acquisition and $802,000 primarily related to trade show and travel costs including the Company's strategic partner conference that was not held in the prior year. The remaining increase is due to higher employee related costs during the three months ended June 30, 2024. Foreign currency translation had a $99,000 favorable impact on selling expenses in the three months ended June 30, 2024.
Previous wording
Research and development expenses were $6,692,000 and $4,839,000, or 2.6% and 2.1% of net sales, in the fiscal 2024 and 2023 third quarters, respectively. The increase in research and development expenses was due to additional spending to achieve strategic goals related to new product development.
Current wording
Research and development expenses were $6,166,000 and $5,900,000, or 2.6% and 2.5% of net sales, in the fiscal 2025 and 2024 first quarter, respectively. The increase in research and development expenses was due to additional spending to achieve strategic goals related to new product development.
Previous wording
Amortization of intangibles was $7,486,000 and $6,459,000 in the fiscal 2024 and 2023 third quarters, respectively, with the increase related to new intangible assets recorded from the montratec acquisition.
Current wording
Amortization of intangibles was $7,500,000 and $6,877,000 in the fiscal 2025 and 2024 first quarters, respectively, with the increase related to new intangible assets recorded from the montratec acquisition.
Previous wording
Investment income of $758,000 in the third quarter ended December 31, 2023 compared to $574,000 in the third quarter ended December 31, 2022 is related to mark-to-market adjustments on the marketable securities held in the Company’s wholly owned captive insurance subsidiary and the Company's equity method investment in EMC, described in Note 6 of the financial statements.
Current wording
Investment income of $209,000 compared to $543,000 in the first quarter ended June 30, 2024 and June 30, 2023. Investment income relates to the mark-to-market adjustments on the marketable securities held in the Company’s wholly owned captive insurance subsidiary and the Company's equity method investment in EMC, described in Note 6 of the financial statements.
Previous wording
Income tax expense as a percentage of income from continuing operations before income tax expense was 29% and 28% in the third quarters ended December 31, 2023 and December 31, 2022, respectively. Typically, these percentages vary from the U.S. statutory rate of 21% primarily due to varying statutory tax rates at the Company's foreign subsidiaries, and the jurisdictional mix of income for these subsidiaries.
Current wording
Income tax expense as a percentage of income from continuing operations before income tax expense was 28% and 27% in the first quarters ended June 30, 2024 and June 30, 2023, respectively. Typically, these percentages vary from the U.S. statutory rate of 21% primarily due to varying statutory tax rates at the Company's foreign subsidiaries, and the jurisdictional mix of income for these subsidiaries. Further, the impact of equity compensation increased the rate by 3 percentage points for the quarter ended June 30, 2024.
Previous wording
Cash, cash equivalents, and restricted cash totaled $103,195,000 at December 31, 2023, a decrease of $30,231,000 from the March 31, 2023 balance of $133,426,000.
Current wording
Cash, cash equivalents, and restricted cash totaled $68,623,000 at June 30, 2024, a decrease of $45,753,000 from the March 31, 2024 balance of $114,376,000.
Previous wording
Net cash provided by operating activities was $28,591,000 for the nine months ended December 31, 2023 compared to $16,902,000 for the nine months ended December 31, 2022. Net income of $34,816,000 along with non-cash adjustments to net income of $49,663,000 contributed to cash provided by operations. The non-cash adjustments included $34,052,000 of depreciation and amortization, $8,473,000 of stock-based compensation, $7,080,000 of non-cash lease expense and $4,599,000 of a non-cash pension settlement charge offset by $6,495,000 of deferred income taxes and related valuation allowance. The non-cash pension settlement charge relates to certain employees electing lump sum payments associated with the termination of one of the Company's U.S. pension plans (refer to Note 10 for further details). Changes in working capital reduced cash from operations by $44,195,000 as a result of an increase of $17,764,000 in inventories, an increase in trade accounts receivable $14,911,000, a decrease in accrued expenses of $7,236,000, an increase in prepaid expenses of $2,897,000, and a decrease of $1,387,000 in trade payables. The increase in inventories relates to purchases required for expected future customer demand. Cash used for operations also included a decrease of $10,834,000 in other non-current liabilities primarily due to lease payments for the nine months ended December 31, 2023.
Current wording
Net cash used for operating activities was $10,758,000 for the three months ended June 30, 2024 compared to $17,247,000 for the three months ended June 30, 2023. Net income of $8,629,000 along with non-cash adjustments to net income of $16,868,000 contributed to cash used for operations. The non-cash adjustments included $11,840,000 of depreciation and amortization, $2,584,000 of non-cash lease expense and $1,101,000 of stock-based compensation. Changes in working capital reduced cash from operations by $34,729,000 as a result of an increase of $15,613,000 in inventories, a decrease in accrued expenses of $11,600,000, a decrease of $8,640,000 in trade payables, and an increase in prepaid expenses of $2,222,000 offset by a decrease in trade accounts receivable of $3,346,000. The increase in inventories relates to purchases required for expected future customer demand. The decrease in accrued expenses primarily consists of the fiscal 2024 annual incentive plan payments, which were paid in the quarter ended June 30, 2024 as well as a payment to the former owners of STAHL related to a tax indemnity agreement. Refer to our Fiscal 2024 10-K for further discussion of this tax payment. Cash used for operations also included a decrease of $1,399,000 in other non-current liabilities primarily due to lease payments for the three months ended June 30, 2024.
