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What changed in COLUMBUS MCKINNON CORP's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of COLUMBUS MCKINNON CORP's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+225 added−248 removedSource: 10-K (2023-05-25) vs 10-K (2022-05-25)

Top changes in COLUMBUS MCKINNON CORP's 2023 10-K

225 paragraphs added · 248 removed · 148 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

49 edited+10 added−19 removed33 unchanged
Biggest changeThe increase is a result of growing order rates as markets recover from COVID-19, backlog related to the acquired businesses, as well as higher than normal backlog due to supply chain challenges. Our orders for standard products are generally shipped within one week. Orders for products that are manufactured to customer specifications are generally shipped within four to twelve weeks.
Biggest changeOur orders for standard products are generally shipped within one week. Orders for products that are manufactured to customer specifications are generally shipped within four to twelve weeks. However, the COVID-19 pandemic has negatively impacted supply chains and has resulted in significantly longer lead-times and past-due backlog compared to these historical levels.
Products include a wide variety of electric, air-powered, lever, and hand hoists, hoist trolleys, explosion-protected hoists, winches, and aluminum work stations; alloy and carbon steel chain; forged attachments, such as hooks, shackles, textile slings, clamps, and load binders; mechanical and electromechanical actuators and rotary unions; and below-the-hook special purpose lifters; power and motion control systems, such as AC and DC drive systems, radio remote controls, push button pendant stations, brakes, and collision avoidance and power delivery subsystems.
Products include a wide variety of electric, air-powered, lever, and hand hoists, hoist trolleys, explosion-protected hoists, winches, and aluminum work stations; alloy and carbon steel chain; forged attachments, such as hooks, shackles, textile slings, clamps, and load binders; mechanical and electromechanical actuators and rotary unions; below-the-hook special purpose lifters; and power and motion control systems, such as AC and DC drive systems, radio remote controls, push button pendant stations, brakes, and collision avoidance and power delivery subsystems.
Key products include hoists, crane components, precision conveyor systems, rigging tools, light rail workstations and digital power and motion control systems. These are highly relevant, professional-grade solutions that solve customers’ critical material handling requirements. The Company is focused on commercial and industrial applications that require the safety, reliability and quality provided by its superior design and engineering know-how.
Key products include hoists, crane components, precision conveyor systems, rigging tools, light rail workstations and digital power and motion control systems. These are highly relevant, professional-grade solutions that solve our customers’ critical material handling requirements. The Company is focused on commercial and industrial applications that require the safety, reliability and quality provided by its superior design and engineering know-how.
The acquisitions 5 of Dorner and Garvey expand the Company's reach to include the stable life sciences, food processing and consumer packaged goods markets and high growth industrial automation and e-commerce sectors. We also serve a niche market for the entertainment industry, including permanent and traveling concerts, live theater, and sporting venues.
The acquisitions of Dorner and Garvey expand the Company's reach to include the stable life sciences, food processing and consumer packaged goods markets and high growth industrial automation and e-commerce sectors. We also serve a niche market for the entertainment industry, including permanent and traveling concerts, live theater, and sporting venues.
Approximately 6% of our employees are represented under two separate U.S. collective bargaining agreements that expire in May 2024 and September 2024. We also have various labor agreements with our non-U.S. employees that we negotiate from time to time. We have good relationships with our employees and positive, productive 8 relationships with our unions.
Approximately 6% of our employees are represented under two separate U.S. collective bargaining agreements that expire in May 2024 and September 2024. We also have various labor agreements with our non-U.S. employees that we negotiate from time to time. We have good relationships with our employees and positive, productive relationships with our unions.
Successful execution of our strategy is dependent on attracting, developing, and retaining key employees and members of our management team, which we achieve through the following: • We always begin with people and values at the center of all that we do and at the heart of our corporate social responsibility efforts.
Successful execution of our strategy is dependent on attracting, developing, and retaining key employees and members of our management team, which we achieve through the following: 8 • We always begin with people and values at the center of all that we do and at the heart of our corporate social responsibility efforts.
See Note 16 to our March 31, 2022 consolidated financial statements included in Item 8 of this Form 10-K for more information on our matters involving litigation. Available Information Our internet address is www.columbusmckinnon.com .
See Note 16 to our March 31, 2023 consolidated financial statements included in Item 8 of this Form 10-K for more information on our matters involving litigation. Available Information Our internet address is www.columbusmckinnon.com .
The strategy is geared toward investing in new products that solve our customers’ tough problems and expanding into new platforms that provide intelligent motion solutions for material handling, such as precision conveyance capabilities. We believe the acquisitions of Dorner and Garvey establish a platform for expansion supported by new product development, a fragmented competitive landscape and complementary adjacencies.
The strategy is geared toward investing in new products that solve our customers’ tough problems and expands into new platforms that provide intelligent motion solutions for material handling, such as precision conveyance capabilities. We believe our recent acquisitions of Dorner and Garvey establish a platform for expansion supported by new product development, a fragmented competitive landscape and complementary adjacencies.
The acquisition of STAHL CraneSystems ("STAHL") in fiscal 2017, which is well renowned for its custom engineering lifting solutions and hoisting technology, advanced our position as a global leader in the production of explosion-protected hoists.
The acquisition of STAHL CraneSystems ("STAHL") in fiscal 2017, which is well-known for its custom engineering lifting solutions and hoisting technology, advanced our position as a global leader in the production of explosion-protected hoists.
A line of our alloy chain is sold under the Herc-AlloyTM brand name for use in overhead lifting, pulling, and restraining applications. In addition, we also sell specialized load chain for use in hoists, as well as three grades and multiple sizes of carbon steel welded-link chain for various load securing and other non-overhead lifting applications.
A line of our alloy chain is sold under the Herc-Alloy TM brand name for use in overhead lifting, pulling, and 6 restraining applications. In addition, we also sell specialized load chain for use in hoists, as well as three grades and multiple sizes of carbon steel welded-link chain for various load securing and other non-overhead lifting applications.
We also manufacture explosion-protected hoists and custom engineered hoists, including wire rope and manual and electric chain hoists. Our STAHL branded products are sold to a variety of end markets including automotive, general manufacturing, oil and gas, steel and concrete, power generation as well as process industries such as chemical and pharmaceuticals.
We also manufacture explosion-protected hoists and custom engineered hoists, including wire rope and manual and electric chain hoists. These branded products are sold to a variety of end markets including automotive, general manufacturing, oil and gas, steel and concrete, power generation as well as process industries such as chemical and pharmaceuticals.
Major competitors for hoists are Konecranes, and Kito (and its U.S. subsidiary Harrington); for chain are Campbell Chain, Peerless Chain Company (acquired by Kito), and American Chain and Cable Company; for digital power control systems are Konecranes, Power Electronics International, Inc., Cattron Holdings (a division of Harbour Group), Conductix-Wampfler (a division of Delachaux Group), Control Techniques (a division of Nidec Corporation), OMRON Corporation, KEB GmbH, and Fujitec; for forged attachments are The Crosby Group, Brewer Tichner Company and Chicago Hardware and Fixture Company; for actuators and rotary unions are Deublin, Joyce-Dayton, and Nook Industries, a division of Altra Industrial Motion Corp.; and for precision conveyors and accumulators are FlexLink, Bosch Rexroth AG, MK North America, Inc., Duravant, Nercon Eng. & Mfg.
Major competitors for hoists are Konecranes, and Kito (and its U.S. subsidiary Harrington) which recently merged with the Crosby Group; for chain are Campbell Chain, Peerless Chain Company (a U.S. subsidiary of Kito), and American Chain and Cable Company; for digital power control systems are Konecranes, Power Electronics International, Inc., Cattron Holdings (a division of Harbour Group), Conductix-Wampfler (a division of Delachaux Group), Control Techniques (a division of Nidec Corporation), OMRON Corporation, KEB GmbH, and Fujitec; for forged attachments are The Crosby Group, Brewer Tichner Company and Chicago Hardware and Fixture Company; for actuators and rotary unions are Deublin, Joyce-Dayton, and Nook Industries, a division of Altra Industrial Motion Corp.; and for precision conveyors and accumulators are FlexLink, Bosch Rexroth AG, MK North America, Inc., Duravant, Nercon Eng. & Mfg.
Load capacities for our hoist product lines range from one-eighth of a ton to nearly 275 tons with the acquisition of STAHL. These products are sold under our Budgit, Chester, CM, Coffing, Little Mule, Pfaff, Shaw-Box, STAHL, Yale, and other recognized brands.
Load capacities for our hoist product lines range from one-eighth of a ton to nearly 275 tons. These products are sold under our Budgit, Chester, CM, Coffing, Little Mule, Pfaff, Shaw-Box, STAHL, Yale, and other recognized brands.
We produce a broad line of alloy and carbon steel closed-die forged chain attachments, including hooks, shackles, HammerloksTM, and master links. These forged attachments are used in chain, wire rope, and textile rigging applications in a variety of industries, including transportation, mining, construction, marine, logging, petrochemical, and agriculture.
We produce a broad line of alloy and carbon steel closed-die forged chain attachments, including hooks, shackles, Hammerloks TM , and master links. These forged attachments are used in chain, wire rope, and textile rigging applications in a variety of industries, including transportation, mining, construction, marine, logging, petrochemical, and agriculture.
We also provide our products to the U.S. and other governments for a variety of military applications. Independent Crane Builders and Engineering Procurement and Construction ("EPC") firms - In addition to the Distribution Channels mentioned above, we sell explosion-protected hoists and custom engineered non-standard hoists to independent crane builders and EPC firms.
We also provide our products to the U.S. and other governments for a variety of military applications. Independent Crane Builders and EPC firms - In addition to the Distribution Channels mentioned above, we sell explosion-protected hoists and custom engineered non-standard hoists to independent crane builders and EPC firms.
While we sell primarily to OEMs of overhead cranes and hoists, we spend a great deal of effort understanding the needs of end users to gain specification. We can combine our products with engineered services to provide complete customer-specific system solutions.
While we sell primarily to original equipment manufacturers ("OEMs") of overhead cranes and hoists, we spend a great deal of effort understanding the needs of end users to gain specification. We can combine our products with engineered services to provide complete customer-specific system solutions.
We make available free of charge through our website our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after such documents are electronically filed with, or furnished to, the SEC.
We make available free of charge through our website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after such documents are electronically filed with, or furnished to, the SEC.
We believe the substantial breadth of our product offering and broad distribution channels in the United States and Europe provide us a strategic advantage in our markets.
We believe the substantial breadth of our product offerings and broad distribution channels in the United States and Europe provide us a strategic advantage in our markets.
In addition, we manufacture carbon steel forged and stamped products, such as load binders, logging tools, and other securing devices, for sale to the industrial and logging markets through industrial distributors, hardware distributors, mass merchandiser outlets, and original equipment manufacturers ("OEMs").
In addition, we manufacture carbon steel forged and stamped products, such as load binders, logging tools, and other securing devices, for sale to the industrial and logging markets through industrial distributors, hardware distributors, mass merchandiser outlets, and OEMs.
The following table sets forth certain sales data for our products, expressed as a percentage of net sales for fiscal 2022 and 2021: Fiscal Years Ended March 31, 2022 2021 Hoists 48 % 61 % High-precision conveying systems 16 — Digital power control and delivery systems 11 12 Actuators and rotary unions 9 11 Chain and rigging tools 9 7 Industrial cranes 5 6 Elevator application drive systems 2 3 100 % 100 % Hoists - We manufacture a wide variety of electric chain hoists, electric wire rope hoists, hand-operated hoists, winches, lever tools, and air-powered hoists.
The following table sets forth certain sales data for our products, expressed as a percentage of net sales for fiscal 2023 and 2022: 5 Fiscal Years Ended March 31, 2023 2022 Hoists 49 % 48 % High-precision conveying systems 16 16 Digital power control and delivery systems 11 11 Actuators and rotary unions 9 9 Chain and rigging tools 8 9 Industrial cranes 4 5 Elevator application drive systems 3 2 100 % 100 % Hoists - We manufacture a wide variety of electric chain hoists, electric wire rope hoists, hand-operated hoists, winches, lever tools, and air-powered hoists.
Our products are used for mission critical applications where we have established, trusted brands with significant customer retention. Our targeted market verticals include general industries, transportation, energy and utilities, process industries, industrial automation, construction and infrastructure, food and beverage, entertainment, life sciences, consumer packaged goods and e-commerce/supply chain/warehousing. On April 7, 2021, the Company completed its acquisition of Dorner Mfg.
Our products are used for mission critical applications where we have established, trusted brands with significant customer retention. Our targeted market verticals include manufacturing, transportation, energy and utilities, process industries, industrial automation, construction and infrastructure, food and beverage, entertainment, life sciences, consumer packaged goods and e-commerce/supply chain/warehousing. In fiscal 2022, the Company completed its acquisition of Dorner Mfg. Corp. ("Dorner").
It also allows Dorner and Garvey to expand geographically by having access to our global footprint and provides us with an entry point into a pipeline of additional acquisition opportunities in the fragmented precision conveying industry.
The acquisitions also allow Dorner and Garvey to expand geographically by having access to our global footprint and provide us with an entry point into a pipeline of additional acquisition opportunities in the fragmented precision conveying industry.
Raw Materials and Components Our principal raw material and component purchases aggregated to approximately $368 million in fiscal 2022 (or 62% of Cost of product sold in fiscal 2022) and included 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; 9 conveyors; accumulators and standard variable drives.
