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What changed in COLUMBUS MCKINNON CORP's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of COLUMBUS MCKINNON CORP's 2023 and 2024 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 2024 report.

+223 added−224 removedSource: 10-K (2024-05-29) vs 10-K (2023-05-25)

Top changes in COLUMBUS MCKINNON CORP's 2024 10-K

223 paragraphs added · 224 removed · 177 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

48 edited+9 added−10 removed34 unchanged
Biggest changeTrademarks 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™.
Biggest changeGenerally, as we experience fluctuations in our costs, we are able to reflect these increases in costs with additional price increases to our customers with the goal of being margin neutral. 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.
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.
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. 8 — 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.
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.
A line of our alloy chain is sold under the Herc-Alloy TM 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.
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.
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 higher growth industrial automation and e-commerce sectors.
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.
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.
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
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. 11 Table of Contents
“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.
Our first value, “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.
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.
We are continuing our transformation 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.
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.
Approximately 6% of our employees are represented under two separate U.S. collective bargaining agreements that expire in September 2024 and May 2027. We also have various labor agreements 9 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.
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.
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., which was acquired by Regal Rexnord; and for precision conveyors and accumulators are FlexLink, Bosch Rexroth AG, MK North America, Inc., Duravant, Nercon Eng. & Mfg.
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.
As we look forward to fiscal 2025 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.
Additionally, in Europe, we believe we are the market leader for manual hoists and a market leader in the heavy load, rail and niche custom applications for actuation. We have achieved this leadership position through strategic acquisitions, our extensive, diverse, and well-established distribution channels and our commitment to product innovation and quality.
Additionally, in Europe, we believe we are the market leader for manual hoists and a market leader in linear actuators used for heavy load, rail and niche custom applications for actuation. We have achieved this leadership position through strategic acquisitions, our extensive, diverse, and well-established distribution channels and our commitment to product innovation and quality.
Our people enable us to grow, and our values ensure we grow responsibly and sustainably. • The Company places the highest priority on workplace safety. We feel it is critical to ensure our most valuable assets, our employees, have a safe environment to work in every day.
Our people enable us to grow, and our values ensure we grow responsibly and sustainably. • The Company places the highest priority on workplace safety. We believe it is critical to ensure that our most valuable assets, our employees, have a safe environment to work in every day.
However, we are not aware of any environmental condition or any operation at any of our facilities, either individually or in the aggregate, which would cause expenditures having a material adverse effect on our results of operations, financial condition or cash flows.
However, we are not aware of any environmental condition or any operation at any of our facilities, either individually or in the aggregate, which would cause expenditures to have a material adverse effect on our results of operations, financial condition or cash flows.
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.
The following table sets forth certain sales data for our products, expressed as a percentage of net sales for fiscal 2024 and 2023: Fiscal Years Ended March 31, 2024 2023 Hoists 49 % 49 % High-precision conveying systems 16 16 Digital power control and delivery systems 12 11 Actuators and rotary unions 10 9 Chain and rigging tools 7 8 Industrial cranes 4 4 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.
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.
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, 2024 was approximately $280,824,000 compared to approximately $308,717,000 at March 31, 2023.
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.
Raw Materials and Components Our principal raw material and component purchases aggregated to approximately $396 million in fiscal 2024 (or 62% of Cost of product sold in fiscal 2024) 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.
This involves building out our presence both geographically and in new verticals with expanded offerings, which we expect we can accomplish organically as well as with acquisitions. • Reimagining the Core is a more transformational path that rethinks our TAM and targets strategic expansion beyond our existing TAM.
This involves building out our presence both geographically and in new verticals with expanded offerings, which we expect to be accomplished organically as well as with selective acquisitions. • Reimagining the Core is a more transformational path that rethinks our TAM and targets strategic expansion beyond our existing TAM.
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 .
See Note 16 to our March 31, 2024 consolidated financial statements included in Item 8, Financial Statements and Supplementary Data, of this Form 10-K for more information on our matters involving litigation. Available Information Our internet address is www.cmco.com .
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.
The addition of Dorner has provided attractive complementary adjacencies to the Company. 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.
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.
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.
Our STAHL subsidiary brings market leadership with independent crane builders and EPC firms. The diverse end-users of our products are in a variety of industries including manufacturing, power generation and distribution, utilities, wind power, warehouses, commercial construction, oil and gas exploration and refining, petrochemical, marine, ship building, transportation and heavy-duty trucking, agriculture, logging and mining.
The diverse end-users of our products are in a variety of industries including manufacturing, power generation and distribution, utilities, wind power, warehouses, commercial construction, oil and gas exploration and refining, petrochemical, marine, ship building, transportation and heavy-duty trucking, agriculture, logging and mining.
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.
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.
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.
For fiscal 2024 and 2023, the Company had an overall safety incident rate of 0.71 and 0.69, respectively (number of injuries and illnesses multiplied by 200,000, divided by hours worked). • We are committed to embracing diversity, equity and inclusion and integrating it into our business.
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.
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.
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.
Inc and Arrowhead Systems, which was acquired by Regal Rexnord. Human Capital Management Headquartered in Charlotte, North Carolina, Columbus McKinnon’s global footprint includes offices, warehouses and manufacturing facilities in 25 countries across North America, Latin America, Europe, the Middle East, Africa and Asia. At March 31, 2024, we had 3,515 employees globally.
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").
Our products are used for mission critical applications where we have established, trusted brands that are well known in the industry. Our targeted market verticals include manufacturing, transportation including EV production and aerospace, 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 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.
In addition, we set the following objectives for fiscal 2024: • 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; • Further align with global reporting standards and increasing global regulatory requirements; and • Be more transparent with internal and external stakeholders through communications and public disclosures.
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.
We are making 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 ensuring a strong governance and risk management culture.
Our legacy Lifting business is cyclical in nature and sensitive to changes in general economic conditions, including changes in industrial capacity utilization, industrial production, and general economic activity indicators, like GDP growth. Both U.S. and Eurozone capacity utilization and the ISM Production Index are leading market indicators for our Company.
Our legacy Lifting business is cyclical in nature and sensitive to changes in general macro economic conditions, including changes in industrial capacity utilization, industrial production, and general macro economic activity indicators, like GDP growth.
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.
Trademarks that are important in identifying and distinguishing our products include, but are not limited to, Hammerloks™ and Herc-Alloy™. We also own domain names, including our website, www.cmco.com. 10 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 purchase most of these raw materials and components from a limited number of strategic and preferred suppliers under agreements that are negotiated on a Company-wide basis through our global purchasing group. 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.
We purchase most of these raw materials and components from a limited number of strategic and preferred suppliers under agreements that are negotiated on a Company-wide basis through our global purchasing group.
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.
Rotary unions are used in a variety of industries including pulp and paper, printing, textile and fabric manufacturing, rubber, and plastic. 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.
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.