Previous wording
Net cash used for investing activities was $125,965,000 for the nine months ended December 31, 2023 compared to $10,912,000 for the nine months ended December 31, 2022. The most significant use of cash in the year was $108,145,000 of cash used for purchase of montratec on May 31, 2023. Additionally, the Company used $16,334,000 for capital expenditures for the nine months ended December 31, 2023 .
Current wording
Net cash used for investing activities was $4,041,000 for the three months ended June 30, 2024 compared to $112,684,000 for the three months ended June 30, 2023. The use of cash for the three months ended June 30, 2024 primarily consisted of $4,629,000 in capital expenditures. In the three months ended June 30, 2023, the most significant use of cash in the period related to the Company's purchase of montratec for $107,605,000.
Previous wording
Net cash provided by financing activities was $67,771,000 for the nine months ended December 31, 2023 and net cash used for financing activities was $37,639,000 for the nine months ended December 31, 2022. The most significant source of cash was $120,000,000 in gross proceeds from the issuance of long-term debt, which was used to fund the montratec acquisition. This was offset by $40,447,000 in debt repayments, $6,027,000 in dividend payments and $2,859,000 in fees paid to secure the new debt borrowings. Associated cash flows from hedging activities are classified as financing activities in the Statement of Cash Flows which resulted in a net cash outflow of $1,215,000 during the nine months ended December 31, 2023.
Current wording
Net cash used for financing activities was $30,583,000 for the three months ended June 30, 2024 and net cash provided by financing activities was $103,985,000 for the three months ended June 30, 2023. The most significant uses of cash were for $20,158,000 in debt repayments, a $6,711,000 payment to the former owners of montratec for the contingent consideration agreement (refer to Note 2 for additional information) and a $2,016,000 dividend payment in the quarter. Cash flows from hedging activities related to the Company's cross currency swap are classified as financing activities in the Statement of Cash Flows which resulted in a net cash inflow of $122,000 during the three months ended June 30, 2024. In the three months ended June 30, 2023, the significant source of cash was $120,000,000 in gross proceeds from the issuance of long-term debt, which was used to fund the montratec acquisition.
Previous wording
We believe that our cash on hand, cash flows, and borrowing capacity under our Amended and Restated Credit Agreement will be sufficient to fund our ongoing operations and debt obligations, and capital expenditures for at least the next twelve months. This belief is dependent upon successful execution of our current business plan and effective working capital utilization. No material restrictions exist in accessing cash held by our non-U.S. subsidiaries. We expect to meet our funding needs with cash provided by our U.S. operations, as well as by repatriating non-U.S. cash. We do not expect to incur significant incremental
Current wording
We believe that our cash on hand, cash flows, and borrowing capacity under our Amended and Restated Credit Revolving Credit Facility will be sufficient to fund our ongoing operations and debt obligations, and capital expenditures for at least the next twelve months. This belief is dependent upon successful execution of our current business plan and effective working capital utilization. No material restrictions exist in accessing cash held by our non-U.S. subsidiaries. We expect to meet our funding needs with cash provided by our U.S. operations, as well as by repatriating non-U.S. cash. We do not expect to incur significant incremental U.S. taxes as we repatriate funds. As of June 30, 2024, $51,126,000 of cash and cash equivalents were held by foreign subsidiaries.
Previous wording
In addition to keeping our current equipment and plants properly maintained, we are committed to replacing, enhancing and upgrading our property, plant and equipment to support new product development, improve productivity and customer responsiveness, reduce production costs, increase flexibility to respond effectively to market fluctuations and changes, meet environmental requirements, enhance safety and promote ergonomically correct work stations. Consolidated capital expenditures for the nine months ended December 31, 2023 and December 31, 2022 were $16,334,000 and $9,511,000, respectively. We expect capital expenditure spending in fiscal 2024 to range from $30,000,000 to $35,000,000.
Current wording
In addition to keeping our current equipment and plants properly maintained, we are committed to replacing, enhancing and upgrading our property, plant and equipment to support new product development, improve productivity and customer responsiveness, reduce production costs, increase flexibility to respond effectively to market fluctuations and changes, meet environmental requirements, enhance safety and promote ergonomically correct work stations. Consolidated capital expenditures for the three months ended June 30, 2024 and June 30, 2023 were $4,629,000 and $5,273,000, respectively. We expect capital expenditure spending in fiscal 2025 to range from $20,000,000 to $30,000,000.