Raw Materials and Components Our principal raw material and component purchases aggregated to approximately $365 million in fiscal 2023 (or 61% of Cost of product sold in fiscal 2023) and included 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.
Specialty Distribution Channels - Our global specialty distribution channels consist of: — National and regional distributors that market a variety of MROP supplies, including material handling products, either exclusively through large, nationally distributed catalogs, or through a combination of catalog, internet, and branch sales and a field sales force. — Material handling specialists and integrators that design and assemble systems incorporating hoists, overhead rail systems, trolleys, scissor lift tables, manipulators, air balancers, jib arms, and other material handling products to provide end-users with solutions to their material handling problems. — Entertainment equipment distributors that design, supply, and install a variety of material handling and rigging equipment for concerts, theaters, ice shows, sporting events, convention centers, and night clubs. 7 Service-After-Sale Distribution Channel - Service-after-sale distributors include our authorized network of 23 chain repair service stations and over 229 certified hoist service and repair stations globally.
Specialty Distribution Channels - Our global specialty distribution channels consist of: — National and regional distributors that market a variety of MROP supplies, including material handling products, either exclusively through large, nationally distributed catalogs, or through a combination of catalog, internet, and branch sales and a field sales force. — Material handling specialists and integrators that design and assemble systems incorporating hoists, overhead rail systems, trolleys, scissor lift tables, manipulators, air balancers, jib arms, and other material handling products to provide end-users with solutions to their material handling problems. — Entertainment equipment distributors that design, supply, and install a variety of material handling and rigging equipment for concerts, theaters, ice shows, sporting events, convention centers, and night clubs.
At the core of CMBS are our people and our values. With CMBS as the foundation, we are well positioned to execute the Core Growth Framework of our Blueprint for Growth 2.0 strategy. The Framework defines four parallel paths for Columbus McKinnon’s growth and provides clear organic and strategic initiatives.
With CMBS as the foundation, we are well positioned to execute our Core Growth Framework (Framework) strategy. The Framework defines four parallel paths for Columbus McKinnon’s growth and provides clear organic and strategic initiatives.
Inc and Arrowhead Systems. Human Capital Management Headquartered in Buffalo, New York, Columbus McKinnon’s global footprint includes offices and manufacturing facilities in more than 24 countries across North America, Latin America, Europe, the Middle East, Africa and Asia. At March 31, 2022, we had 3,224 employees globally.
Inc and Arrowhead Systems, recently acquired by Rexroth. Human Capital Management Headquartered in Buffalo, New York, Columbus McKinnon’s global footprint includes offices and manufacturing facilities in more than 25 countries across North America, Latin America, Europe, the Middle East, Africa and Asia. At March 31, 2023, we had 3,392 employees globally.
OEM/Government Distribution Channels - This channel consists of: — OEMs that supply various component parts directly to other industrial manufacturers as well as private branding and packaging of our traditional products for material handling, lifting, positioning, and special purpose applications. — Government agencies, including the U.S. and Canadian Navies and Coast Guards, that primarily purchase load securing chain and forged attachments.
This service network is designed for easy parts and service access for our large installed base of hoists and related equipment in that region. 7 OEM/Government Distribution Channels - This channel consists of: — OEMs that supply various component parts directly to other industrial manufacturers as well as private branding and packaging of our traditional products for material handling, lifting, positioning, and special purpose applications. — Government agencies, including the U.S. and Canadian Navies and Coast Guards, that primarily purchase load securing chain and forged attachments.
The content on any website referred to in this Annual Report on Form 10-K (“Form 10-K”) is not incorporated by reference into this Form 10-K, unless expressly noted otherwise. 10 Table of Contents
The content on any website referred to in this Form 10-K is not incorporated by reference into this Form 10-K, and such content should not be considered part of this Form 10-K, unless expressly noted otherwise. 10 Table of Contents
STAHL serves independent crane builders and Engineering Procurement and Construction ("EPC") firms, providing products to a variety of end markets including automotive, general manufacturing, oil and gas, steel and concrete, power generation, as well as process industries such as chemical and pharmaceuticals. We initiated our Blueprint for Growth strategy in early fiscal 2018. It originally had three phases.
STAHL serves independent crane builders and Engineering Procurement and Construction ("EPC") firms, providing products to a variety of end markets including automotive, general manufacturing, oil and gas, steel and concrete, power generation, as well as process industries such as chemical and pharmaceuticals.
Our operations are also governed by many other laws and regulations, including those relating to workplace safety and worker health, principally OSHA in the U.S. and others outside the U.S. and regulations thereunder.
Our operations are also governed by many other laws and regulations, including those relating to workplace safety and worker health, principally the Occupational Health and Safety Administration ("OSHA") in the U.S. and others outside the U.S. and regulations thereunder. The penalties for any breach of these regulations can vary and may be substantial.
Environmental and Other Governmental Regulation Like most manufacturing companies, we are subject to various federal, state, and local laws relating to the protection of the environment.
We also own domain names, including our website, www.columbusmckinnon.com. 9 Environmental and Other Governmental Regulation Like most manufacturing companies, we are subject to various federal, state, and local laws relating to the protection of the environment.
Initiatives include further developing commercial and product management competencies and improving our digital tools for a better, more efficient customer experience. • Growing the Core is a path that is focused on taking greater marker share, both organically and through acquisitions, within our SAM.
Our Framework includes: • Strengthening the Core which is a foundational path focused on initiatives that will strengthen competencies and improve our competitive position within our existing share of our Serviceable Addressable Market (”SAM”). 4 Initiatives include further developing commercial and product management competencies and improving our digital tools for a better, more efficient customer experience. • Growing the Core is a path that is focused on taking greater market share, both organically and through acquisitions, within our SAM.
We are making significant investments in our people and systems to enable meaningful progress in areas including, but not limited to, environmental stewardship, safety for our employees, workplace diversity and inclusion, connecting with our communities, and strong governance and risk management.
We are making significant investments in our people, processes and systems to enable meaningful progress in areas including, but not limited to, environmental stewardship, employee safety, workplace diversity and inclusion, connecting with our communities, and strong governance and risk management. We are taking deliberate steps to fully integrate ESG into our enterprise strategy, our business system, and our daily actions.
Independent crane builders are lifting solution developers and final crane assemblers that source hoists as components. EPC firms are responsible for project management or construction management of production facilities that purchase lifting solutions from crane and hoist builders.
Independent crane builders are lifting solution developers and final crane assemblers that source hoists as components. EPC firms are responsible for project management or construction management of production facilities that purchase lifting solutions from crane and hoist builders. Backlog Our backlog of orders at March 31, 2023 was approximately $308,717,000 compared to approximately $309,052,000 at March 31, 2022.
Dorner offers a broad range of precision conveying systems to our product offerings, which include low profile, flexible chain, large scale, sanitary and vertical elevation conveyor systems, as well as pallet system conveyors. In addition, on December 1, 2021, the Company completed its acquisition of Garvey Corporation ("Garvey"), which further expanded its precision conveyance offerings.
The addition of Dorner provides attractive complementary adjacencies including sortation and asynchronous conveyance systems. Dorner offers a broad range of precision conveying systems to our product offerings, which include low profile, flexible chain, large scale, sanitary and vertical elevation conveyor systems, as well as pallet system conveyors.
Rotary unions are used in a variety of industries including pulp and paper, printing, textile and fabric manufacturing, rubber, and plastic. 6 Chain and Rigging Tools - We manufacture alloy and carbon steel chain for various industrial and consumer applications. U.S. federal regulations require the use of alloy chain for overhead lifting applications because of its strength and wear characteristics.
Chain and Rigging Tools - We manufacture alloy and carbon steel chain for various industrial and consumer applications. U.S. federal regulations require the use of alloy chain for overhead lifting applications because of its strength and wear characteristics.
As we look forward to fiscal 2023 and beyond, we have additional plans that will continue to move our ESG initiatives forward. We continue to collect and analyze data to set realistic, yet challenging goals. We expect to publish several of these goals in our next Corporate Social Responsibility Report.
As we look forward to fiscal 2024 and beyond, we have additional plans that will continue to move our ESG initiatives forward. We continue to collect and analyze data to set realistic, yet challenging goals and be transparent about our progress against our commitments.
Rotary unions are devices that transfer a liquid or gas from a fixed pipe or hose to a rotating drum, cylinder or other device.
Rotary unions are devices that transfer a liquid or gas from a fixed pipe or hose to a rotating drum, cylinder or other device. Rotary unions are used in a variety of industries including pulp and paper, printing, textile and fabric manufacturing, rubber, and plastic.
Dorner is a leading supplier to the stable life sciences, food processing, and consumer packaged goods markets as well as the high growth industrial automation and e-commerce sectors. The addition of Dorner provides attractive complementary adjacencies including sortation and asynchronous conveyance systems.
Dorner is a leading automation solutions company providing unique, patented technologies in the design, application, manufacturing and integration of high-precision conveying systems. Dorner is a leading supplier to the stable life sciences, food processing, and consumer packaged goods markets as well as the high growth industrial automation and e-commerce sectors.
Garvey is a leading accumulation systems solutions company providing unique, patented systems for the automation of production processes whose products complement those of Dorner. The acquisitions of Dorner and Garvey accelerate the Company’s shift to intelligent motion and serves as a platform to expand capabilities in advanced, higher technology automation solutions.
The acquisitions of Dorner and Garvey and expected acquisition of montratec accelerate the Company’s shift to intelligent motion solutions and serve as a platform to expand capabilities in advanced, higher technology automation solutions.
“Connect safety to everything you do” highlights the importance of safety to our culture. As a permanent agenda item at all management meetings, safety comes first. For fiscal 2022, the Company had an overall safety incident rate of 0.70 (number of injuries and illnesses multiplied by 200,000, divided by hours worked).
“Connect safety to everything you do” highlights the importance of safety to our culture. As a permanent agenda item at all management meetings, safety comes first.
Associates where possible are being brought back to the office in a hybrid working model, increasing site collaboration while maintaining flexibility. We also recognize our corporate responsibility to advance our Environmental Social and Governance (“ESG”) efforts and to be held accountable for making progress.
We also recognize our corporate responsibility to advance our Environmental Social and Governance (“ESG”) efforts and to be held accountable for making progress.
Other important factors include distributor relationships and territory coverage as well as the robustness of our digital tools which impacts the customer experience. We believe we have leading U.S. market share in various products categories including hoists, trolleys and components, AC and DC material handling drives, screw jacks, and elevator DC drives.
We believe we have leading U.S. market share in various products categories including hoists, trolleys and components, AC and DC material handling drives, screw jacks, precision conveyors, and elevator DC drives. These product categories represented 51% of our U.S. net sales for fiscal 2023.
We are dedicated to building a company that future generations can be proud of and a team that embraces diversity and appreciates differences across the enterprise. We have embedded diversity, equity and inclusion into the People and Values framework of the Columbus McKinnon Business System. We are working to create an environment of inclusion.
We know the positive impact diverse and inclusive teams have on our business, employees, customers, and communities around the world. We are dedicated to building a company that future generations can be proud of and a team that embraces diversity and appreciates differences across the enterprise.
We face competition from a wide range of regional, national, and international manufacturers globally. In addition, we often compete with individual operating units of larger, highly diversified companies. The principal competitive factors affecting our business include customer service and support as well as product availability, performance, functionality, brand reputation, reliability, and price.
In addition, fluctuations in backlog can reflect the project-oriented nature of certain aspects of our business. Competitive Conditions The material handling and precision conveyance industries remains fragmented. We face competition from a wide range of regional, national, and international manufacturers globally. In addition, we often compete with individual operating units of larger, highly diversified companies.
Products Of our fiscal 2022 sales, $532,830,000, or 59%, were U.S. and $373,725,000 or 41% were non-U.S.
Products Of our fiscal 2023 sales, $569,215,000, or 61%, were U.S. and $367,025,000 or 39% were non-U.S.
We launched a series of virtual training modules around diversity, inclusion and unconscious bias. We have updated our core value “Win as a team” to specifically address embracing diversity. As part of our response to the COVID-19 pandemic, we implemented strict safety protocols at our sites, as recommended by medical and public health experts.
We have embedded diversity, equity and inclusion into the People and Values framework of the Columbus McKinnon Business System. We are working to create an environment of inclusion. We launched a series of virtual training modules around diversity, inclusion and unconscious bias. We have updated our core value “Win as a team” to specifically address embracing diversity.
We believe the risk of employee or union led disruption in production is remote. The acquisitions of Dorner and Garvey in fiscal 2022 added approximately 596 employees to our global workforce and five primary manufacturing facilities.
We believe the risk of employee or union led disruption in production is remote.
In addition, we also set the following objectives for fiscal 2022: • Make significant investments in forward advancement of ESG (People & Technology enablers); • Perform extensive data collection and analysis to identify areas for improvement; • Build upon our baseline year ESG metrics; • Build upon our legacy products and commitment to customers, while also growing through acquisitions; • Launch our CMCO Cares platform, a more formal and centralized process for corporate giving and community involvement; and • Be more transparent with internal and external stakeholders through communications and public disclosures.
In addition, we also set the following objectives for fiscal 2023: • Make significant investments to advance our ESG initiatives (People & Technology); • Drive a people-first culture through engagement, training and development opportunities; • Perform extensive data collection and analysis to identify areas for improvement; • Build upon our progress toward ESG targets and goals; • Decrease our complexity to customers with an organizational restructure to a bi-regional structure; • Further align with global carbon emissions reporting standards, including CDP and TCFD; • Be more transparent with internal and external stakeholders through communications and public disclosures.