Actuators are linear motion devices used in a variety of industries, including the transportation, paper, steel, energy, aerospace, and many other commercial industries. Rotary unions are devices that transfer a liquid or gas from a fixed pipe or hose to a rotating drum, cylinder or other device.
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.
While we sell primarily to original equipment manufacturers ("OEMs") of overhead cranes and hoists, we engage with end users to understand their needs and gain specification. We can combine our products with engineered services to provide complete customer-specific system solutions. We are also a leading independent supplier of AC and DC digital motion control systems for underground coal mining equipment.
We also recognize our corporate responsibility to advance our Environmental Social and Governance (“ESG”) efforts and to be held accountable for making progress.
One of our core values is “Win as a team” to specifically address embracing diversity. We also recognize our corporate responsibility to advance our Environmental Social and Governance (“ESG”) efforts and to be accountable for making progress.
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.
The Garvey acquisition added additional product capabilities as it is a leading accumulation systems solutions company providing unique, patented systems for the automation of production processes whose products complement those of Dorner.
High-precision conveying systems – Our fiscal 2022 acquisitions of Dorner and Garvey expanded our product offerings to include high-precision, specialty conveyor system solutions. These conveyor systems range from build to order modular standard systems to highly engineered customer solutions. These products offer customers high quality and reliable solutions that enhance productivity and profitability.
These conveyor systems range from build to order modular standard systems to highly engineered custom solutions. These products offer customers high quality and reliable solutions that enhance productivity and profitability. The Company’s most recent acquisition, montratec, provides asynchronous conveying solutions, which complements both Dorner and Garvey product offerings.
The Company’s people and the behaviors they display define our success, including integrity, respect and teamwork. Many of our material social factors, including Employee Health and Safety, Training and Development, Talent Recruitment and Retention, Diversity, Equity and Inclusion, and Community Involvement, are directly connected to our commitment to people and values.
The Company’s people and the behaviors they display define our success, including integrity, respect and teamwork. Many of our Human Capital Management priorities, including Occupational Health and Safety, Succession and People Development, Diversity and Equal Opportunity, and Local Communities, are directly connected to our commitment to people and values.
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.
Service-After-Sale Distribution Channel - Service-after-sale distributors include our authorized network of 22 chain repair service stations and over 229 certified hoist service and repair stations globally. This service network is designed for easy parts and service access for our large installed base of hoists and related equipment in that region.
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 have embedded diversity, equity and inclusion into the People and Values framework of the CMBS. We are committed to ensuring that we have an environment of inclusion. We launched a series of virtual training modules for employees that provides education around diversity, inclusion and unconscious bias.
The Dorner and Garvey acquisitions are examples of reimagining Columbus McKinnon’s core, which added an additional $5 billion to our TAM, with the specialty conveying microsegment growing at an estimated 6% to 8% rate annually.
The acquisitions of our conveyor businesses is an example of reimagining Columbus McKinnon’s core, which added approximately $5 billion to our TAM, with the specialty conveying microsegment growing at an estimated 6% to 8% rate annually. Business Description We design, manufacture, and distribute a broad range of material handling products for various applications.
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.
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. High-precision conveying systems – Dorner and Garvey expanded our product offerings to include high-precision, specialty conveyor system solutions.
The fiscal 2022 acquisitions of Dorner and Garvey expand our product offerings to include a broad range of highly engineered, precision conveying solutions. Our products are typically manufactured for stock or assembled to order from standard components, and are sold primarily through a variety of commercial distributors and, to a lesser extent, directly to end-users.
Our products are typically manufactured for stock or assembled to order from standard components and are sold primarily through a variety of commercial distributors and, to a lesser extent, directly to end-users. Our STAHL subsidiary brings market leadership with independent crane builders and EPC firms.
Actuators and Rotary Unions - Through our Duff-Norton and Pfaff brands, we design and manufacture industrial components such as mechanical and electromechanical actuators and rotary unions. Actuators are linear motion devices used in a variety of industries, including the transportation, paper, steel, energy, aerospace, and many other commercial industries.
Our systems are used in coal hauling vehicles, shuttle cars, scoops, and other heavy mining equipment. 7 Actuators and Rotary Unions - Through our Duff-Norton and Pfaff brands, we design and manufacture industrial components such as mechanical and electromechanical actuators and rotary unions.
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.
We also serve a niche market for the entertainment industry, including permanent and traveling concerts, live theater, and sporting venues. Our precision conveyance acquisitions expanded our product offerings to include a broad range of highly engineered, precision conveying solutions.
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. 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.
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. In fiscal 2024, the Company made significant progress reducing past-due backlog to more normal levels. In addition, fluctuations in backlog can reflect the project-oriented nature of certain aspects of our business.
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.
This furthers our shift to intelligent motion solutions and provides capabilities in advanced, higher technology automation solutions.
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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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In fiscal 2022, the Company initiated a new long-term strategy to transform from a legacy cyclical industrial company to a high growth, high margin secular growth company. The Company expanded into the precision conveyance sector with its acquisitions of Dorner Mfg. Corp. ("Dorner") and Garvey Corporation ("Garvey").
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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.
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The Company added asynchronous conveying technology in the precision conveyance sector in fiscal 2024 with its acquisition of montratec GmbH ("montratec"), a leading automation solutions company that designs and develops intelligent automation and transport systems for interlinking industrial production and logistics processes. montratec product offerings compliment the previous acquisitions of both Dorner and Garvey.
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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.
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Together, our acquisitions within the precision conveyance industry established a platform for growth organically as well as through further acquisitions as the industry is highly fragmented and offers complementary adjacencies, which we believe will enable further growth.
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Business Description We design, manufacture, and distribute a broad range of material handling products for various applications.
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Our Framework includes: 5 • 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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Products Of our fiscal 2023 sales, $569,215,000, or 61%, were U.S. and $367,025,000 or 39% were non-U.S.
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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. montratec’s principal markets include aerospace and electric vehicle production amongst others. 6 Products Of our fiscal 2024 sales, $574,843,000, or 57%, were U.S. and $438,697,000 or 43% were non-U.S.
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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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We recently announced that along with a strategic partner we have developed a cutting-edge battery hoist.
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We expect to close on this acquisition on May 31, 2023 subject to customary closing conditions.
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Combining our industry-leading hoist design with our partner's expertise in lithium-ion battery and brushless motor technology, the innovative BatteryStar™ hoist provides the lifting strength and speed of an electric chain hoist and the portability of a manual hoist without the need for time-consuming manual operation or access to a power source.
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We are also a leading independent supplier of AC and DC digital motion control systems for underground coal mining equipment. Our systems are used in coal hauling vehicles, shuttle cars, scoops, and other heavy mining equipment.
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The BatteryStar hoist has a 1-metric-ton lifting capacity with 20 feet of lift as standard and lifting speeds of 8 feet per minute. The hoist will be available for sale beginning in fiscal 2025. We also manufacture explosion-protected hoists and custom engineered hoists, including wire rope and manual and electric chain hoists.
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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.