Previous wording
Our costs are affected by inflation in the U.S. economy and, to a lesser extent, in non-U.S. economies including those of Europe, Canada, Mexico, South America, and Asia-Pacific. We do not believe that general inflation has had a material effect on our results of operations over the periods presented despite rising inflation due to our ability to pass on rising costs through price increases. We are currently experiencing higher raw material, freight, and logistics costs than we have seen in recent years, which we have been able to recover with pricing actions. In the future, we may not be able to pass on these cost increases to our customers.
Current wording
Our costs are affected by inflation in the U.S. economy and, to a lesser extent, in non-U.S. economies including those of Europe, Canada, Mexico, South America, and Asia-Pacific. We do not believe that general inflation has had a material effect on our results of operations over the periods presented despite rising inflation due to our ability to pass on rising costs through price increases. In the past we have experienced higher raw material, freight, and logistics costs as a result of the COVID-19 pandemic, which we have been able to recover with pricing actions. In the future, we may not be able to pass on similar cost increases to our customers.
Previous wording
We test goodwill at the reporting unit level, which is one level below our operating segment. We identify our reporting units by assessing whether the components of our operating segment constitute businesses for which discrete financial information is available and segment management regularly reviews the operating results of those components. We also aggregate components that have similar economic characteristics into single reporting units (for example, similar products and / or services, similar long-term financial results, product processes, classes of customers, etc.). We have three reporting units: the Duff Norton reporting unit, the Rest of Products reporting unit, and the Precision Conveyance reporting unit, which have goodwill totaling $9,699,000, $308,693,000, and $410,035,000, respectively, as of December 31, 2023.
Current wording
We test goodwill at the reporting unit level, which is one level below our operating segment. We identify our reporting units by assessing whether the components of our operating segment constitute businesses for which discrete financial information is available and segment management regularly reviews the operating results of those components. We also aggregate components that have similar economic characteristics into single reporting units (for example, similar products and / or services, similar long-term financial results, product processes, classes of customers, etc.). We have three reporting units: the Linear Motion Products reporting unit, the Rest of Products reporting unit, and the Precision Conveyance reporting unit, which have goodwill totaling $9,699,000, $303,499,000, and $395,373,000, respectively, as of June 30, 2024.
Previous wording
We currently do not believe that it is more likely than not that the fair value of each of our reporting units is less than its applicable carrying value. Additionally, we currently do not believe that we have any significant impairment indicators or that any of our reporting units with goodwill are at risk of failing Step One of the goodwill impairment test. However, if the projected long-term revenue growth rates, profit margins, or terminal growth rates are significantly lower, and/or the estimated weighted-average cost of capital is considerably higher, future testing may indicate impairment of one or more of the Company’s reporting units and, as a result, the related goodwill may be impaired.
Current wording
We currently do not believe that it is more likely than not that the fair value of any of our reporting units is less than its applicable carrying value. Additionally, we currently do not believe that we have any significant impairment indicators or that any of our reporting units with goodwill are at risk of failing Step One of the goodwill impairment test. However, if the projected long-term revenue growth rates, profit margins, or terminal growth rates are significantly lower, and/or the estimated weighted-average cost of capital is considerably higher, future testing may indicate impairment of one or more of the Company’s reporting units and, as a result, the related goodwill may be impaired.
Rearranged previous paragraphs (5)
Previous report — wording carried elsewhere
Research and development expenses were $19,134,000 and $15,429,000, or 2.6% and 2.3% of net sales, in the nine months ended December 31, 2023 and December 31, 2022, respectively. The increase in research and development expenses was due to additional spending to achieve strategic goals related to new product development.
Previous report — wording carried elsewhere
Amortization of intangibles was $21,871,000 and $19,442,000 in the nine months ended December 31, 2023 and December 31, 2022, respectively, with the increase related to new intangible assets recorded from the montratec acquisition and foreign currency.
Previous report — wording carried elsewhere
Investment income of $1,212,000 compared to investment loss of $168,000 in the nine months ended December 31, 2023 and December 31, 2022, respectively, is related to mark-to-market adjustments on the marketable securities held in the Company’s wholly owned captive insurance subsidiary and the Company's equity method investment in EMC, described in Note 6 of the financial statements.
Previous report — wording carried elsewhere
Income tax expense as a percentage of income from continuing operations before income tax expense was 26% and 35% in the nine months ended December 31, 2023 and December 31, 2022, respectively. Typically, these percentages vary from the U.S. statutory rate of 21% primarily due to varying statutory tax rates at the Company's foreign subsidiaries, and the jurisdictional mix of income for these subsidiaries.
Previous report — wording carried elsewhere
U.S. taxes as we repatriate funds. As of December 31, 2023, $58,277,000 of cash and cash equivalents were held by foreign subsidiaries.