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Corp. ("Dorner"). Dorner, headquartered in Hartland, Wisconsin, is a leading automation solutions company providing unique, patented technologies in the design, application, manufacturing and integration of high-precision conveying systems. The acquisition of Dorner accelerates the Company’s shift to intelligent motion and serves as a platform to expand capabilities in advanced, higher technology automation solutions.
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Further in fiscal 2022, the Company completed its acquisition of Garvey Corporation ("Garvey"), which further expanded its precision conveyance offerings. Garvey is a leading accumulation systems solutions company providing unique, patented systems for the automation of production processes whose products complement those of Dorner.
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In Phase 1, which was completed during fiscal 2018, we focused on instilling a performance-based culture to drive results, which included reorganizing the business into three product groups.
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Most recently, in April 2023 we announced that we had entered into a definitive agreement to acquire montratec GmbH (montratec), a leading automation solutions company that designs and develops intelligent automation and transport systems for interlinking industrial production and logistics processes. We expect to close on this acquisition on May 31, 2023 subject to customary closing conditions.
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Phase II, which began in the latter half of fiscal 2018, included simplifying the business with our 80/20 process, improving our operational excellence, and ramping the growth engine by investing in new product development and a digital platform to grow profitably.
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We are continuing to transform from a legacy cyclical industrial company to a top-tier, secular growth, intelligent motion solutions company. In accordance with our strategic framework, we are building out the Columbus McKinnon Business System ("CMBS") and growth framework to be market-led, customer-centric and operationally excellent with our people and values at the core.
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Through the simplification process, we identified three businesses in our portfolio that were not a fit with our product offerings and strategy that represented approximately $38 million in revenue in fiscal 2018.
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We expect to further expand our product offering in the this space with the April 2023 announcement that we had entered into a definitive agreement to acquire montratec. montratec product offerings complement both Dorner and Garvey, and further our shift to intelligent motion and serve as a platform to expand capabilities in advanced, higher technology automation solutions.
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By the end of fiscal 2019, we divested these three businesses and completed the closure of one manufacturing facility in Ohio, which provided $2 million in cost savings in fiscal 2020.
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We expect to close on this acquisition on May 31, 2023 subject to customary closing conditions.
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During fiscal 2020, the Company began to further reduce its manufacturing footprint by initiating the closure and consolidation of our remaining facility in Ohio into other U.S. facilities, which was completed in fiscal 2021. Similarly, one of our manufacturing facilities in China was closed during fiscal 2020 and its operations were consolidated into our other manufacturing facility in China.
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Service-After-Sale Distribution Channel - Service-after-sale distributors include our authorized network of 23 chain repair service stations and over 229 certified hoist service and repair stations globally.
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A small operation in France was closed during fiscal 2021. The annual savings from these factory consolidations is approximately $8.3 million. Simplification with the 80/20 process and other operational efficiencies implemented enabled the consolidations without reducing our ability to serve our customers and address demand.
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The principal competitive factors affecting our business include customer service and support as well as product availability, performance, functionality, brand reputation, reliability, and price. Other important factors include distributor relationships and territory coverage as well as the robustness of our digital tools which impacts the customer experience.
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Phase III of the strategy was centered on evolving the business 4 model including optimizing our current product portfolio as well as pursuing acquisitions to advance our transformation into a leading intelligent motion solutions company. The Dorner and Garvey transactions are examples of these types of acquisitions.
Added
For fiscal 2023 and 2022, the Company had an overall safety incident rate of 0.69 and 0.70, respectively (number of injuries and illnesses multiplied by 200,000, divided by hours worked). • We are committed to embracing diversity, equity and inclusion and making it a part of everything we do.
Removed
We have since evolved our Blueprint for Growth strategy to version 2.0 in order to accelerate our pivot to growth with an emphasis on broadening our expertise in intelligent motion solutions for material handling.
Added
Currently, as a result of macroeconomic conditions, including rising inflation, we are continuing to experience 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.
Removed
Our Blueprint for Growth 2.0 strategy is focused on delivering above market growth through organic and inorganic initiatives as well as improved financial performance, which we believe drives shareholder value creation. The strategy is underpinned with the Columbus McKinnon Business System, ("CMBS") that provides the discipline, processes and core competencies necessary to scale our business.
Added
Trademarks We own or have the rights to use certain trademarks, service marks and trade names that are registered with the U.S. Patent and Trademark Office. Trademarks that are important in identifying and distinguishing our products include, but are not limited to, Hammerloks™ and Herc-Alloy™.
Removed
Our Core Growth framework includes: • Strengthening the Core which is a foundational path focused on initiatives that will strengthen competencies and improve our competitive position within our existing share of our Serviceable Addressable Market (”SAM”).
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This service network is designed for easy parts and service access for our large installed base of hoists and related equipment in that region.
Removed
Backlog Our backlog of orders at March 31, 2022 was approximately $309,052,000, including $60,223,000 of backlog related to the Dorner and Garvey acquisitions, compared to approximately $171,698,000 at March 31, 2021.
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Given the short product lead times, we do not believe that the amount of our backlog of orders is a reliable indication of our future sales. Fluctuations in backlog can reflect the project-oriented nature of certain aspects of our business. Competitive Conditions The material handling and precision conveyance industries remains fragmented.
Removed
These product categories represented 53% of our U.S. net sales for fiscal 2022.
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This figure excludes our fiscal 2022 acquisitions of Dorner and Garvey which will be incorporated in Fiscal 2023. • We are committed to embracing diversity, equity and inclusion and making it a part of everything we do. We know the positive impact diverse and inclusive teams have on our business, employees, customers, and communities around the world.
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We continue to have regular communication with employees to keep them abreast of the corporate-wide expectations and posted signage throughout our facilities reminds our associates of the new heightened safety protocols, including frequent cleaning and increased sanitization efforts to keep our employees safe.
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We are taking deliberate steps to fully integrate ESG into our enterprise strategy, our business system, and our daily actions. In fiscal 2022, we made it a priority to articulate our Purpose - Together we create intelligent motion solutions that move the world forward and improve lives.
Removed
Currently, as a result of global supply chain challenges, we are experiencing higher raw material costs. To date, we have successfully raised prices several times globally to our customers to cover these increased raw material costs and protect gross margins.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

41 edited+21 added−21 removed80 unchanged
Biggest changeConcern over climate change will likely result in new legal or regulatory requirements designed to reduce greenhouse gas emissions and mitigate the effects of climate change. Further, our customers and the markets we serve may impose emissions 17 Table of Contents reduction or other environmental standards and requirements.
Biggest changeFurthermore, the potential physical impacts of climate change on our customers, and therefore on our operations, are speculative and highly uncertain, and would be particular to the circumstances developing in various geographical regions. Concern over climate change will likely result in new legal or regulatory requirements designed to reduce greenhouse gas emissions and mitigate the effects of climate change.
The industries that produce these critical components and materials are also themselves highly cyclical and at times pricing and availability can be volatile due to a number of factors beyond our control, including general economic conditions, labor costs, competition, import duties, tariffs, and currency exchange rates. This volatility can significantly affect our raw material costs.
The industries that produce these critical components and materials are also themselves highly cyclical and at times pricing and availability can be volatile due to a number of factors beyond our control, including general economic conditions, inflation, labor costs, competition, import duties, tariffs, and currency exchange rates. This volatility can significantly affect our raw material costs.
Their demand for our products, and thus our results of operations, is directly related to the level of production in their facilities, which changes as a result of changes in general macroeconomic conditions, including, among others, movements in interest rates, inflation, changes in currency exchange rates and higher fuel and other energy costs, and other factors beyond our control, and is vulnerable to economic downturns.
Their demand for our products, and thus our results of operations, is cyclical and directly related to the level of production in their facilities, which changes as a result of changes in general macroeconomic conditions, including, among others, movements in interest rates, inflation, changes in currency exchange rates and higher fuel and other energy costs, and other factors beyond our control, and is vulnerable to economic downturns.
Our Term Loan B Facility and revolving credit facility contain a financial leverage covenant, which will only be tested if any extensions of credit (other than letters of credit) are outstanding under the revolving credit facility at the end of any fiscal quarter, and other restrictive covenants.
Our Term Loan B and New Revolving Credit Facility contain a financial leverage covenant, which will only be tested if any extensions of credit (other than letters of credit) are outstanding under the New Revolving Credit Facility at the end of any fiscal quarter, and other restrictive covenants.
At this time, it is not known whether or when SOFR or other alternative reference rates will attain market traction as replacements for LIBOR. Any new benchmark rate will likely not replicate LIBOR exactly. The interest rate on the Company’s Term Loan B and revolving credit facility have a variable component that is based on LIBOR.
At this time, it is not known whether or when SOFR or other alternative reference rates will attain market traction as replacements for LIBOR. Any new benchmark rate will likely not replicate LIBOR exactly. The interest rate on the Company’s Term Loan B (as defined herein) and New Revolving Credit Facility have a variable component that is based on LIBOR.
See Note 16 to our March 31, 2022 consolidated financial statements included in Item 8 of this Form 10-K. As indicated above, our self-insurance coverage is provided through our captive insurance subsidiary. The reserves of our captive insurance subsidiary are subject to periodic adjustments based upon actuarial evaluations, which adjustments impact our overall results of operations and financial condition.
See Note 16 to our March 31, 2023 consolidated financial statements included in Item 8 of this Form 10-K. As indicated above, our self-insurance coverage is provided through our captive insurance subsidiary. The reserves of our captive insurance subsidiary are subject to periodic adjustments based upon actuarial evaluations, which adjustments impact our overall results of operations and financial condition.
We cannot predict if we will be able to obtain replacement components within the timeframes that we require at an acceptable cost, if at all. In addition, we have experienced, and may continue to experience, significant delays in receiving shipments of key component and raw materials and in shipping our completed products to customers.
We cannot predict if we will be able to obtain 12 Table of Contents replacement components within the timeframes that we require at an acceptable cost, if at all. In addition, we have experienced, and may continue to experience, significant delays in receiving shipments of key component and raw materials and in shipping our completed products to customers.
Moreover, if any of our suppliers become financially unstable, or otherwise unable or unwilling to provide us with raw materials or components, we may have to find new suppliers. It may take several months to locate alternative suppliers, if required, or to 12 Table of Contents redesign our products to accommodate components from different suppliers.
Moreover, if any of our suppliers become financially unstable, or otherwise unable or unwilling to provide us with raw materials or components, we may have to find new suppliers. It may take several months to locate alternative suppliers, if required, or to redesign our products to accommodate components from different suppliers.
Our operations and facilities are subject to various federal, state, local, and foreign requirements relating to the protection of the environment, including those governing the discharges of pollutants in the air and water, the generation, management and 16 Table of Contents disposal of hazardous substances and wastes, and the cleanup of contaminated sites.
Our operations and facilities are subject to various federal, state, local, and foreign requirements relating to the protection of the environment, including those governing the discharges of pollutants in the air and water, the generation, management and disposal of hazardous substances and wastes, and the cleanup of contaminated sites.
Additional environmental liabilities could exist, including clean-up obligations at these locations or other sites at which materials from our operations were disposed, which could result in substantial future expenditures that cannot be currently quantified and which could reduce our profits or have an adverse effect on our financial condition, operations, or liquidity.
Additional environmental liabilities could exist, including clean-up obligations at these locations or other sites at which 16 Table of Contents materials from our operations were disposed, which could result in substantial future expenditures that cannot be currently quantified and which could reduce our profits or have an adverse effect on our financial condition, operations, or liquidity.
Our growth strategy depends on successful integration of acquisitions. Acquisitions are a key part of our growth strategy. Our historical growth has depended, and our future growth is likely to depend, on our ability to successfully execute our acquisition strategy, and the successful integration of acquired businesses, including Dorner and Garvey, into our existing business.
Our growth strategy depends on successful integration of acquisitions. Acquisitions are a key part of our growth strategy. Our historical growth has depended, and our future growth is likely to depend, on our ability to successfully execute our acquisition strategy, and the successful integration of acquired businesses into our existing business.
Since our financial statements are denominated in U.S. dollars, changes in currency exchange rates between the U.S. dollar and other currencies have had, and will continue to have, a currency translation impact on our earnings. Currency fluctuations may impact our financial performance in the future. 15 Table of Contents We are subject to debt covenant restrictions.
Since our financial statements are denominated in U.S. dollars, changes in currency exchange rates between the U.S. dollar and other currencies have had, and will continue to have, a currency translation impact on our earnings. Currency fluctuations may impact our financial performance in the future. We are subject to debt covenant restrictions.
The importance of recruiting and retaining qualified employees has only become more acute during the COVID-19 pandemic as 13 Table of Contents labor shortages have occurred in many of the regions in which we have operations.
The importance of recruiting and retaining qualified employees has only become more acute during the COVID-19 pandemic as labor shortages have occurred in many of the regions in which we have operations.
Thus, a portion of our revenues (approximately $373,725,000 in our fiscal year ended March 31, 2022) are generated in foreign currencies, including principally the Euro, the British Pound, the Canadian Dollar, the South African Rand, the Brazilian Real, the Mexican Peso, and the Chinese Yuan, and while much of the costs incurred to generate those revenues are incurred in the same currency, a portion is incurred in other currencies.