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We are taking deliberate steps to fully integrate ESG into our enterprise strategy, our business system, and our daily actions.
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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.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFurther, 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.
Biggest changeThese 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. 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.
While we may attempt to recover the increased costs through price increases to our customers, we may be unable to mitigate the effect on our results of operations. We have also multi-sourced and pre-ordered components and raw materials inventory in some cases in an effort to reduce the impact of the adverse supply chain conditions we have experienced.
While we may attempt to recover the increased costs through price increases to our customers, we may be unable to mitigate the effect on our results of operations. We also have multi-sourced and pre-ordered components and raw materials inventory in some cases in an effort to reduce the impact of the adverse supply chain conditions we have experienced.
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.
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; our 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.
Reduced revenue as a result of decreased demand may also reduce our planned growth and otherwise hinder our ability to improve our performance in connection with our long-term strategy. Climate change, or legal, regulatory or market measures to address climate change, may materially adversely affect our financial condition and business operations.
Reduced revenue as a result of decreased demand may also reduce our planned growth and otherwise hinder our ability to improve our performance in connection with our long-term business strategy. Climate change, or legal, regulatory or market measures to address climate change, may materially adversely affect our financial condition and business operations.
We depend on various information technology systems throughout our Company to administer, store, and support multiple business activities, including to process the data we collect, store and use in connection with our business.
We depend on various information technology systems throughout the Company to administer, store, and support multiple business activities, including to process the data we collect, store and use in connection with our business.
Our information technology systems may be damaged or cease to function properly due to any number of causes, such as catastrophic events, power outages and security breaches (including destructive malware such as ransomware) resulting in unauthorized access or cyber-attacks.
Our information technology systems may be damaged or cease to function properly due to any number of causes, such as catastrophic events, power outages and security breaches (including destructive malware such as ransomware) resulting in unauthorized access or cyber-security attacks.
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.
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.
These laws and regulations continue to evolve, are increasing in complexity and number and increasingly conflict among the various countries in which we operate, which has resulted in greater compliance risk and cost for us.
These laws and regulations continue to evolve, are increasing in complexity and number and increasingly conflict among the various countries in which we operate, which has resulted in greater compliance risk for us.
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.
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 macroeconomic conditions, inflation, labor costs, competition, import duties, tariffs, and currency exchange rates. This volatility can significantly affect our raw material costs.
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.
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, cyber-security attacks 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.
These supply chain constraints and their related challenges could result in shortages, increased material costs or use of cash, engineering design changes, and delays in new product introductions, each of which could adversely impact our growth, gross margin and financial results. These types of negative financial impacts on our business may become more acute as supply chain pressures increase.
These supply chain constraints and their related challenges could result in shortages, increased material costs or use of cash, engineering design changes, and delays in new product introductions, each of which could adversely impact our growth, gross margins and financial results. These types of negative financial impacts on our business may become more acute as supply chain pressures increase.
Our industry is affected by changes in economic conditions outside our control, which can result in a general decrease in product demand from our customers. Such economic developments, like inflationary pressures in the U.S. and elsewhere, the China trade wars and the war in Ukraine may affect our business in a number of ways.
Our industry is affected by changes in economic conditions outside our control, which can result in a general decrease in product demand from our customers. Such economic developments, like inflationary pressures in the U.S. and elsewhere, the China trade wars, the war between Russia and Ukraine may affect our business in a number of ways.
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.
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. 16 Table of Contents Legal Risks Our products involve risks of personal injury and property damage, which exposes us to potential liability.
Many of the end-users of our products are in highly cyclical industries, such as manufacturing, power generation and distribution, commercial construction, oil and gas exploration and refining, transportation, agriculture, logging, and mining that are sensitive to changes in general economic conditions.
Many of the end-users of our products are in highly cyclical industries, such as manufacturing, power generation and distribution, commercial construction, oil and gas exploration and refining, transportation, agriculture, logging, and mining that are sensitive to changes in general macroeconomic conditions.
A delay in our ability to obtain components and equipment parts from our suppliers may affect our ability to meet our customers' needs and may have an adverse effect upon our profitability. General Risks Adverse changes in global economic conditions may negatively affect our industry, business, and results of operations.
A delay in our ability to obtain components and equipment parts from our suppliers may affect our ability to meet our customers' needs and may have a material adverse effect upon our profitability. General Risks Adverse changes in global economic conditions may negatively affect our industry, business, and results of operations.
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.
Our backlog can be significantly affected by the timing of orders for large projects, and the amount of our backlog at March 31, 2024 is not necessarily indicative of future backlog levels or the rate at which backlog will be recognized as sales.
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.
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.
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.
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 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.
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.
During an inflationary period, the cost 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.
This constrained supply environment has adversely affected, and could further affect, availability, lead times and cost of components and raw material, and has impacted, and could continue to impact, our ability to respond to accelerated or quick-turn delivery requests from customers, or meet customer demand and product delivery dates for our end customers where we cannot timely secure adequate supply of these components and raw materials.
This constrained supply environment has materially adversely affected, and could further materially adversely affect, availability, lead times and cost of components and raw material, and has materially impacted, and could continue to materially impact, our ability to respond to accelerated or 13 Table of Contents quick-turn delivery requests from customers, or meet customer demand and product delivery dates for our end customers where we cannot timely secure adequate supply of these components and raw materials.
We rely in large part on independent distributors for sales of our products. For the most part, we depend on independent distributors to sell our products and provide service and aftermarket support to our end-user customers.
We rely in large part on independent distributors for sales of our products. We depend on independent distributors to sell our products and provide service and aftermarket support to our end-user customers.
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.
These non-U.S. operations are subject to a number of special risks, in addition to the risks of our U.S. business, including but not limited to differing protections of intellectual property, trade barriers, labor unrest, geopolitical conflicts, exchange 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 15 Table of Contents widespread operations, differences in the availability, and terms of financing, political instability and risks of increases in taxes.
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.
Furthermore, the prices we are able to charge for our products and services are affected by a number of other factors, including: • general macroeconomic and political conditions; • our customers' desires to reduce their costs; • the competitive environment in our industry; • 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.
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.
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.
In addition, any acquisitions of businesses with foreign operations or sales may increase our exposure to risks inherent in doing business outside the United States. We intend to continue to seek additional acquisition opportunities in accordance with our acquisition strategy, both to expand into new markets and to enhance our position in existing markets throughout the world.
In addition, any acquisitions of businesses with foreign operations or sales may increase our exposure to risks inherent in doing business outside the U.S. We intend to continue to seek additional acquisition opportunities in accordance with our acquisition strategy, both to expand into new markets and to enhance our position in existing markets throughout the world.
Implementation of this strategy may increase the impact of the risks described above, and we cannot assure you that such risks will not have an adverse effect on our business, results of operations or financial condition.
Implementation of this strategy may increase the impact of the risks described above, and we cannot assure you that such risks will not have a material adverse effect on our business, results of operations or financial condition.
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.
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, 2024 was $281 million.