Thus, a portion of our revenues (approximately $367,025,000 in our fiscal year ended March 31, 2023) are generated in foreign currencies, including principally the Euro, the British Pound, the Canadian Dollar, the South African Rand, the Brazilian Real, the Mexican Peso, and the Chinese Yuan, and while much of the costs incurred to generate those revenues are incurred in the same currency, a portion is incurred in other currencies.
Claims brought against us that are not covered by insurance or that are in excess of insurance coverage could have a material adverse effect on our results, financial condition, or liquidity. In addition, like many industrial manufacturers, we are also involved in asbestos-related litigation.
Claims brought against us that are not covered by insurance or that are in excess of insurance coverage could have a material adverse effect on our results, financial condition, or liquidity. In addition, warranty and certain other claims are not typically covered by insurance. In addition, like many industrial manufacturers, we are also involved in asbestos-related litigation.
As a result, we may experience increased compliance burdens and operational costs and raw material sourcing, manufacturing operations and the distribution of our products may be adversely affected. Moreover, we may not be able to timely meet these requirements due to the required level of capital investment or technological advancement.
In addition, we may experience increased compliance burdens and operational costs and raw material sourcing, manufacturing operations and the distribution of our products may be adversely affected. Moreover, we may not be able to timely meet these requirements due to the required level of capital investment or technological advancement.
While the Company’s business operations relating to Russia constitute an immaterial part of the Company’s overall business, we may decide to, or be required to, exit from our operations in Russia in their entirety, which could result in a loss of revenues currently earned from our Russian operations (approximately $2,174,000 for the fiscal year ended March 31, 2022) or may necessitate the need to incur a bad debt reserve or an asset write-off related to our Russian operations.
While the Company’s business operations relating to Russia constitute an immaterial part of the Company’s overall business, we may decide to, or be required to, exit from our operations in Russia in their entirety, which could result in a loss of revenues from our Russian operations (approximately $167,000 for the fiscal year ended March 31, 2023) or may necessitate the need to incur a bad debt reserve or an asset write-off related to our Russian operations.
It is unclear if at that time LIBOR will cease to exist or if new methods of calculating LIBOR will be established such that it continues to exist after June 30, 2023, or whether different benchmark rates used to price indebtedness will develop. The Alternative Reference Rates Committee, a group of market participants convened by the U.S.
It is unclear if at that time LIBOR will cease to exist or if new methods of calculating LIBOR will be established such that it continues to exist after December 31, 2024, or whether different benchmark rates used to price indebtedness will develop. The Alternative Reference Rates Committee, a group of market participants convened by the U.S.
The degree to which we are leveraged could have important consequences to our shareholders, including the following: • we may have greater difficulty satisfying our obligations with respect to our indebtedness; • we must dedicate a substantial portion of our cash flow from operations to the payment of principal and interest on our indebtedness, reducing the funds available for our operations; • our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions or other purposes may be impaired; • we may be limited in our ability to make additional acquisitions or pay dividends on our common stock; • our flexibility in planning for, or reacting to, changes in the markets in which we compete may be limited; • we may be at a competitive disadvantage relative to our competitors with less indebtedness; • we may be rendered more vulnerable to general adverse economic and industry conditions; • our credit ratings may be downgraded; and • we are exposed to increased interest rate risk given that a portion of our indebtedness obligations are at variable interest rates.
The degree to which we are leveraged could have important consequences to our shareholders, including the following: • we may have greater difficulty satisfying our obligations with respect to our indebtedness; • we must dedicate a substantial portion of our cash flow from operations to the payment of principal and interest on our indebtedness, reducing the funds available for our operations; • our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions or other purposes may be impaired; • we may be limited in our ability to make additional acquisitions or pay dividends on our common stock; • our flexibility in planning for, or reacting to, changes in the markets in which we compete may be limited; • we may be at a competitive disadvantage relative to our competitors with less indebtedness; • inability to comply with covenants in, and potential for default under, our debt instruments • we may be rendered more vulnerable to general adverse economic and industry conditions; • we may be unable to pay off in full or refinance any of our indebtedness at maturity; • our credit ratings may be downgraded; and • we are exposed to increased interest rate risk given that a portion of our indebtedness obligations are at variable interest rates.
These periodic adjustments can be favorable or unfavorable. We are subject to various environmental laws, which may require us to expend significant capital and incur substantial cost.
These periodic adjustments can be favorable or unfavorable. We are subject to various environmental laws, which may require us to expend significant capital, incur substantial cost and could lower our margins.
These non-U.S. operations are subject to a number of special risks, in addition to the risks of our U.S. business, differing protections of intellectual property, trade barriers, labor unrest, exchange controls, regional economic uncertainty, differing (and possibly more stringent) labor regulation, risk of governmental expropriation, U.S. and foreign customs and tariffs, current and changing regulatory environments, difficulty in obtaining distribution support, difficulty in staffing and managing widespread operations, differences in the availability, and terms of financing, political instability and risks of increases in taxes.
These non-U.S. operations are subject to a number of special risks, in addition to the risks of our U.S. business, differing protections of intellectual property, trade barriers, labor unrest, geopolitical conflicts, exchange 14 Table of Contents controls, regional economic uncertainty, differing (and possibly more stringent) labor regulation, risk of governmental expropriation, U.S. and foreign customs and tariffs, political and economic instability in the jurisdictions in which we operate, foreign receivables collection risk, current and changing regulatory environments, difficulty in obtaining distribution support, difficulty in staffing and managing widespread operations, differences in the availability, and terms of financing, political instability and risks of increases in taxes.
We cannot assure you that we will be able to retain our existing management personnel or to attract additional qualified personnel when needed.
We cannot assure you that we will be able to retain our existing management personnel or to attract additional qualified personnel when needed. 18 Table of Contents
Our success is dependent on the management and leadership skills of our management team, including our senior team. The loss of any of these individuals or an inability to attract, retain, and maintain additional personnel, especially in a post-COVID job market, could prevent us from implementing our business strategy.
Our success is dependent on the management and leadership skills of our management team, including our senior team. The loss of any of these individuals or an inability to attract, retain, and maintain additional personnel could prevent us from implementing our business strategy.
Limits on manufacturing availability or capacity or delays in production or delivery of components or raw materials due to COVID-related restrictions could further delay or inhibit our ability to obtain supply of components and raw materials and produce finished goods.
Limits on manufacturing availability or capacity or delays in production or delivery of components or raw materials for our suppliers could further delay or inhibit our ability to obtain supply of components and raw materials and produce finished goods.
In our fiscal year ended March 31, 2022, approximately 41% of our net sales were derived from non-U.S. markets.
In our fiscal year ended March 31, 2023, approximately 39% of our net sales were derived from non-U.S. markets.
As the breadth and complexity of our information technology systems continue to grow, including as a result of the increasing reliance on, and use of, mobile technologies and cloud-based services, and as more of our employees are working remotely during the COVID-19 pandemic, the risk of security incidents and cyberattacks has increased.
As the breadth and complexity of our information technology systems continue to grow, including as a result of the increasing reliance on, and use of, mobile technologies and cloud-based services, the risk of security incidents and cyberattacks has increased.
Furthermore, the failure to achieve the anticipated synergies of our recent significant acquisitions or recognize the anticipated market opportunities or integration from our recent acquisitions, could have a material adverse effect on our business, financial condition and results of operations. The COVID-19 pandemic has, and may in the future continue to, adversely affect our business.
Furthermore, the failure to achieve the anticipated synergies of our recent significant acquisitions or recognize the anticipated market opportunities or integration from our recent acquisitions, could have a material adverse effect on our business, financial condition and results of operations.
There can be no assurance that historically improving cycles are representative of actual future demand. In addition, the cyclical nature of our business could at times also adversely affect our liquidity and ability to borrow under our revolving credit facility.
There can be no assurance that historically improving cycles are representative of actual future demand. In addition, the cyclical nature of our business could at times also adversely affect our liquidity and ability to borrow under our New Revolving Credit Facility (as defined herein) and limits our ability to make accurate long-term predictions about the performance of our Company.
There also continues to be a lack of consistent climate legislation, which creates economic and regulatory uncertainty. These factors may impact the demand for our products, obsolescence of certain products and adversely affect our results of operations. Our business operations may be adversely affected by information technology systems interruptions or intrusion.
There also continues to be a lack of 17 Table of Contents consistent climate legislation, which creates economic and regulatory uncertainty. These factors may impact the demand for our products, obsolescence of certain products and adversely affect our results of operations.
Legal Risks Our products involve risks of personal injury and property damage, which exposes us to potential liability. Our business exposes us to possible claims for personal injury or death and property damage resulting from the products that we sell and to potential warranty, contractual or other claims.
Our business exposes us to possible claims for personal injury or death, property damage or economic loss resulting from the products that we sell and to potential warranty, contractual or other claims. These product liability risks are inherent in the design, manufacture and sale of our products.
These product liability risks are inherent in the design, manufacture and sale of our products. Our products are complex and may contain defects, errors, or experience failures or unsatisfactory performance, due to any number of issues, including issues in materials, design, fabrication, packaging and/or use within a system or item of equipment.
Our products are complex and may contain defects, errors, or experience failures or unsatisfactory performance, due to any number of issues, including issues in materials, design, fabrication, packaging and/or use within a system or item of equipment. Further, because of the complexity of our products, defects or errors might only be detected when the products are in use.
Such a strategy involves the potential risks inherent in assessing the value, strengths, weaknesses, contingent or other liabilities, and potential profitability of acquisition candidates and in 11 Table of Contents integrating the operations of acquired companies.
Such a strategy involves the potential risks inherent in assessing the value, strengths, weaknesses, 11 Table of Contents contingent or other liabilities, and potential profitability of acquisition candidates and in integrating the operations of acquired companies. Furthermore, the price we pay for any business acquired may overstate the value of that business or otherwise be too high.
In connection with the completion of the acquisitions of Dorner and Garvey, our indebtedness has increased significantly. Our indebtedness could limit our cash flow available for operations and our flexibility. In connection with the completion of the acquisition of Dorner and Garvey, our indebtedness has increased significantly.
In connection with the completion of the acquisitions of Dorner and Garvey, our indebtedness has increased significantly. We expect to incur additional indebtedness with the acquisition of montratec expected to close on May 31, 2023. Our indebtedness could limit our cash flow available for operations and our flexibility.
In connection with the Dorner acquisition, we incurred debt of $450,000,000 under the Term Loan B, following our equity offering of $207,000,000 in May 2021. Additionally, in connection with the completion of the Garvey acquisition, the Company incurred another $75,000,000 of Term Loan B indebtedness through the exercise of an accordion feature under the terms of our existing credit agreement.
Additionally, in connection with the completion of the Garvey acquisition, the Company incurred another $75,000,000 of Term Loan B indebtedness through the exercise of an accordion feature under the terms of our First Lien Facilities Credit Agreement.
With inflation, the costs of capital increases, and the purchasing power of our and our end users’ cash resources declines, which can negatively affect demand from our customers.
During an inflationary period, the costs of capital will often increase, and the purchasing power of our end users’ cash resources will decline, which can negatively affect demand from our customers.
On July 27, 2017, the United Kingdom’s Financial Conduct Authority, which regulates LIBOR, announced that it intends to phase out LIBOR by the end of 2021, although on November 30, 2020 it announced that it had extended the period in which it will continue to publish certain LIBOR tenors, including three-month LIBOR, to June 30, 2023.
Financial Risks Changes in the method of determining the London Interbank Offered Rate ("LIBOR"), or the replacement of LIBOR with an alternative reference rate, may adversely affect interest rates. 13 Table of Contents On July 27, 2017, the United Kingdom’s Financial Conduct Authority, which regulates LIBOR, announced that it intends to phase out LIBOR by the end of 2021, although on November 30, 2020 it announced that it had extended the period in which it will continue to publish certain LIBOR tenors, including three-month LIBOR, to December 31, 2024.
In such an event, the Company would need to modify or restructure all or a portion of its indebtedness. Depending on prevailing economic conditions at the time, the Company might find it difficult to modify or restructure the debt on attractive terms, or at all.
In such an event, the Company would need to modify or restructure all or a portion of its indebtedness.
In addition, our liability insurance, which includes cyber insurance, might not be sufficient in type or amount to cover us against claims related to security incidents, cyberattacks and other related incidents. We depend on our management team and the loss of any member could adversely affect our operations.
In addition, our liability insurance, which includes cyber insurance, might not be sufficient in type or amount to cover us against claims related to security incidents, cyberattacks and other related incidents. We operate in many different jurisdictions, and we could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act and similar worldwide anti-corruption laws. The U.S.
If we are unable to successfully integrate acquired businesses, including Dorner and Garvey, into our existing business or expand into new markets, our sales and earnings growth could be reduced.
If we are unable to successfully integrate acquired businesses into our existing business or expand into new markets, our sales and earnings growth could be reduced. Inherent in connection with any acquisition is the risk of transitioning company cultures and facilities and the corresponding risk of management and employee turnover.
As of March 31, 2022, we had approximately $100,000,000 available for borrowing under the revolving credit facility (after deducting approximately $17,151,000 of letters of credit outstanding as of March 31, 2022).
As of March 31, 2023, we had approximately $100,000,000 available for borrowing under the New Revolving Credit Facility (before deducting approximately $15,104,000 of letters of credit outstanding as of March 31, 2023). Further, our potential fiscal 2024 acquisition of montratec has increased our indebtedness.
Further, because of the complexity of our products, defects or errors might only be detected when the products are in use. Development of new products increases complexity and adds risk to manufacturing reliability, and increases the likelihood of product defects or errors.
As a result, we could experience material product liability or warranty costs in the future and incur significant costs to defend ourselves against associated claims. Development of new products increases complexity and adds risk to manufacturing reliability, and increases the likelihood of product defects or errors.
Removed
We have been, and may continue in future periods to be, materially and adversely impacted by the effects of the COVID-19 pandemic. In addition to global macroeconomic effects, the COVID-19 pandemic and any other related adverse public health developments have caused, and are expected to continue to cause, disruption to both our domestic and international operations and sales activities.
Added
In addition, the focus on the integration of operations of acquired entities may divert management’s attention from the day-to-day operation of our businesses. The failure to efficiently and effectively achieve such transitions could increase our costs and decrease our profitability.
Removed
The continued operation of our facilities is subject to local laws and regulations. While all of our facilities have been deemed essential under applicable law, there is no guarantee this will continue.
Added
Our results of operations could materially suffer if we are unable to obtain sufficient pricing for our products and service to meet our profitability expectations. If we are unable to obtain favorable pricing for our products and services in a timely manner, our revenues and profitability could materially suffer.
Removed
Although we have thus far had no significant operating disruptions due to the pandemic, like all companies, the apparent increased contagiousness of the Omicron variant poses risk to the availability of our workforce.
Added
For example, current conditions in our supply chain have resulted in rapid increases in the prices for the raw materials we use.
Removed
Our third-party manufacturers, suppliers, distributors, sub-contractors and customers have been, and may in the future continue to be, disrupted by worker absenteeism, quarantines and restrictions on their employees’ ability to work, office and factory closures, disruptions to ports and other shipping infrastructure, border closures, and other travel or health-related restrictions.
Added
Furthermore, the prices we are able to charge for our products and services are affected by a number of other factors, including: • general economic and political conditions; • our customers' desires to reduce their costs; • the competitive environment; • our ability to accurately estimate our costs, including our ability to estimate the impact of inflation on our costs over long-term contracts; and • the procurement practices of our customers.
Removed
Depending on the magnitude of such effects on our manufacturing operations or the operations of our suppliers, third-party distributors, or sub-contractors, our supply chain, manufacturing and product shipments have been, and in the future may continue to be, delayed, which could adversely affect our business, operations, and customer relationships.
Added
Our inability to pass increased prices along to our customers in a timely manner could have a material adverse effect on our business, financial condition or results of operations.
Removed
In addition, COVID-19 or other disease outbreaks have in the short-run and may over the longer term adversely affect the economies and financial markets of many countries and have caused inflationary pressures in the U.S. and elsewhere, which could result in an economic downturn that could affect demand for our products and impact our operating results.
Added
Our backlog is subject to modification, termination or reduction of orders, which could negatively impact our sales. Our backlog is comprised of the portion of firm signed purchase orders or other written contractual commitments received from customers that we have not recognized as sales. The dollar amount of backlog as of March 31, 2023 was $309 million.
Removed
There can be no assurance that any decrease in sales resulting from the COVID-19 pandemic will be offset by increased sales in subsequent periods.
Added
Our backlog can be significantly affected by the timing of orders for large projects, and the amount of our backlog at March 31, 2023 is not necessarily indicative of future backlog levels or the rate at which backlog will be recognized as sales.
Removed
Although the magnitude of the impact of the COVID-19 pandemic on our business and operations remains uncertain, the continued spread of the COVID-19 or the occurrence of other epidemics and the imposition of related public health measures and travel and business restrictions has, and may in the future continue to, adversely impact our business, financial condition, operating results and cash flows.
Added
Although modifications and terminations of our orders may be partially offset by cancellation fees, customers can, and sometimes do, terminate or modify these orders. We cannot predict whether cancellations will accelerate or diminish in the future.
Removed
There can be no assurance that the impacts of the COVID-19 pandemic on the supply chain will not continue, or worsen, in the future.
Added
Cancellations of purchase orders, indications that the customers will not perform under their existing purchase orders or contracts or reductions of product quantities in existing contracts could substantially and materially reduce our backlog and, consequently, our future sales. Our failure to replace canceled orders could negatively impact our sales and results of operations.
Removed
The future results of our Company will suffer if we do not effectively manage our expanded operations following the Dorner and Garvey acquisitions. Since the completion of the acquisition of Dorner and Garvey, the size of our business has increased significantly beyond its pre-acquisition size.
Added
In connection with the completion of the acquisition of Dorner and Garvey, our indebtedness has increased significantly. In connection with the Dorner acquisition, we incurred debt of $450,000,000 under the Term Loan B, following our equity offering of $207,000,000 in May 2021.
Removed
Our future success depends, in part, on our ability to manage the Dorner and Garvey businesses, which will pose substantial challenges for management, including challenges related to the management and monitoring of our operations and associated increased costs and complexity.
Added
If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to sell assets, seek additional capital or seek to restructure or refinance our indebtedness. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations.
Removed
There can be no assurances that the Dorner business or the Garvey business will be successful or that we will realize the benefits anticipated from the acquisition of those businesses. We are currently integrating the operations of Dorner and Garvey into the Company.
Added
We may be unable to consummate those asset sales to raise capital or sell assets at prices that we believe are fair and proceeds that we do receive may be inadequate to meet any debt service obligations then due. Furthermore, we may be able to incur substantial additional indebtedness in the future.
Removed
As part of the integration plan for Dorner and Garvey, we have incurred, and anticipate that we will continue to incur, certain non-recurring charges in connection with this integration, including costs for: • employee retention, redeployment, relocation or severance; and • integration, including of people, technology, operations, marketing, and systems and processes; however, we cannot identify the exact timing, nature and amount of all such charges.
Added
The terms of our debt instruments do not fully prohibit us from doing so. This could further exacerbate the risks that we face. Our operations outside the U.S. pose certain risks that may adversely impact sales and earnings.
Removed
These integration costs will be charged as an expense in the period incurred. Although we believe that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses, will offset incremental transaction and acquisition-related costs over time, this net benefit may not be achieved in the near term, or at all.
Added
Depending on prevailing economic conditions at the time, the Company might find it difficult to modify or restructure the debt on attractive terms, or at all. 15 Table of Contents Legal Risks Our products involve risks of personal injury and property damage, which exposes us to potential liability.
Removed
Financial Risks Changes in the method of determining the London Interbank Offered Rate ("LIBOR"), or the replacement of LIBOR with an alternative reference rate, may adversely affect interest rates.
Added
Increased public awareness and concern regarding climate change and other ESG matters at numerous levels of government in various jurisdictions may lead to additional international, national, regional and local legislative and regulatory responses, and compliance with any new rules could be difficult and costly. We have made, and will continue to make, expenditures to comply with such requirements.
Removed
Dorner and Garvey were each previously a private company and were not required to comply with the Sarbanes-Oxley Act of 2002, as amended (“Sarbanes-Oxley”).
Added
Further, our customers and the markets we serve may impose emissions reduction or other environmental standards and requirements. These requirements could result in a need to change our manufacturing processes or product offerings, or undertake other activities which may require us to incur additional expense.
Removed
Sarbanes-Oxley requires public companies to have and maintain effective internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements and to have management report on the effectiveness of those controls on an annual basis (and have its independent public accountants attest annually to the effectiveness of such internal controls).
Added
A failure, or perceived failure, to respond to investor or customer expectations related to ESG concerns in areas such as climate change and supply chain management could materially adversely affect our business and reputation. Our business operations may be adversely affected by information technology systems interruptions or intrusion.
Removed
As private companies, Dorner and Garvey were not required to comply with the requirements of Sarbanes-Oxley. 14 Table of Contents In connection with the completed acquisitions of Dorner and Garvey, we have been implementing our Sarbanes-Oxley procedures regarding internal controls over financial reporting.
Added
Foreign Corrupt Practices Act (“FCPA”) and similar worldwide anti-corruption laws generally prohibit companies and their intermediaries from making improper payments for the purpose of obtaining or retaining business. Our internal policies mandate compliance with these anti-corruption laws.
Removed
This process has required a significant amount of time from our management and other personnel, and has required, and will continue to require, us to expend a significant amount of financial resources, which is likely to increase our compliance costs.
Added
We operate in many parts of the world that have experienced corruption to some degree, and in certain circumstances, strict compliance with anti-corruption laws may conflict with local customs and practices.
Removed
We will be required to assess Dorner's and Garvey's internal controls over financial reporting beginning one year after the date of the acquisition. Our operations outside the U.S. pose certain risks that may adversely impact sales and earnings.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeProperties We maintain our corporate headquarters in Buffalo, New York (an owned property) and, as of March 31, 2022, conducted our principal manufacturing at the following facilities: Location Products/Operations Square Footage Owned or Leased 1 Künzelsau, Germany Hoists 345,000 Leased 2 Wadesboro, NC Hoists 180,000 Owned 3 Lexington, TN Chain 164,000 Owned 4 Charlotte, NC Actuators and Rotary Unions 146,000 Leased 5 Menomonee Falls, WI Power control systems 144,000 Leased Tennessee forging operation: 6 Chattanooga, TN Forged attachments 81,000 Owned 7 Chattanooga, TN Forged attachments 59,000 Owned 8 Hartland, WI Precision Conveyors 125,000 Leased 9 Wuppertal, Germany Hoists 124,000 Leased 10 Kissing, Germany Hoists, winches, and actuators 107,000 Leased 11 Damascus, VA Hoists 97,000 Owned 12 Hangzhou, China Hoists 82,000 Owned 13 Brighton, MI Overhead light rail workstations 71,000 Leased 14 Hammonton, NJ Accumulation Tables 58,000 Leased 15 Chester, England Plate clamps 56,000 Owned 16 Santiago Tianguistenco, Mexico Hoists 54,000 Owned 17 Bayan Lepas, Malaysia Precision Conveyors 40,000 Leased 18 Jülich, Germany Precision Conveyors 29,000 Owned 19 Szekesfehervar, Hungary Textiles and textile strappings 24,000 Leased 20 Zapopan, Mexico Precision Conveyors 20,000 Leased In addition, we have a total of 48 sales offices, distribution centers, and warehouses.
Biggest changeProperties We maintain our corporate headquarters in Buffalo, New York (an owned property) and, as of March 31, 2023, conducted our principal manufacturing at the following facilities: Location Products/Operations Square Footage Owned or Leased 1 Künzelsau, Germany Hoists 345,000 Leased 2 Wadesboro, NC Hoists 180,000 Owned 3 Lexington, TN Chain 164,000 Owned 4 Charlotte, NC Actuators and Rotary Unions 146,000 Leased 5 Menomonee Falls, WI Power control systems 144,000 Leased Tennessee forging operation: 6 Chattanooga, TN Forged attachments 81,000 Owned 7 Chattanooga, TN Forged attachments 59,000 Owned 8 Hartland, WI Precision Conveyors 125,000 Leased 9 Wuppertal, Germany Hoists 124,000 Leased 10 Kissing, Germany Hoists, winches, and actuators 107,000 Leased 11 Damascus, VA Hoists 97,000 Owned 12 Hangzhou, China Hoists 82,000 Owned 13 Brighton, MI Overhead light rail workstations 71,000 Leased 14 Hammonton, NJ Accumulation Tables 58,000 Leased 15 Chester, England Plate clamps 56,000 Owned 16 Santiago Tianguistenco, Mexico Hoists 54,000 Owned 17 Bayan Lepas, Malaysia Precision Conveyors 40,000 Leased 18 Jülich, Germany Precision Conveyors 29,000 Owned 19 Szekesfehervar, Hungary Textiles and textile strappings 24,000 Leased 20 Zapopan, Mexico Precision Conveyors 20,000 Leased In addition, we have a total of 47 sales offices, distribution centers, and warehouses.
Upon the expiration of our current leases, we believe that either we will be able to secure renewal terms or enter into leases for alternative locations at market terms. 19 Table of Contents
Upon the expiration of our current leases, we believe that either we will be able to secure renewal terms or enter into leases for alternative locations at market terms. 20 Table of Contents

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThese limits range from $2,000,000 to $6,000,000 for each policy year from inception through fiscal 2022. We obtain additional insurance coverage from independent insurers to cover potential losses in excess of these limits. Like many industrial manufacturers, we are also involved in asbestos-related litigation.
Biggest changeThese limits range from $2,000,000 to $6,000,000 for each policy year from inception through fiscal 2023. We obtain additional insurance coverage from independent insurers to cover potential losses in excess of these limits. Like many industrial manufacturers, we are also involved in asbestos-related litigation.
See Note 16 to our March 31, 2022 consolidated financial statements included in Item 8 of this Form 10-K for more information on our matters involving litigation.
See Note 16 to our March 31, 2023 consolidated financial statements included in Item 8 of this Form 10-K for more information on our matters involving litigation.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeOur current credit agreement allows for the declaration and payment of dividends, subject to specified limitation as set forth in our credit agreement. PERFORMANCE GRAPH The Performance Graph shown below compares the cumulative total shareholder return on our common stock based on its market price, with the total return of the S&P SmallCap 600 Index, and the Dow Jones U.S.