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.
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 $1,311,000 for the fiscal year ended March 31, 2024) or may necessitate the need to incur a bad debt reserve or an asset write-off related to our Russian operations.
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.
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 cyber-security attacks has increased.
You should carefully consider the risks described below, as well as the other information contained in this Annual Report on Form 10-K in evaluating your investment in us. The risks and uncertainties described below are those that we have identified as material, but are not the only risks and uncertainties facing Columbus McKinnon.
You should carefully consider the risks described below, as well as the other information contained in this Form 10-K in evaluating your investment in us. The risks and uncertainties described below are those that we have identified as material, but are not the only risks or uncertainties facing Columbus McKinnon.
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.
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 17 Table of Contents quantified and which could reduce our profits or have a material adverse effect on our financial condition, operations, or liquidity.
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.
Thus, a portion of our revenues (approximately $438,697,000 in our fiscal year ended March 31, 2024) 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.
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.
Our results of operations could be materially adversely affected 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 be materially adversely affected.
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.
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, and we incur meaningful costs complying with these laws.
Decreased capital and maintenance spending by these customers could have a material adverse effect on the demand for our products and our business, financial condition, and results of operations.
Decreased capital and maintenance spending by these customers has in the past and could in the future have a material adverse effect on the demand for our products and our business, financial condition, and results of operations.
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.
Each of our Term Loan B and Amended and Restated Revolving Credit Facility contains a financial leverage covenant, which will only be tested if any extensions of credit (other than letters of credit) are outstanding under the Amended and Restated Revolving Credit Facility at the end of any fiscal quarter, and other restrictive covenants.
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.
We depend on our management team and the loss of any member could adversely affect our operations. 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.
In our fiscal year ended March 31, 2023, approximately 39% of our net sales were derived from non-U.S. markets.
In our fiscal year ended March 31, 2024, approximately 43% of our net sales were derived from non-U.S. markets.
We have operations and assets located outside of the United States, primarily in China, Mexico, Germany, the United Kingdom, Hungary, Malaysia and Russia. I n addition, we import a portion of our hoist product line from Asia and sell our products to distributors located in approximately 50 countries.
We have operations and assets located outside of the U.S., primarily in Germany, the United Kingdom, Hungary, Russia, China, Malaysia and Mexico, including our new facility in Monterrey, Mexico. In addition, we import a portion of our hoist product line from Asia and sell our products to distributors located in approximately 50 countries.
There can also be no assurance that customers will continue to regard our products favorably, that we will be able to develop new products or product developments that appeal to customers, that we will be able to improve or maintain our profit margins on sales to our customers or that we will be able to continue to compete successfully in our core markets.
There can also be no assurance that customers will continue to regard our products favorably, that we will be able to develop new products or product developments that appeal to customers, that we will be able to improve or maintain our profit margins on sales to our customers or that we will be able to continue to compete successfully in our core markets. 12 Table of Contents Our growth strategy depends on successful integration of acquisitions.
Particularly, the markets for motors, computer chips, and other components are experiencing increased demand, creating substantial uncertainty regarding the availability of key components and raw materials used to manufacture our products. The COVID-19 pandemic has also contributed to and exacerbated these constraints.
Particularly, the markets for motors, computer chips, and other components are experiencing increased demand, creating substantial uncertainty regarding the availability of key components and raw materials used to manufacture our products.
Part of our strategy is to expand our worldwide market share and reduce costs by strengthening our international distribution capabilities and sourcing components in lower cost countries, such as China, Mexico, Hungary and Malaysia.
These factors may adversely affect our future profits. Part of our strategy is to expand our worldwide market share and reduce costs by strengthening our international distribution capabilities and sourcing components in lower cost countries, such as China, Mexico, Hungary and Malaysia, including through the use of our new facility in Monterey, Mexico.
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
We cannot assure you that we will be able to retain our existing management personnel or to attract additional qualified personnel when needed. The market price of our common stock may be volatile.
In addition, we could be adversely affected financially should we be judged to have infringed upon the intellectual property of others. We rely on subcontractors or suppliers to perform their contractual obligations. Some of our contracts involve subcontracts with other companies upon which we rely to perform a portion of the services we must provide to our customers.
We rely on subcontractors or suppliers to perform their contractual obligations. Some of our contracts involve subcontracts with other companies upon which we rely to perform a portion of the services we must provide to our customers.
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.
In addition, the cyclical nature of our business could at times also adversely affect our liquidity and ability to borrow under our Amended and Restated Revolving Credit Facility (as defined herein) and limits our ability to make accurate long-term predictions about the performance of the Company.
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.
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. 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.
Also, in some foreign jurisdictions, we may be subject to laws limiting the right and ability of entities organized or operating therein to pay dividends or remit earnings to affiliated companies unless specified conditions are met. These factors may adversely affect our future profits.
Any of these factors, individually or together, could have a material adverse effect on our business, financial condition, results of operations and cash flows. Also, in some foreign jurisdictions, we may be subject to laws limiting the right and ability of entities organized or operating therein to pay dividends or remit earnings to affiliated companies unless specified conditions are met.
Despite our training and compliance programs, we cannot assure you that our internal control policies and procedures always will protect us from reckless or criminal acts committed by our employees or agents. Our continued expansion outside the U.S., including in developing countries, could increase the risk of such violations in the future.
Despite our training and compliance programs, we cannot assure you that our internal control policies and procedures always will protect us from reckless or criminal acts committed by our employees or agents.
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.
See Note 16 to our March 31, 2024 consolidated financial statements included in Item 8, Financial Statements and Supplementary Data, of this Form 10-K. As indicated above, our self-insurance coverage is provided through our captive insurance subsidiary.
Furthermore, there is no guarantee that the current Russian invasion of Ukraine will not draw military intervention from other countries or further retaliation from Russia, which, in turn, could lead to a much larger conflict. If such escalation should occur, supply chain, trade routes and markets currently served by the Company could be adversely affected.
Furthermore, there is no guarantee that the current Russian invasion of Ukraine will not draw military intervention from other countries or further retaliation from Russia, which, in turn, could lead to a much larger conflict beyond its current geographic, political and economic scope.
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.
We had $175,000,000 available for borrowing under the Amended and Restated Revolving Credit Facility (before deducting approximately $15,368,000 of letters of credit outstanding as of March 31, 2024).
If we are unable to compete successfully against other manufacturers of material handling equipment and precision conveyors, we could lose customers and our revenues may decline.
In addition, through consolidation, some of our competitors have achieved substantially greater market penetration in certain of the markets in which we operate than we have been able to achieve. If we are unable to compete successfully against other manufacturers of material handling equipment and precision conveyors, we could lose customers and our revenues may decline.
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.
Moreover, we may not be able to timely meet these requirements due to the required level of capital investment or technological advancement.