Biggest changeThere were no repurchases made in the quarter ended March 31, 2023. 22 Table of Contents PERFORMANCE GRAPH The Performance Graph shown below compares the cumulative total shareholder return on our common stock based on its market price, with the total return of the S&P SmallCap 600 Index, and the Dow Jones U.S. Diversified Industrials Index.
Diversified Industrials Index. The comparison of total return assumes that a fixed investment of $100 was invested on March 31, 2017 in our common stock and in each of the foregoing indices and further assumes the reinvestment of dividends. The stock price performance shown on the graph is not necessarily indicative of future price performance.
The comparison of total return assumes that a fixed investment of $100 was invested on March 31, 2018 in our common stock and in each of the foregoing indices and further assumes the reinvestment of dividends. The stock price performance shown on the graph is not necessarily indicative of future price performance.
On March 21, 2022, the Company's Board of Directors declared a regular quarterly dividend of $0.07 per common share. The dividend was paid on May 16, 2022 to shareholders of record as of May 6, 2022 and totaled approximately $2,000,000.
On March 21, 2023, the Company's Board of Directors declared a regular quarterly dividend of $0.07 per common share. The dividend was paid on May 15, 2023 to shareholders of record as of May 5, 2023 and totaled approximately $2,005,000.
Item 5. Market for the Company’s Common Stock and Related Security Holder Matters Our common stock is traded on the Nasdaq Global Select Market under the symbol ‘‘CMCO.” As of April 30, 2022, there were 329 holders of record of our common stock. During fiscal 2022, the Company declared quarterly cash dividends totaling $7,119,000.
Item 5. Market for Registrant’s Common Equity, Related Security Holder Matters and Issuer Purchases of Equity Securities Our common stock is traded on the Nasdaq Global Select Market under the symbol "CMCO." As of April 30, 2023, there were 333 holders of record of our common stock. During fiscal 2023, the Company declared quarterly cash dividends totaling $8,014,000.
Added
Our First Lien Facilities Credit Agreement allows for the declaration and payment of dividends, subject to specified limitation as set forth in our First Lien Facilities Credit Agreement. We expect to continue to pay dividends in fiscal 2024 at our historical rates.
Added
Issuer Purchases of Equity Securities The following table presents information with respect to purchases of common stock of the Company made during the three months ended March 31, 2023 by the Company: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program Approximate Dollar Value of Shares that May Yet be Purchased under the Program (in thousands) 1 January 1 - 31, 2023 — $ — — February 1 - 28, 2023 — $ — — March 1 - 31, 2023 — $ — — Total — $ — — $ 19,000 1 The Company publicly announced on March 26, 2019 that its Board of Directors approved a share repurchase authorization for up to $20 million of shares of common stock of Columbus McKinnon Corporation, with no expiration.
Added
As of March 31, 2023, approximately $19 million of shares of common stock of the Company remains available repurchase under the current authorization plan.
Added
This Performance Graph shall not be deemed "filed" with the SEC for purposes of Section 18 of the Exchange Act or incorporate by reference into any of our filings under the Securities Act or the Exchange Act.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

34 edited+41 added−52 removed23 unchanged
Biggest changeIn addition non-current liabilities decreased by $11,211,000. The decrease in non-current liabilities primarily consists of $9,059,000 in cash paid for amounts included in the measurement of operating lease liabilities for fiscal 2022. Cash flow from investing activities Net cash used for investing activities was $554,311,000 and $5,548,000 in fiscal 2022 and 2021, respectively.
Biggest changeThis was partially offset by an increase in accrued liabilities of $9,150,000. The increase in accrued liabilities is primarily related to an increase in customer down payments. In addition non-current liabilities decreased by $13,689,000. The decrease in non-current liabilities primarily consists of $8,872,000 in cash paid for amounts included in the measurement of operating lease liabilities in fiscal 2023.
Item 7. Management’s Discussion and Analysis of Results of Operations and Financial Condition This section should be read in conjunction with our consolidated financial statements included in Item 8 of this Form 10-K.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations This section should be read in conjunction with our consolidated financial statements included in Item 8 of this Form 10-K.
These are highly relevant, professional-grade solutions that solve customers’ critical material handling requirements. 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 147-year history by emphasizing technological innovation, manufacturing excellence and superior customer service.
These are highly relevant, professional-grade solutions that solve customers’ critical material handling requirements. 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 148-year history by emphasizing technological innovation, manufacturing excellence and superior customer service.
Annual Goodwill Impairment Test When we evaluate the potential for goodwill impairment, we assess a range of qualitative factors including, but not limited to, macroeconomic conditions, industry conditions, the competitive environment, changes in the market for our products and services, regulatory and political developments, entity specific factors such as strategy, and changes in key personnel and 27 Table of Contents overall financial performance.
Annual Goodwill Impairment Test When we evaluate the potential for goodwill impairment, we assess a range of qualitative factors including, but not limited to, macroeconomic conditions, industry conditions, the competitive environment, changes in the market for our products and services, regulatory and political developments, entity specific factors such as strategy, and changes in key personnel and overall financial performance.
Effects of New Accounting Pronouncements Information regarding the effects of new accounting pronouncements is included in Note 21 to the accompanying consolidated financial statements included in Item 8 of this Form 10-K. 28 Table of Contents
Effects of New Accounting Pronouncements Information regarding the effects of new accounting pronouncements is included in Note 21 to the accompanying consolidated financial statements included in Item 8 of this Form 10-K. 29 Table of Contents
These events or circumstances could include a significant long-term adverse change in the business climate, poor indicators of operating performance, or a sale or disposition of a significant portion of a reporting unit. We test goodwill at the reporting unit level, which is one level below our operating segment.
These events or 27 Table of Contents circumstances could include a significant long-term adverse change in the business climate, poor indicators of operating performance, or a sale or disposition of a significant portion of a reporting unit. We test goodwill at the reporting unit level, which is one level below our operating segment.
For a discussion of our results of operations for fiscal 2021 compared to fiscal 2020, please refer to Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended March 31, 2021, which was filed with the SEC on May 26, 2021.
For a discussion of our results of operations for fiscal 2022 compared to fiscal 2021, please refer to Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended March 31, 2022, which was filed with the SEC on May 25, 2022.
We believe that our cash on hand, cash flows, and borrowing capacity under our new First Lien 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.
We believe that our cash on hand, cash flows, and borrowing capacity under our First Lien Facilities (as defined below) 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.
Other insurance reserves such as workers compensation and group health insurance are based on actual historical and current claim data provided by third party administrators or internally maintained. Goodwill and indefinite-lived intangible asset impairment testing. Our goodwill balance of $648,849,000 as of March 31, 2022 is subject to impairment testing.
Other insurance reserves such as workers compensation and group health insurance are based on actual historical and current claim data provided by third party administrators or internally maintained. Goodwill and indefinite-lived intangible asset impairment testing. Our goodwill balance of $644,629,000 as of March 31, 2023 is subject to impairment testing.
Our principal raw materials and components purchases were approximately $368 million in fiscal 2022 (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.
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.
There were no similar expenses incurred in fiscal 2021. 23 Table of Contents Investment income of $46,000 and $1,693,000, in fiscal 2022 and 2021, respectively, related to earnings on marketable securities held in the Company’s wholly owned captive insurance subsidiary and the Company's equity method investment in EMC, described in Note 7 to our March 31, 2022 consolidated financial statements.
There were no similar expenses incurred in fiscal 2023. 25 Table of Contents Investment income of $315,000 and $46,000, in fiscal 2023 and 2022, respectively, related to earnings on marketable securities held in the Company’s wholly owned captive insurance subsidiary and the Company's equity method investment in EMC, described in Note 7 to our March 31, 2023 consolidated financial statements.
Our long-term growth strategy is supported by our strong free cash flow as well as our liquidity position and flexible debt structure. RESULTS OF OPERATIONS The following discussion is a comparison between fiscal 2022 and fiscal 2021 results.
While we execute our long-term growth strategy, we are supported by our strong free cash flow as well as our liquidity position and flexible debt structure. RESULTS OF OPERATIONS The following discussion is a comparison between fiscal 2023 and fiscal 2022 results.
We have three reporting units, Duff-Norton, Rest of Products and Precision Conveyance, and have goodwill totaling $9,699,000, $310,793,000, and $328,357,000, respectively, at March 31, 2022. The Precision Conveyance group is new in fiscal 2022 with the acquisitions of Dorner and Garvey (refer to Note 3).
We have three reporting units, Duff-Norton, Rest of Products and Precision Conveyance, and have goodwill totaling $9,699,000, $306,988,000, and $327,942,000, respectively, at March 31, 2023. The Precision Conveyance group was new in fiscal 2022 with the acquisitions of Dorner and Garvey (refer to Note 3).
Our capital expenditures for fiscal 2022 and 2021 were $13,104,000 and $12,300,000, respectively. Excluded from fiscal 2022 capital expenditures is 26 Table of Contents $329,000 and $730,000, in property, plant and equipment purchases included in accounts payable at March 31, 2022 and 2021, respectively. We expect capital expenditure spending in fiscal 2023 to range from $25,000,000 to $30,000,000.
Our capital expenditures for fiscal 2023 and 2022 were $12,632,000 and $13,104,000, respectively. Excluded from fiscal 2023 capital expenditures is $624,000 and $329,000, in property, plant and equipment purchases included in accounts payable at March 31, 2023 and 2022, respectively. We expect capital expenditure spending in fiscal 2024 to range from $30,000,000 to 40,000,000.
INFLATION AND OTHER MARKET CONDITIONS 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.
The increase in expected capital expenditures is related to investments to create a machining center of excellence. INFLATION AND OTHER MARKET CONDITIONS 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 believe shareholder value will be enhanced by expanding EBITDA margins and return on invested capital ("ROIC"). Our revenue base is geographically diverse with approximately 41% derived from customers outside the U.S. for the year ended March 31, 2022.
We expect our strategy will enhance shareholder value by growing sales, expanding EBITDA margins and increasing our return on invested capital ("ROIC"). Our revenue base is geographically diverse with approximately 39% derived from customers outside the U.S. for the year ended March 31, 2023.
No material restrictions exist in accessing cash held by our non-U.S. subsidiaries. Additionally we expect to meet our U.S. funding needs without repatriating non-U.S. cash and incurring incremental U.S. taxes. As of March 31, 2022, $75,284,000 of cash and cash equivalents were held by foreign subsidiaries.
No material restrictions exist in accessing cash held by our non-U.S. subsidiaries. Additionally, we expect to meet our U.S. funding needs without repatriating non-U.S. cash and incurring incremental U.S. taxes.
We seek to maintain and enhance our market share by focusing our sales and marketing activities toward select North American and global market sectors including general industrial, energy, automotive, heavy OEM, entertainment, and construction and infrastructure. In March 2021, the Company announced that it had entered into a definitive agreement to acquire Dorner.
We seek to maintain and enhance our market share by focusing our sales and marketing activities toward select North American and global market sectors including general industrial, energy, automotive, heavy OEM, entertainment, and construction and infrastructure. In fiscal 2022, the Company completed its acquisitions of Dorner and Garvey.
To date, we have raised prices to our 22 Table of Contents customers to cover these increased raw material costs and are working with our supply base to prioritize shipments and improve availability of key components. We operate in a highly competitive and global business environment.
Currently, as a result of global inflation, we are experiencing higher raw material costs and availability issues for select raw materials and components. To date, we have raised prices to our customers 24 Table of Contents to cover these increased raw material costs and are working with our supply base to prioritize shipments and improve availability of key components.
Income tax expense as a percentage of income from continuing operations before income tax expense was 22.9% and 9.6% in fiscal 2022 and 2021, respectively. Typically these percentages vary from the U.S. statutory rate of 21% due to varying effective tax rates at the Company's foreign subsidiaries and the jurisdictional mix of income for these subsidiaries.
Typically these percentages vary from the U.S. statutory rate of 21% due to varying effective tax rates at the Company's foreign subsidiaries and the jurisdictional mix of income for these subsidiaries.
The translation of foreign currencies had a $594,000 favorable impact on gross profit for the year ended March 31, 2022. Selling expenses were $99,187,000 and $76,907,000, or 10.9% and 11.8% of net sales in fiscal years 2022 and 2021. Selling expense increased $15,161,000 as a result of the Dorner and Garvey acquisitions.
The translation of foreign currencies had a $10,804,000 unfavorable impact on gross profit for the year ended March 31, 2023. Selling expenses were $102,528,000 and $99,187,000, or 11.0% and 10.9% of net sales in fiscal years 2023 and 2022.
Cash flow from operating activities Net cash provided by operating activities was $48,881,000 and $98,890,000 in fiscal 2022, and 2021, respectively. In fiscal 2022, net income of $29,660,000 and non-cash adjustments to net income of $76,266,000 were the largest contributors.
Cash flow from operating activities Net cash provided by operating activities was $83,636,000 and $48,881,000 in fiscal 2023 and 2022, respectively. In fiscal 2023, net income of $48,429,000 and non-cash adjustments to net income of $61,111,000 were the largest contributors. Of the non-cash adjustments, $41,947,000 was depreciation and amortization and $10,425,000 was stock-based compensation.
Amortization of intangibles were $25,283,000 and $12,623,000 in fiscal 2022 and 2021, respectively, with the increase related to new intangible assets recorded from the Dorner and Garvey acquisition. Interest and debt expense was $20,126,000 and $12,081,000 in fiscal 2022 and 2021, respectively.
The increase in research and development expenses was due to additional spending to achieve strategic goals related to new product development. Amortization of intangibles were $26,001,000 and $25,283,000 in fiscal 2023 and 2022, respectively, with the increase related to new intangible assets recorded from the Garvey acquisition.
The increase is related to higher interest rates as well as higher average borrowing outstanding as a result of the Dorner and Garvey acquisitions. The Company incurred $14,803,000 in Cost of debt refinancing in fiscal 2022 as a result of the Dorner acquisition and related refinancing as described in Note 12 to our March 31, 2022 consolidated financial statements.
As described in Note 12 to our March 31, 2023 consolidated financial statements, this was a result of the Dorner acquisition and related refinancing during fiscal 2022.
Dorner is a leading supplier to the stable life sciences, food processing, and consumer packaged goods markets as well as the high growth industrial automation and e-commerce sectors. The addition of Dorner provides attractive complementary adjacencies including sortation and asynchronous conveyance systems. Further, on December 1, 2021, the Company completed its acquisition of Garvey.
Dorner is a leading supplier to the stable life sciences, food processing, and consumer packaged goods markets as well as the high growth industrial automation and e-commerce sectors. Garvey is a leading accumulation systems solutions company providing unique, patented systems for the automation of production processes whose products complement those of Dorner.
Fiscal 2022 Compared to 2021 Fiscal 2022 sales were $906,555,000, an increase of 39.5%, or $256,913,000 compared with fiscal 2021 sales of $649,642,000. Sales for the fiscal year were positively impacted by $144,587,000 of incremental sales from the Dorner and Garvey acquisitions as well as increased sales volume of $89,955,000 and price increases of $20,002,000.
Fiscal 2023 Compared to Fiscal 2022 Fiscal 2023 sales were $936,240,000, an increase of 3.3%, or $29,685,000 compared with fiscal 2022 sales of $906,555,000. Sales for the fiscal year were positively impacted by $22,436,000 of incremental sales from the Garvey acquisition as well as price increases of $46,987,000.
Net working capital increases reduced operating cash flows by $45,859,000, which included an increase of $40,201,000 in inventories as the Company increased inventory due to current supply chain constraints and an increase in trade accounts receivable of $18,988,000 attributable to strong fourth quarter sales. This was partially offset by an increase in trade accounts payable of $12,681,000.
Net working capital increases reduced operating cash flows by $12,092,000, which included an increase of $9,087,000 in inventories as the Company increased inventory due to continuing supply chain constraints and a $13,964,000 decrease in accounts payable as the Company purchased less inventory in the final month of fiscal 2023 compared to fiscal 2022.
Research and development expenses were $15,351,000 and $12,405,000 in fiscal 2022 and 2021, respectively. As a percentage of consolidated net sales, research and development expenses were 1.7% and 1.9% in fiscal 2022 and 2021.
Foreign currency translation had a $2,220,000 favorable impact on general and administrative expenses for the year ended March 31, 2023. Research and development expenses were $20,935,000 and $15,351,000 in fiscal 2023 and 2022, respectively. As a percentage of consolidated net sales, research and development expenses were 2.2% and 1.7% in fiscal 2023 and 2022.
Favorable foreign currency translation also increased sales by $2,369,000. Gross profit was $315,730,000 and $220,225,000 or 34.8% and 33.9% of net sales in fiscal 2022 and 2021, respectively.
Offsetting these increases were $9,154,000 in decreased sales volume and unfavorable foreign currency translation of $30,584,000. Gross profit was $342,099,000 and $315,730,000 or 36.5% and 34.8% of net sales in fiscal 2023 and 2022, respectively.
Garvey is a leading accumulation systems solutions company providing unique, patented systems for the automation of production processes whose products complement those of Dorner. The acquisitions of Dorner and Garvey accelerate the Company’s shift to intelligent motion and serve as a platform to expand capabilities in advanced, higher technology automation solutions.
In April 2023, the Company announced that it had entered into a definitive agreement to acquire 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.
In fiscal 2022, the most significant use of cash in investing activities was $539,778,000 to purchase Dorner and Garvey, net of cash acquired, as well as $13,104,000 in capital expenditures. Cash flow from by financing activities Net cash provided by (used for) financing activities was $420,700,000 and $(10,189,000) in fiscal 2022 and 2021, respectively.
Cash flow from financing activities Net cash used for financing activities was $49,987,000 in fiscal 2023 compared to net cash provided by financing activities of $420,700,000 in fiscal 2022. In fiscal 2023, the most significant uses of cash were $40,550,000 in the repayment of debt and $8,008,000 in dividend payments.
In fiscal 2021 the tax rate was primarily reduced by 6.9 percentage points primarily due to federal tax credits including research and development tax credits. LIQUIDITY AND CAPITAL RESOURCES Cash, cash equivalents, and restricted cash totaled $115,640,000 and $202,377,000, at March 31, 2022 and 2021, respectively.
The tax rate was also unfavorably affected by non-deductible compensation and U.S. taxes on foreign earnings. These increased the rate by 2 percentage points each. LIQUIDITY AND CAPITAL RESOURCES Cash, cash equivalents, and restricted cash totaled $133,426,000 and $115,640,000, at March 31, 2023 and 2022, respectively.
Foreign currency exchange resulted in a loss of $1,574,000 and $941,000 in fiscal 2022 and 2021, respectively, as a result of foreign currency volatility related to foreign currency denominated sales and purchases and intercompany debt. Other income was $1,122,000 in fiscal 2022 and other expense was $20,850,000 in fiscal 2021.
Foreign currency exchange resulted in a gain of $2,189,000 and a loss $1,574,000 in fiscal 2023 and 2022, respectively. This favorable change was due to the recent strengthening of the Euro in comparison to the U.S. Dollar. Other income was $2,072,000 in fiscal 2023 and $1,122,000 in fiscal 2022.
The remaining increase is due to variable selling costs as the Company continues to recover from the COVID-19 pandemic. Foreign currency translation had a $304,000 unfavorable impact on selling expenses. General and administrative expenses were $102,128,000 and $76,035,000 or 11.3% and 11.7% of net sales in fiscal 2022 and 2021, respectively.
General and administrative expenses were $94,794,000 and $102,128,000 or 10.1% and 11.3% of net sales in fiscal 2023 and 2022, respectively. The decrease in general and administrative expenses was due to a net decrease of $8,960,000 in acquisition and deal integration costs and a decrease of $1,495,000 in stock-based compensation expense.
Removed
In addition, acquisitions significantly broadened our product lines and services and expanded our geographic reach, end-user markets and customer base. In accordance with our Blueprint for Growth 2.0 Strategy, we are simplifying the business utilizing our 80/20 process, improving our operational excellence, and ramping the growth engine by investing in new product development and a digital platform to grow profitably.
Added
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.
Removed
The acquisition of Dorner closed on April 7, 2021. Dorner, headquartered in Hartland, Wisconsin, is a leading automation solutions company providing unique, patented technologies in the design, application, manufacturing and integration of high-precision conveying systems.
Added
The acquisitions of Dorner and Garvey accelerate the Company’s shift to intelligent motion.
Removed
Currently, as a result of global supply chain challenges, we are experiencing higher raw material costs and availability issues for select raw materials and components.
Added
We operate in a highly competitive and global business environment. We see a variety of opportunities in our markets and geographies, including trends toward automation and increasing labor productivity and the expansion of market opportunities in Asia and other emerging markets.
Removed
The Company is moving from its past as an industrial company to a top-tier intelligent motion company. We have refocused our Company on faster growing markets as demonstrated by the Dorner and Garvey acquisitions. We are benefiting from increased trends for safety, industrial automation, manufacturing on-shoring and workforce productivity initiatives.
Added
The fiscal 2023 increase in gross profit of $26,369,000 or 8.4% is the result of the $22,614,000 of price increases net of material inflation, $9,521,000 in gross profit as a result of the acquisition of Garvey, $7,663,000 of prior year acquisition amortization for inventory step up, backlog and integration costs that did not reoccur, $2,850,000 from a prior year product liability settlement which did not reoccur, $1,606,000 of prior year business realignment costs that did not reoccur, $674,000 of decreased product liability costs, and $629,000 of decreased tariffs offset by $5,019,000 of decreased productivity net of other cost changes and $3,365,000 from lower sales volumes.
Removed
The fiscal 2022 increase in gross profit of $95,505,000 or 43.4% is the result of the Dorner and Garvey acquisitions, which added $53,627,000 of gross profit net of acquisition related costs, $30,746,00 in higher sales volume, $10,551,000 in higher productivity net of other manufacturing cost increases, $5,953,000 of price increases net of material inflation and $2,671,000 in prior year factory closure costs which did not recur.
Added
Selling expense increased $2,417,000 as a result of the Garvey acquisition, $2,250,000 as the result of increased business realignment costs, and $2,744,000 from increased travel and trade show expenses. Foreign currency translation had a $4,095,000 favorable impact on selling expenses.
Removed
These increases were offset by $3,045,000 in increased product liability costs, $2,627,000 in increased tariffs costs, $2,189,000 from a gain recorded in the prior year for a building sold in China classified as Cost of products sold that did not recur, and $776,000 in increased severance costs in fiscal 2022.
Added
The decrease in stock-based compensation expense was the result of the performance condition not being fully met on the Company's fiscal 2021 performance shares.
Removed
The increase is primarily due to the Dorner and Garvey acquisitions adding $10,596,000 of ongoing general and administrative costs and $5,625,000 of acquisition deal costs. In addition, general and administrative costs increased $4,868,000 due to higher incentive compensation and stock based compensation expense. Foreign currency translation had a $238,000 unfavorable impact on general and administrative expenses.
Added
Partially offsetting these decreases were $1,989,000 of higher general and administrative expenses incurred by the Garvey acquisition including the accrual of additional contingent consideration as discussed in Note 3 of the financial statements and $1,667,000 of higher net business realignment costs.
Removed
The increase in research and development expenses is primarily due to $1,722,000 of acquisition and acquisition related costs and $456,000 in higher incentive compensation and stock based compensation expense. Foreign currency translation had a $15,000 unfavorable impact on research and development expenses.
Added
Interest and debt expense was $27,942,000 and $20,126,000 in fiscal 2023 and 2022, respectively. The increase is related to higher interest rates, as well as increased borrowings to finance the Garvey acquisition. The Company incurred $14,803,000 in Cost of debt refinancing in 2022.
Removed
The decrease in expense is primarily related to a $19,038,000 settlement charge as a result of the termination of one of the Company's U.S. pension plans in fiscal 2021 as described in Note 13 to our March 31, 2022 consolidated financial statements.
Added
As described in Note 13, the increase in Other income is primarily related to a tax indemnification reimbursement received from STAHL's former owners in accordance with the share purchase agreement. Income tax expense as a percentage of income from continuing operations before income tax expense was 35.0% and 22.9% in fiscal 2023 and 2022, respectively.
Removed
Of the non-cash adjustments, $41,924,000 was Depreciation and amortization and $14,803,000 was Cost of debt refinancing as a result of the Dorner acquisition.
Added
In fiscal 2023, the rate was unfavorably impacted 3 percentage points due to settlement of income tax assessments related to tax periods prior to the Company’s acquisition of Stahl Cranesystems GmbH (“STAHL").
Removed
In fiscal 2022, the most significant sources of cash were $725,000,000 in gross proceeds from the issuance of long term debt and $207,000,000 in gross proceeds from an equity offering, which were used to fund the Dorner and Garvey acquisitions.
Added
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 Consolidated Statements of Operations.
Removed
These sources of cash were offset by $477,846,000 in repayments of debt, $26,184,000 in fees related to the debt and equity offering, and dividends paid in the amount of $6,562,000. As noted in Note 8 of the financial statements, during the second quarter of fiscal 2022, the Company modified its cross currency swap and interest rate swap.
Added
The tax rate also reflects an unfavorable impact of 2 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.
Removed
As such, the 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 $789,000.
Added
Cash flow from investing activities Net cash used for investing activities was $13,932,000 and $554,311,000 in fiscal 2023 and 2022, respectively. In fiscal 2023, the most significant uses of cash in investing activities was $12,632,000 in capital expenditures and $1,616,000 related to a working capital adjustment for the Garvey acquisition described in Note 3 of the financial statements.
Removed
On January 31, 2017 the Company entered into a Credit Agreement ("Credit Agreement") and $545,000,000 of debt facilities ("Facilities") in connection with the STAHL acquisition. The Facilities consist of a Revolving Facility ("Revolver") in the 24 Table of Contents amount of $100,000,000 and a $445,000,000 1st Lien Term Loan ("Term Loan").
Added
As of March 31, 2023, $74,694,000 of cash and cash equivalents were held by foreign subsidiaries. 26 Table of Contents As discussed in Note 3 of the financial statements, the Company announced in April 2023 that it entered into an agreement to acquire montratec. The acquisition is expected to close on May 31, 2023.
Removed
The Term Loan has a seven-year term maturing in 2024. On August 26, 2020, the Company entered into a Second Amendment to the Credit Agreement (as amended by the First Amended Credit Agreement, dated as of February 26, 2018).
Added
To finance the montratec acquisition, the Company expanded its New Revolving Credit Facility by $75 million. The Company has drawn on the expanded New Revolving Credit facility to initially fund the acquisition on May 31, 2023.
Removed
The Second Amended Credit Agreement extended the $100,000,000 secured Revolver which was originally set to expire on January 31, 2022 to August 25, 2023.