Furthermore, cybersecurity threats are constantly expanding and evolving, becoming increasingly sophisticated and complex, increasing the difficulty of detecting and defending against them and maintaining effective security measures and protocols. We are also subject to a variety of laws and regulations in the United States, Europe and around the world, as well as contractual obligations, regarding data privacy, security and protection.
We are also subject to a variety of laws and regulations in the U.S., Europe and around the world, as well as contractual obligations, regarding data privacy, security and protection.
Low rates of unemployment in key geographic areas in which we operate may lead to high rates of turnover and loss of critical talent, which could in turn lead to higher labor costs.
Low rates of unemployment in key geographic areas in which we operate may lead to high rates of turnover and loss of critical talent, which could lead to higher labor costs. 14 Table of Contents Our ability to understand our customers’ specific preferences and requirements, and to develop, manufacture and market products that meet customer demand as we expand into additional international markets, could significantly affect our business results.
Certain competitors may also have the ability to develop product or service innovations that could put us at a disadvantage. In addition, through consolidation, some of our competitors have achieved substantially greater market penetration in certain of the markets in which we operate than we have been able to achieve.
Certain competitors may also have the ability to develop product or service innovations that could put us at a disadvantage. In addition to the general competitive challenges we face, international trade policies could negatively affect the demand for our products and services and reduce our competitive position in such markets.
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.
Failure to deliver quality products that meet customer needs at competitive prices ahead of competitors could have a significant adverse effect on our business. Financial Risks In connection with the completion of the Precision Conveyance acquisitions, our indebtedness has increased significantly. Our indebtedness could limit our cash flow available for operations and our flexibility.
Removed
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.
Added
There can be no assurance that historically improving cycles are representative of actual future demand.
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. 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.
Added
Our ability to match new product offerings to diverse global customers’ anticipated preferences for different types and sizes of equipment and various equipment features and functionality, at affordable prices, is critical to our success. This requires a thorough understanding of our existing and potential customers on a global basis.
Removed
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.
Added
In connection with the montratec acquisition, the Company entered into an Amended and Restated Credit Agreement increasing the size of the Revolving Credit Facility by $75,000,000 to a total of $175,000,000.
Removed
Federal Reserve Board and the Federal Reserve Bank of New York, has recommended the Secured Overnight Financing Rate (“SOFR”), a rate calculated based on repurchase agreements backed by treasury securities, as its recommended alternative benchmark rate to replace LIBOR.
Added
The Company subsequently borrowed additional funds in accordance with the Accordion feature under its existing Term Loan B facility to increase the principal amount of the Term Loan B facility by $75,000,000 in both fiscal years 2022 and 2024.
Removed
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.
Added
The Company also borrowed an additional $45,000,000 under a new credit agreement secured by the Company's U.S. accounts receivable balances (the "AR Securitization Facility").
Removed
The phase-out of LIBOR may negatively impact the terms of our outstanding indebtedness. In addition, the overall financial market may be disrupted as a result of the phase-out or replacement of LIBOR. Disruption in the financial market could have a material adverse effect on our financial position, results of operations, and liquidity.
Added
As of March 31, 2024, the outstanding principal balance of the Term Loan B facility was $477,560,000, which includes $75,000,000 in principal balance from the Accordion exercised in the first quarter of fiscal 2024 as described above.
Removed
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.
Added
If such escalation should occur, supply chain, trade routes and markets currently served by the Company could be adversely affected and other risks discussed in this Form 10-K may be exacerbated.
Removed
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.
Added
Our efforts to protect our intellectual property through patents, trademarks, service marks, domain names, copyrights, trade secrets and confidentiality agreements may not adequately protect us against infringements, and pending patent or trademark applications may not result in issued patents or trademarks.
Removed
Violations of these laws, or allegations of such violations, could disrupt our business and result in a material adverse effect on our results of operations or financial condition. We depend on our management team and the loss of any member could adversely affect our operations.
Added
Our patents, registered trademarks and patent applications, if any, may not be upheld if challenged, and competitors may develop similar or superior methods or products outside the protection of our patents. This could reduce demand for our products, reduce our market share and materially decrease our revenues.
Added
We may need to spend significant resources monitoring and enforcing our intellectual property rights and we may not be aware of or able to detect or prove infringement by third parties.
Added
The protection and enforceability of our intellectual property rights is also subject to uncertainty in certain countries where we operate that have less rigorous intellectual property protection laws than the U.S.
Added
In addition, we could be adversely affected financially should we be judged to have infringed upon the intellectual property of others, and we could be required to modify the design of our products, change the name of our products or obtain a license for the use of some of the technologies used in our products.
Added
For example, the SEC has adopted new climate change disclosure rules aimed at enhancing and standardizing climate change-related disclosures by public companies. If these new rules are 18 Table of Contents successfully implemented, our compliance costs could be significant. Further, our customers and the markets we serve may impose emissions reduction or other environmental standards and requirements.
Added
Furthermore, cybersecurity threats are constantly expanding and evolving and becoming increasingly sophisticated and complex, including attacks from highly organized adversaries such as nation state actors, thereby increasing the costs associated with our cyber-security defense measures and procedures and increasing the difficulty of detecting and defending against them and maintaining effective security measures and protocols.

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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, 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.
Biggest changeProperties We maintain our corporate headquarters in Charlotte, NC (a leased property) and, as of March 31, 2024, 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 Monterrey, Mexico Hoists 165,000 Leased 4 Lexington, TN Chain 164,000 Owned 5 Charlotte, NC Actuators and Rotary Unions 146,000 Leased 6 Menomonee Falls, WI Power control systems 144,000 Leased Tennessee forging operation: 7 Chattanooga, TN Forged attachments 81,000 Owned 8 Chattanooga, TN Forged attachments 59,000 Owned 9 Hartland, WI Precision Conveyors 125,000 Leased 10 Wuppertal, Germany Hoists and Precision Conveyors 124,000 Leased 11 Kissing, Germany Hoists, winches, and actuators 107,000 Leased 12 Dauchingen, Germany Automation Solutions 103,000 Leased 13 Damascus, VA Hoists 97,000 Owned 14 Hangzhou, China Hoists 82,000 Owned 15 Brighton, MI Overhead light rail workstations 71,000 Leased 16 Hammonton, NJ Accumulation Tables 58,000 Leased 17 Chester, England Plate clamps 56,000 Owned 18 Bayan Lepas, Malaysia Precision Conveyors 40,000 Leased 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 46 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. 20 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. 22 Table of Contents

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWe do not believe that any of our pending litigation will have a material impact on our business. We maintain comprehensive general product liability insurance against risks arising out of the use of our products sold to customers through our wholly owned New York State captive insurance subsidiary of which we are the sole policy holder.
Biggest changeWe maintain comprehensive general product liability insurance against risks arising out of the use of our products sold to customers through our wholly owned New York State captive insurance subsidiary of which we are the sole policy holder.
These 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.
These limits range from $2,000,000 to $6,000,000 for each policy year from inception through fiscal 2024. 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, 2023 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, 2024 consolidated financial statements included in Item 8, Financial Statements and Supplementary Data, of this Form 10-K for more information on our matters involving litigation.
Added
In April of fiscal 2025, a trial involving a product liability claim against us resulted in a jury verdict demanding us to pay approximately $3,000,000 in damages. We along with our attorneys believe we will be successful in overturning this verdict and that payment of the damages is not probable.
Added
As such we have not accrued the damages at March 31, 2024. We do not believe that any of our pending litigation will have a material impact on our business.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeOur 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.
Biggest changeOur Amended and Restated Credit Agreement allows for the declaration and payment of dividends, subject to specified limitation as set forth in our Amended and Restated Credit Agreement. We expect to continue to pay dividends in fiscal 2025 consistent with our historical amounts.
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.
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, 2024 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, 2024 — $ — — February 1 - 29, 2024 — $ — — March 1 - 31, 2024 — $ — — 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.
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.
The comparison of total return assumes that a fixed investment of $100 was invested on March 31, 2019 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.
There 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.
There were no repurchases made in the quarter ended March 31, 2024. 24 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.
As of March 31, 2023, approximately $19 million of shares of common stock of the Company remains available repurchase under the current authorization plan.
As of March 31, 2024, approximately $19 million of shares of common stock of the Company remains available repurchase under the current authorization plan.
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.
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, 2024, there were 330 holders of record of our common stock. During fiscal 2024, the Company declared quarterly cash dividends totaling $8,055,000.
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.
On March 18, 2024, the Company's Board of Directors declared a regular quarterly dividend of $0.07 per common share. The dividend was paid on May 13, 2024 to shareholders of record as of May 3, 2024 and totaled approximately $2,020,000.

Item 7. Management's Discussion & Analysis

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

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Biggest changeThe 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.
Biggest changeThe fiscal 2024 increase in gross profit of $32,739,000 or 9.6% is the result of the $28,987,000 of price increases net of material inflation, $13,828,000 in gross profit as a result of the acquisition of montratec, $946,000 due to favorable sales mix and $904,000 of decreased product liability costs offset by $12,087,000 of other manufacturing cost changes, $3,294,000 of start up costs for our new Monterrey, Mexico facility and $346,000 of current year business realignment costs.
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.
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 U.S. state net operating losses prior to their expiration.
Regardless of the economic climate and point in the economic cycle, we constantly explore ways to increase operating margins as well as further improve our productivity and competitiveness. We have specific initiatives to reduce quote lead-times, improve on-time deliveries, reduce warranty costs, and improve material and factory productivity.
Regardless of the economic climate and point in the economic cycle, we constantly explore ways to increase operating margins as well as further improve our productivity and competitiveness. We have specific initiatives to reduce lead-times, improve on-time deliveries, reduce warranty costs, and improve material and factory productivity.
We also proceed to the quantitative model when economic or other business factors indicate that the fair value of our reporting units may have declined since our last quantitative test.
We also proceed to the quantitative model when economic or other business factors indicate that the fair value of our reporting units may have declined since our last quantitative impairment test.
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.
For a discussion of our results of operations for fiscal 2023 compared to fiscal 2022, 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, 2023, which was filed with the SEC on May 25, 2023.
We maintain a strong North American market share with significant leading market positions in hoists, lifting and sling chain, forged attachments, actuators, and digital power and motion control systems for the material handling industry.
We maintain a strong North American market share with significant leading market positions in hoists, lifting and sling chain, forged attachments, actuators, precision conveyors and digital power and motion control systems for the material handling industry.
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.
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 the reporting unit's current business, expected developments and operational strategies over a seven-year period.
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.
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, Financial Statements and Supplementary Data, of this Form 10-K.
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.
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 the reporting unit reflects management’s assumptions of marketplace participants’ cost of capital and risk assumptions, both specific to the reporting unit and overall in the economy.
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.
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.
CAPITAL EXPENDITURES In addition to keeping our current equipment and plants properly maintained, we are committed to replacing, enhancing and upgrading our property, plant and equipment to support new product development, improve productivity and customer responsiveness, reduce production costs, increase flexibility to respond effectively to market fluctuations and changes, meet environmental requirements, enhance safety and promote ergonomically correct work stations.
CAPITAL EXPENDITURES In addition to keeping our current equipment and plants properly maintained, we are committed to replacing, enhancing and upgrading our property, plant and equipment to support new product development, improve productivity and customer 28 Table of Contents responsiveness, reduce production costs, increase flexibility to respond effectively to market fluctuations and changes, meet environmental requirements, enhance safety and promote ergonomically correct work stations.
These rates reflect our estimate of long-term growth into perpetuity and approximate the long-term gross domestic product growth expected on a global basis as well as our normal annual price 28 Table of Contents increases. The estimated weighted-average cost of capital for the reporting units was determined to be 13.2% for the Precision Conveyance reporting unit.
These rates reflect our estimate of long-term growth into perpetuity and approximate the long-term gross domestic product growth expected on a global basis as well as our normal annual price increases. The estimated weighted-average cost of capital was determined to be 13.2% for the Precision Conveyance reporting unit.
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.
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 $710,334,000 as of March 31, 2024 is subject to impairment testing.
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.
Our principal raw materials and components purchases were approximately $396 million in fiscal 2024 (or 62% of Cost of product sold) and include steel, consisting of rod, wire, bar, structural, and other forms of steel; electric motors; bearings; gear reducers; castings; steel and aluminum enclosures and wire harnesses; electro-mechanical components; and standard variable drives and controls.
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.
The tax rate was also unfavorably affected by non-deductible compensation and U.S. taxes on foreign earnings, which increased the rate by 2 percentage points each. LIQUIDITY AND CAPITAL RESOURCES Cash, cash equivalents, and restricted cash totaled $114,376,000 and $133,426,000, at March 31, 2024 and 2023, respectively.
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.
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 13.0% for the Precision Conveyance reporting unit.
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.
We believe that our cash on hand, cash flows, and borrowing capacity under our Amended and Restated Credit Agreement will be sufficient to fund our ongoing operations and debt obligations, and capital expenditures for at least the next twelve months. This belief is dependent upon successful execution of our current business plan and effective working capital utilization.
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.
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.
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.
Investment income of $1,759,000 and $315,000, in fiscal 2024 and 2023, 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, 2024 consolidated financial statements.
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.
The translation of foreign currencies had a $3,756,000 favorable impact on gross profit for the year ended March 31, 2024. Selling expenses were $105,341,000 and $102,528,000, or 10.4% and 11.0% of net sales in fiscal years 2024 and 2023, respectively.
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.
We believe this will transform Columbus McKinnon into a top-tier intelligent motion solutions company. 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 43% derived from customers outside the U.S. for the year ended March 31, 2024.
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.
Excluded from fiscal 2024 capital expenditures is $690,000 and $624,000, in property, plant and equipment purchases included in accounts payable at March 31, 2024 and 2023, respectively. We expect capital expenditure spending in fiscal 2025 to range from $20,000,000 to $30,000,000.