Added
In addition, the Company plans to raise approximately $50 million in additional debt by June 30, 2023 through the securitization of certain of the Company's U.S. customer accounts receivable balances. The Company intends to use these proceeds to partially repay borrowings under its New Revolving Credit Facility.
Removed
As discussed in Note 3, the Company completed its acquisition of Dorner on April 7, 2021 and entered into a $750,000,000 First Lien Facility with JPMorgan Chase Bank, PNC Capital Markets LLC, and Wells Fargo Securities LLC. The First Lien Facilities consist of a Revolving Facility in an aggregate amount of $100,000,000 and a $650,000,000 Bridge Facility.
Added
Please refer to Note 3 of the financial statements for additional information related to the montratec acquisition.
Removed
Proceeds from the Bridge Facility were used, among other things, to finance the purchase price for the Dorner acquisition, pay related fees, expenses and transaction costs, and refinance the Company's borrowings under its prior Term Loan and Revolver.
Added
We performed the qualitative assessment as of February 28, 2023 and determined the quantitative test should be performed for the Rest of Products, Precision Conveyance, and Duff Norton due to volatility in our stock price and changes in our business during fiscal 2023.
Removed
In addition to the debt borrowing described above, the Company commenced and completed an underwritten public offering of 4,312,500 shares of its common stock at a price of $48.00 per share for total gross proceeds of $207,000,000. The Company used all of the net proceeds from the equity offering to repay part of its outstanding borrowings under its Bridge Facility.
Added
We also performed sensitivities and other analysis and determined that goodwill is not impaired as of March 31, 2023. In order to perform the quantitative impairment tests for the Rest of Products, Precision Conveyance and Duff Norton reporting units, we use the discounted cash flow method to estimate fair value.
Removed
The equity offering closed on May 4, 2021. Following the repayment of outstanding borrowings under the Bridge Facility, the Bridge Facility was refinanced with a syndicated Term Loan B facility on May 14, 2021.
Added
The discounted cash flow method incorporates various assumptions, the most significant being projected revenue growth rates, EBITDA margins and cash flows, and the weighted-average cost of capital. Management projects discounted cash flows based on each reporting unit’s current business, expected developments and operational strategies over a five to seven-year period.
Removed
The key terms of the Term Loan B facility are as follows: 1) Term Loan B: An aggregate $450,000,000 Term Loan B facility, which requires quarterly principal amortization of 0.25% with the remaining principal due at the maturity date.
Added
In estimating the terminal growth rate, we consider our historical and projected results, as well as the economic environment in which the reporting unit operates. The weighted-average cost of capital utilized for each reporting unit reflect management’s assumptions of marketplace participants’ cost of capital and risk assumptions, both specific to the reporting unit and overall in the economy.
Removed
In addition, if the Company has Excess Cash Flow (ECF) as defined in the Credit Agreement for the First Lien Facility (the “Credit Agreement”), the ECF Percentage of the Excess Cash Flow for each fiscal year minus optional prepayments of the Loans (except prepayments of Revolving Loans that are not accompanied by a corresponding permanent reduction of Revolving Commitments) pursuant to Section 2.10(a) of the Credit Agreement other than to the extent that any such prepayment is funded with the proceeds of Funded Debt, shall be applied toward the prepayment of the Term Loan B facility.
Added
Rest of Products Reporting Unit Testing goodwill for impairment under the quantitative method described above requires us to estimate fair value of the reporting unit using significant estimates and judgmental factors. The compound annual growth rate for revenue during the first seven years of our projections was approximately 6.73% for the Rest of Products reporting unit.
Removed
The ECF Percentage is defined as 50% stepping down to 25% or 0% based on the achievement of specified Secured Leverage Ratios as of the last day of such fiscal year.
Added
The terminal value was calculated assuming a projected growth rate of 3.0% after seven years. These rates reflect our estimate of long-term growth into perpetuity and approximates the long-term gross domestic product growth expected on a global basis as well as our normal annual price increases.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

16 edited+1 added−8 removed5 unchanged
Biggest changeOur results of operations could be affected by factors such as changes in foreign currency rates or weak economic conditions in foreign markets. With our fiscal year 2017 acquisition of STAHL, we have an increased presence in the United Arab Emirates, with total assets of approximately $4,800,000. Our operating results are exposed to fluctuations between the U.S.
Biggest changeWith our fiscal year 2017 acquisition of STAHL, we have an increased presence in the United Arab Emirates, with total assets of approximately $5,718,000. Our operating results are exposed to fluctuations between the U.S. Dollar and the Canadian Dollar, European currencies, the South African Rand, the Mexican Peso, the Brazilian Real, and the Chinese Yuan.
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. Generally, as we experience fluctuations in our costs, we reflect these increases in costs as price increases to our customers with the goal of being margin neutral.
Commodity Price Risk 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. Generally, as we experience fluctuations in our costs, we reflect these increases in costs as price increases to our customers with the goal of being margin neutral.
For example, a 10% change in the value of the U.S. dollar in relation to our most significant foreign currency exposures would have had an impact of approximately $4,200,000 on our income from operations. In addition, the majority of our export sale transactions are denominated in U.S. dollars.
For example, a 10% change in the value of the U.S. dollar in relation to our most significant foreign currency exposures would have had an impact of approximately $4,488,000 on our income from operations. In addition, the majority of our export sale transactions are denominated in U.S. dollars.
The Company has concluded that the transaction to modify the cross currency swap, as 29 Table of Contents well as the modified swap, maintained hedge accounting. The modified cross currency swap is considered to have an other than insignificant financing element. As such, its cash flows are classified within financing activities in the Statement of Cash Flows.
The Company has concluded that the transaction to modify the cross currency swap, as well as the modified swap, maintained hedge accounting. The modified cross currency swap is considered to have an other than insignificant financing element. As such, its cash flows are classified within financing activities in the Statement of Cash Flows.
From its March 31, 2022 balance of AOCL, the Company expects to reclassify approximately $128,000 out of AOCL, and into foreign currency exchange loss (gain), during the next 12 months based on the contractual payments due under this intercompany loan.
From its March 31, 2023 balance of AOCL, the Company expects to reclassify approximately $126,000 out of AOCL, and into foreign currency exchange loss (gain), during the next 12 months based on the contractual payments due under this intercompany loan.
The Company has foreign currency forward agreements that are designated as cash flow hedges to hedge a portion of forecasted inventory purchases denominated in foreign currencies. As of March 31, 2022, the notional amount of these derivatives was $6,959,000, and all contracts mature by March 31, 2023.
The Company has foreign currency forward agreements that are designated as cash flow hedges to hedge a portion of forecasted inventory purchases denominated in foreign currencies. As of March 31, 2023, the notional amount of these derivatives was $5,743,000, and all contracts mature by March 31, 2024.
As of March 31, 2022, the notional amount of this derivative was $137,650,000, and the contract matures on March 31, 2028. During fiscal 2022, the Company modified the cross currency swap by extending it to fiscal year 2028, matching the intercompany loan.
As of March 31, 2023, the notional amount of this derivative was $115,780,000, and the contract matures on March 31, 2028. During fiscal 2022, the Company modified the cross currency swap by extending it to fiscal year 2028, matching the intercompany loan.
These interest rate swap agreements are designated as cash flow hedges to hedge changes in interest expense due to changes in the variable interest rate of the senior secured term loan. The amortizing interest rate swaps mature by February 28, 2025 and had a total notional amount of $300,747,000 as of March 31, 2022.
These interest rate swap agreements are designated as cash flow hedges to hedge changes in interest expense due to changes in the variable interest rate of the senior secured term 30 Table of Contents loan. The amortizing interest rate swaps mature by February 28, 2025 and had a total notional amount of $273,591,000 as of March 31, 2023.
From its March 31, 2022 balance of AOCL, the Company expects to reclassify approximately $389,000 out of AOCL, and into interest expense, during the next 12 months. 30 Table of Contents
From its March 31, 2023 balance of AOCL, the Company expects to reclassify approximately $5,450,000 out of AOCL, and into interest expense, during the next 12 months. 31 Table of Contents
We are also exposed to foreign currency fluctuations in relation to purchases denominated in foreign currencies. Our foreign currency risk is mitigated since the majority of our foreign operations’ net sales and the related expense transactions are denominated in the same currency, which reduces the impact of a significant change in foreign exchange rates on net income.
Our foreign currency risk is mitigated since the majority of our foreign operations’ net sales and the related expense transactions are denominated in the same currency, which reduces the impact of a significant change in foreign exchange rates on net income.
The Company has three interest rate swap agreements in which the Company receives interest at a variable rate and pays interest at a fixed rate. The third interest rate swap agreement was entered into in fiscal year 2022 as a result of the additional debt from the Dorner and Garvey acquisitions.
The third interest rate swap agreement was entered into in fiscal 2022 as a result of the additional debt incurred from the Dorner and Garvey acquisitions.
Currently, as a result of supply chain challenges, we are experiencing higher raw material costs. Further, increases in U.S. employee benefits costs such as health insurance and workers compensation insurance have exceeded general inflation levels.
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. Further, increases in U.S. employee benefits costs such as health insurance and workers compensation insurance have exceeded general inflation levels.
Dollar and the Canadian Dollar, European currencies, the South African Rand, the Mexican Peso, the Brazilian Real, and the Chinese Yuan. For example, when the U.S. dollar weakens against the Euro, the value of our net sales and net income denominated in Euros increases when translated into U.S. dollars for inclusion in our consolidated results.
For example, when the U.S. dollar weakens against the Euro, the value of our net sales and net income denominated in Euros increases when translated into U.S. dollars for inclusion in our consolidated results. We are also exposed to foreign currency fluctuations in relation to purchases denominated in foreign currencies.
From its March 31, 2022 balance of AOCL, the Company expects to reclassify approximately $191,000 out of AOCL during the next 12 months based on the expected sales of the goods purchased. The Company's policy is to maintain a capital structure that is comprised of 50-70% of fixed rate long-term debt and 30-50% of variable rate long-term debt.
From its March 31, 2023 balance of AOCL, the Company expects to reclassify approximately $68,000 out of AOCL during the next 12 months based on the expected sales of the goods purchased.
The Company is exposed to trade tariffs with China. The Company monitors the impact of tariffs and actively works to mitigate this impact through material productivity actions and pricing strategies. We have been, and may continue in future periods to be, materially and adversely impacted by the effects of the COVID-19 pandemic.
The Company is exposed to trade tariffs with China. The Company monitors the impact of tariffs and actively works to mitigate this impact through material productivity actions and pricing strategies. Foreign Currency Exchange Risk In fiscal 2023, 39% of our net sales were from manufacturing plants and sales offices in foreign jurisdictions.
In fiscal 2022, 41% of our net sales were from manufacturing plants and sales offices in foreign jurisdictions. We manufacture our products in the United States, China, Germany, United Kingdom, Hungary, Mexico, and Malaysia and sell our products in over 100 countries.
We manufacture our products in the United States, China, Germany, United Kingdom, Hungary, Mexico, and Malaysia and sell our products in over 100 countries. Our results of operations could be affected by factors such as changes in foreign currency rates or weak economic conditions in foreign markets.
Removed
In addition to global macroeconomic effects, the COVID-19 pandemic and any other related adverse public health developments have caused, and are expected to continue to cause, disruption to both our domestic and international operations and sales activities. The continued operation of our facilities is subject to local laws and regulations.
Added
Interest Rate Risk The Company's policy is to maintain a capital structure that is comprised of 50-70% of fixed rate long-term debt and 30-50% of variable rate long-term debt. The Company has three interest rate swap agreements in which the Company receives interest at a variable rate and pays interest at a fixed rate.
Removed
While all of our facilities have been deemed essential under applicable law, there is no guarantee this will continue. Although we have thus far had no significant operating disruptions due to the pandemic, like all companies, the apparent increased contagiousness of the Omicron variant and subsequent variants poses risk to the availability of our workforce.
Removed
Our third-party manufacturers, suppliers, distributors, sub-contractors and customers have been, and may in the future continue to be, disrupted by worker absenteeism, quarantines and restrictions on their employees’ ability to work, office and factory closures, disruptions to ports and other shipping infrastructure, border closures, and other travel or health-related restrictions.
Removed
Depending on the magnitude of such effects on our manufacturing operations or the operations of our suppliers, third-party distributors, or sub-contractors, our supply chain, manufacturing and product shipments have been, and in the future may continue to be, delayed, which could adversely affect our business, operations, and customer relationships.
Removed
In addition, COVID-19 or other disease outbreaks have in the short-run and may over the longer term adversely affect the economies and financial markets of many countries and have caused inflationary pressures in the U.S. and elsewhere, which could result in an economic downturn that could affect demand for our products and impact our operating results.
Removed
There can be no assurance that any decrease in sales resulting from the COVID-19 pandemic will be offset by increased sales in subsequent periods.
Removed
Although the magnitude of the impact of the COVID-19 pandemic on our business and operations remains uncertain, the continued spread of the COVID-19 or the occurrence of other epidemics and the imposition of related public health measures and travel and business restrictions has, and may in the future continue to, adversely impact our business, financial condition, operating results and cash flows.
Removed
We believe that our exposure to the Russia and Ukraine conflict is not significant, as our entity in Russia had income from operations of $400,000 in fiscal year 2022 and had total assets of approximately $1,000,000 as of March 31, 2022.

Other CMCO 10-K year-over-year comparisons