The compound annual growth rate for revenue during the first seven years of our projections was approximately 9.82% for the Precision Conveyance reporting unit. This reflects the higher expected growth rates on our conveyor business compared to our other businesses. The terminal value was calculated assuming a projected growth rate of 3.0% after seven years.
This reflects the higher expected growth rates on our precision conveyor business compared to our other businesses. The terminal value was calculated assuming a projected growth rate of 3.0% after seven years.
Even with such changes, the fair value of the reporting unit would be greater than its net book value as of February 28, 2023, therefore indicating no impairment. We further test our indefinite-lived intangible asset balance of $46,338,000 consisting of trademarks for acquisitions prior to fiscal 2023 on an annual basis for impairment.
Even with such changes, the fair value of the reporting unit would be greater than its net book value as of February 29, 2024, therefore indicating no impairment. We further test our indefinite-lived intangible asset balance of $46,254,000 consisting of trademarks for acquisitions prior to fiscal 2024. Similar to goodwill, we first assess various qualitative factors in the analysis.
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.
Foreign currency exchange resulted in a loss of $1,826,000 and a gain $2,189,000 in fiscal 2024 and 2023, respectively. This unfavorable change was due to the strengthening of the U.S. Dollar in comparison to the Euro and other currencies where our businesses operates. Other expense was $7,597,000 in fiscal 2024 and other income was $2,072,000 in fiscal 2023.
For example, a decline in the terminal growth rate by 50 basis points would decrease fair market value by $9,300,000 and an increase in the weighted-average cost of capital by 50 basis points would result in a decrease in fair market value by $16,600,000 for the Precision Conveyance reporting unit.
For example, a decline in the terminal growth rate by 100 basis points would decrease fair market value by $24,800,000, an increase in the weighted-average cost of capital by 75 basis points would result in a decrease in fair market value by $33,500,000, and an annual decrease in gross profit of 200 basis points would result in a decrease in fair value of $23,100,000 for the Precision Conveyance reporting unit.
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.
To date, we have raised prices to our customers to cover these increased raw material costs and are working with our supply base to prioritize shipments and improve availability of key components. 26 Table of Contents We operate in a highly competitive and global business environment.
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.
Income tax expense as a percentage of income from continuing operations before income tax expense was 24.2% and 35.0% in fiscal 2024 and 2023, 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.
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.
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, construction and infrastructure, life sciences food and beverage, e-commerce and consumer products.
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.
On May 31, 2023, the Company completed its acquisition of montratec GmbH ("montratec"), a leading automation solutions company that designs and develops intelligent automation and transport systems for interlinking industrial production and logistics processes. montratec product offerings compliment the previous acquisitions of both Dorner and Garvey, and these acquisitions are collectively expected to accelerate the Company’s shift to intelligent motion solutions and serve as a platform to expand capabilities in advanced, higher technology automation solutions.
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.
No material restrictions exist in accessing cash held by our non-U.S. subsidiaries. We expect to meet our funding needs with cash provided by our U.S. operations, as well as by repatriating non-U.S. cash. We do not expect to incur significant incremental U.S. taxes as we repatriate funds.
This 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.
This was partially offset by a decrease in trade payables of $4,748,000. In addition, non-current liabilities decreased by $8,760,000. The decrease in non-current liabilities primarily consists of $9,454,000 in cash paid for amounts included in the measurement of operating lease liabilities in fiscal 2024.
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.
We have three reporting units, Linear Motion Products (formerly referred to as Duff-Norton), Rest of Products and Precision Conveyance, and have goodwill totaling $9,699,000, $304,760,000, and 395,875,000, respectively, at March 31, 2024. montratec, which was acquired in fiscal 2024 has been included in the Precision Conveyance reporting unit. 29 Table of Contents 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.
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.
Cash flow from operating activities Net cash provided by operating activities was $67,198,000 and $83,636,000 in fiscal 2024 and 2023, respectively. In fiscal 2024, net income of $46,625,000 and non-cash adjustments to net income of $57,928,000 were the largest contributors.
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.
Amortization of intangibles were $29,396,000 and $26,001,000 in fiscal 2024 and 2023, respectively, with the increase related to amortization of new intangible assets acquired in the montratec acquisition. Interest and debt expense was $37,957,000 and $27,942,000 in fiscal 2024 and 2023, respectively. The increase is related to higher interest rates, as well as increased borrowings to finance the montratec acquisition.
In accordance with our strategic framework, we are building out our business system ("CMBS") and growth framework to be market-led, customer-centric, and operationally excellent with our people and values at the core. We believe this will transform Columbus McKinnon into a top-tier Intelligent Motion Solutions company.
We developed our leading market position over our 149-year history by emphasizing technological innovation, manufacturing excellence and superior customer service. In accordance with our strategic framework, we are building out our business system ("CMBS") and growth framework to be market-led, customer-centric, and operationally excellent with our people and values at the core.
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.
Fiscal 2024 Compared to Fiscal 2023 Fiscal 2024 sales were $1,013,540,000, an increase of 8.3%, or $77,300,000 compared with fiscal 2023 sales of $936,240,000. Sales for the fiscal year were positively impacted by price increases of $33,837,000 as well as $32,584,000 of incremental sales from the montratec acquisition. Offsetting these increases was $469,000 in decreased sales volume.
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.
As a percentage of consolidated net sales, research and development expenses were 2.6% and 2.2% in fiscal 2024 and 2023, respectively. The increase in research and development expenses was due to additional spending to achieve strategic goals related to new product development.
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 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. 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.
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.
Accordingly, we did not perform the quantitative goodwill impairment test for the Rest of Products and Linear Motion Products reporting units during fiscal 2024. Quantitative Test for the Precision Conveyance Group In order to perform the quantitative impairment test for the Precision Conveyance reporting unit, we used the discounted cash flow method to estimate fair value.
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.
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. Founded in 1875, we have grown to our current size and leadership position through organic growth and acquisitions.
Future changes in these estimates and assumptions could materially affect the results of our goodwill impairment tests.
The quantitative test results indicate that the Precision Conveyance reporting unit is not impaired as its fair value exceeds its book value by 6%. Future changes in these estimates and assumptions could materially affect the results of our goodwill impairment tests.
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.
Cash flow from financing activities Net cash provided by financing activities was $48,201,000 in fiscal 2024 compared to net cash used for financing activities of $49,987,000 in fiscal 2023. The most significant source of cash was $120,000,000 in gross proceeds from the issuance of long-term debt, which was used to fund the montratec acquisition.
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.
These increases were offset by a $1,230,000 adjustment in the prior year for the Garvey acquisition contingent consideration which did not recur. Foreign currency translation had a $711,000 unfavorable impact on general and administrative expenses for the year ended March 31, 2024. Research and development expenses were $26,193,000 and $20,935,000 in fiscal 2024 and 2023, respectively.
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
We performed the qualitative assessment as of February 29, 2024 and determined that it was not more likely than not that the fair value of each of our indefinite-lived intangible assets was less than its applicable carrying value. 30 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, Financial Statements and Supplementary Data, of this Form 10-K. 31 Table of Contents
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.
Cash flow from investing activities Net cash used for investing activities was $133,364,000 and $13,932,000 in fiscal 2024 and 2023, respectively. In fiscal 2024, the most significant uses of cash in investing activities was $108,145,000 of cash used for the purchase of montratec on May 31, 2023. Additionally, the Company used $24,813,000 in capital expenditures.
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.
The translation of foreign currency had a favorable impact of $11,348,000. Gross profit was $374,838,000 and $342,099,000 or 37.0% and 36.5% of net sales in fiscal 2024 and 2023, 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.
General and administrative expenses were $106,760,000 and $94,794,000 or 10.5% and 10.1% of net sales in fiscal 2024 and 2023, respectively.
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.
Selling expenses increased $6,426,000 as a result of the montratec acquisition offset by a decreases in net business realignment costs, which did not recur for $3,807,000, and lower employee costs of $1,157,000 as a result of the prior year business realignment. Foreign currency translation had a $1,055,000 unfavorable impact on selling expenses.
EXECUTIVE OVERVIEW The Company is a leading worldwide designer, manufacturer and marketer of intelligent motion solutions, including motion control products, technologies, automated systems and services, that efficiently and ergonomically move, lift, position and secure materials. Our key products include hoists, crane components, precision conveyors, actuators, rigging tools, light rail workstations, and digital power and motion control systems.
EXECUTIVE OVERVIEW Columbus McKinnon Corporation ("Columbus McKinnon" or the "Company") is a leading worldwide designer, manufacturer and marketer of intelligent motion solutions that move the world forward and improve lives by efficiently and ergonomically moving, lifting, positioning and securing materials.
Removed
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.
Added
Currently, as a result of global inflation, we are experiencing higher raw material costs and availability issues for select raw materials and components.
Removed
The acquisitions of Dorner and Garvey accelerate the Company’s shift to intelligent motion.
Added
RESULTS OF OPERATIONS The following discussion is a comparison between fiscal 2024 and fiscal 2023 results.
Removed
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.
Added
The increase in general and administrative expenses was due to the acquisition of montratec which added $3,586,000 in expenses, net increases of $2,595,000 for acquisition and deal integration costs, an increase in stock-based compensation of $2,171,000, an increase of $1,596,000 for the new Monterrey, Mexico facility and an increase in net business realignment costs of $1,084,000.
Removed
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.
Added
During fiscal 2024, the Company terminated both of its Canadian pension plans and began the process to terminate one of its U.S. pension plans. For the U.S. 27 Table of Contents plan, lump sum payments were made to eligible participants who elected to receive them. Both of these actions resulted in a settlement charge of $4,984,000.
Removed
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.
Added
Further as discussed in Note 17, the increase in expense is also related to an income tax refund which will be paid to the former owners of STAHL, as agreed to in a tax indemnification agreement, as it relates to a tax period prior to the acquisition date.
Removed
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.
Added
Of the non-cash adjustments, $45,945,000 was depreciation and amortization and $12,039,000 was stock-based compensation offset by $15,285,000 of deferred income taxes and related valuation allowance. Net working capital increases reduced operating cash flows by $29,132,000, which included an increase of $14,428,000 in accounts receivable, a $9,583,000 decrease in accrued liabilities and an increase in prepaid expenses and other of $8,555,000.
Removed
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.
Added
This was offset by $60,604,000 in debt repayments, $8,044,000 in dividend payments and $2,859,000 in fees paid to secure the new debt borrowings. Associated cash flows from hedging activities are classified as financing activities in the Statement of Cash Flows, which resulted in a net cash inflow of $1,370,000.
Removed
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.
Added
As of March 31, 2024, $64,103,000 of cash and cash equivalents were held by foreign subsidiaries.
Removed
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.
Added
Our capital expenditures for fiscal 2024 and 2023 were $24,813,000 and $12,632,000, respectively. This increase in capital expenditures during fiscal 2024 was related to the establishment of a machining center of excellence in Mexico.
Removed
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.
Added
We performed the qualitative assessment as of February 29, 2024 and determined the quantitative test should be performed for the Precision Conveyance reporting unit as the businesses in this reporting unit were recently acquired resulting in a relatively small difference between the reporting unit's book and fair value.
Removed
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.
Added
We performed sensitivities and other analysis and determined that goodwill is not impaired as of March 31, 2024 for the Precision Conveyance reporting unit.
Removed
Please refer to Note 3 of the financial statements for additional information related to the montratec acquisition.
Added
The qualitative assessment as of February 29, 2024 for the Rest of Products and Linear Motion Products reporting units determined it was not more likely than not that the fair value of the reporting units were less than their applicable carrying value.
Removed
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).
Added
If, after completing this assessment, it is determined that it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying value, we proceed to a quantitative impairment test.
Removed
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
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.
Removed
The estimated weighted-average cost of capital for the reporting unit was determined to be 11.8% for the Rest of Products reporting unit. This was estimated based upon an analysis of similar companies and their debt to equity mix, their related volatility and the size of their market capitalization.
Removed
We also consider any additional risk of the Rest of Products reporting unit achieving its forecast, and adjust the weighted-average cost of capital applied when determining the reporting unit’s estimated fair value. Future changes in these estimates and assumptions could materially affect the results of our goodwill impairment tests.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

10 edited+1 added−1 removed11 unchanged
Biggest changeThese 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.
Biggest changeThese 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.
With 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.
With our fiscal year 2017 acquisition of STAHL, we have an increased presence in the United Arab Emirates, with total assets of approximately $6,280,000. 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.
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.
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 $6,450,000 on our income from operations. In addition, the majority of our export sale transactions are denominated in U.S. dollars.
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.
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 2024, 43% of our net sales were from manufacturing plants and sales offices in foreign jurisdictions.
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.
From its March 31, 2024 balance of AOCL, the Company expects to reclassify approximately $148,000 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.
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.
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 two interest rate swap agreements currently outstanding in which the Company receives interest at a variable rate and pays interest at a fixed rate.
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.
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, 2024, the notional amount of these derivatives was $7,590,000, and all contracts mature by March 31, 2025.
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.
From its March 31, 2024 balance of AOCL, the Company expects to reclassify approximately $71,000 out of AOCL during the next 12 months based on the expected sales of the goods purchased.
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.
As of March 31, 2024, the notional amount of this derivative was $93,910,000, 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.
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
From its March 31, 2024 balance of AOCL, the Company expects to reclassify approximately $5,644,000 out of AOCL, and into interest expense, during the next 12 months. 33 Table of Contents
Removed
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.
Added
The amortizing interest rate swaps mature by February 28, 2025 and April 30, 2028 had a total notional amount of 32 Table of Contents $346,434,000 as of March 31, 2024.

Other CMCO 10-K year-over-year comparisons