Greetings. And welcome to the Columbus McKinnon Corp. -- Corporation Fourth Quarter Fiscal Year 2023 Financial Results. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Deborah Pawlowski, Investor Relations for Columbus McKinnon. Thank you. You may begin.

Thank you, Latonia, and good morning, everyone. We certainly appreciate your time today and your interest in Columbus McKinnon. Joining me here for the quarterly conference call are David Wilson, our President and CEO; and Greg Rustowicz, our Chief Financial Officer. You should have a copy of the third quarter fiscal -- fourth quarter fiscal 2023 financial results, which we released earlier this morning, as well as the slides that will accompany our conversation today. If not, they are available on our website at investors.columbusmckinnon.com. David and Greg will provide their formal remarks. After which we will open the line for questions. If you will turn to slide two in the deck, I will review the Safe Harbor statement. You should be aware that we may make some forward-looking statements during the formal discussion, as well as during the Q&A session. These statements apply to future events that are subject to risks and uncertainties, as well as other factors that could cause actual results to differ materially from what is stated here today. These risks and uncertainties and other factors are provided in the earnings release, as well as with other documents filed by the company with the Securities and Exchange Commission. You can find those documents on our website or at sec.gov. During today’s call, we will also discuss some non-GAAP financial measures. We believe these will be useful in evaluating our performance. However, you should not consider the presentation of this additional information in isolation or as a substitute for results prepared in accordance with GAAP. We have provided reconciliation of non-GAAP measures with comparable GAAP measures in the tables that accompany today’s release and slides. So, with that, please advance to slide three and I will turn the call over to David to begin. David?

Thanks, Deb, and good morning, everyone. We ended fiscal 2023 on a strong note, setting annual records for sales, gross margin, operating income and adjusted EPS. On a constant currency basis, we grew the business by 7% and greater than 4% organically in fiscal 2023. Our strong results reflect the effort of our Columbus McKinnon team as they execute to improve the customer’s experience, drive greater productivity and advance our strategy. We capped off the year delivering better-than-expected fourth quarter revenue and a new quarterly revenue record of $254 million. In addition to growing operating income by 14%, we generated a record level of cash from operations in the quarter of $67 million. Our strong cash flow enabled us to pay down over $40 million of debt in the year and we ended Q4 with a 2.2 times net debt leverage ratio on a bank covenant basis. This position of financial strength exemplifies the strong cash generation capabilities of our business and our commitment to quickly delever following acquisitions. It also supports further investment in organic and inorganic growth initiatives. Let’s review a few initiatives that illustrate how we are unlocking the potential of our business and building a significantly upgraded less cyclical and more powerful Columbus McKinnon. If you’ll turn to slide four, I’ll update you on our digital enablement strategy. This strategy is critical to improving customer experience, enabling growth, increasing productivity and increasing returns. We are streamlining processes, applying technology, expanding analytics and enabling scale and productivity. These digital tools make it easier for our customers to interact and do business with us. They also capture intelligence that leads to better identification of opportunities, enhanced communication and customer engagement and service level improvements. We are attacking this from one end of our business processes to the other,…

Thank you, David. Good morning, everyone. Turning to slide eight. We delivered record sales in the fourth quarter of $253.8 million, up 1.8% from the prior year period on a constant currency basis and above the high end of the guidance we provided last quarter. We are working hard to improve our customer experience and we are pleased that we were able to reduce past due backlog by 25% or $10 million from last quarter’s level. Looking at our sales bridge, pricing gains of $14.5 million or 5.7% accelerated as we converted orders to revenue at more current prices. This was up 20 basis points from our Q3 level. Volume decreased by $9.9 million or 3.9% and foreign currency translation reduced sales by $4.2 million or 1.7% of sales. Let me provide a little color on sales by region. For the fourth quarter, we saw a modest growth of 0.3% in the U.S., which was driven by a 6.3% improvement in pricing. Sales volume was down 6%. This was largely due to a decision we made to forego year-end promotions, so we could focus on reducing our past due backlog. Outside of the U.S., sales grew 4.1% on a constant currency basis, pricing improved by 4.9% and sales volume decreased modestly by 0.8%. We were encouraged with the volume increases we saw in certain regions outside of Europe, the Middle East and Africa. We recorded volume gains of approximately 16% in Canada, 12% in Asia and 9% in Latin America. Volumes declined 7% in EMEA. Our short-cycle business in EMEA saw volume gains, but this was more than offset by a slowing in our project business with the exception of our rail business, which had certain projects shift from Q3 to Q4, which we mentioned last quarter. Quoting activity remains…

Thanks, Greg. Turning now to orders, which increased 14% sequentially in Q4 as demand remains solid across several end markets. We saw strength in the quarter, which came from oil and gas, transportation, metals processing and entertainment. Excluding the impact of FX, orders for the quarter were $250.6 million. We remain encouraged by the activity in our pipeline and while there is still a level of caution with respect to customers releasing large orders, there’s a lot of excitement regarding the opportunities within our targeted end markets. We believe that last year’s slightly elevated order levels reflected an element of demand that was associated with the post-pandemic recovery and was influenced by supply chain constraints and longer lead times. Backlog remains strong and as supply chain constraints are easing, past due backlog is down to just under 10% of total backlog. Short-term backlog, which is backlog expected to ship in the next quarter, represents 70% of our expected fiscal 2024 first quarter revenue. In the quarter, we also settled a $10 million order cancellation request with a large e-commerce customer, which resulted in an $8 million cash settlement. This had no impact on our fiscal 2023 income statement. We are working closely with this customer as they manage through shifting priorities and we remain very encouraged by the innovative work that is underway and the many opportunities ahead of us as we continue to collaborate with this customer. If you’ll turn to slide 17, I’ll wrap up my prepared remarks before we open the line for questions. As I noted earlier, we are executing to achieve our strategic plan outcomes and expect to deliver $1.5 billion in revenue and greater than 21% adjusted EBITDA margins in fiscal 2027. We are encouraged by the opportunity landscape, which given the macro backdrop and all we are operate -- we are all operating within. We expect first quarter fiscal 2024 sales of about $235 million to $240 million, montratec is included in this number -- this range but is expected to have a nominal contribution in the quarter. For fiscal 2024, we’re planning for sales growth in the low-to-mid single digits as we address steady demand across our end markets, execute our commercial initiatives and secure key wins. To drive organic growth, we’ve been advancing our customer experience and investing in new product development. NPD N-3 revenue for fiscal 2023 was $47.4 million or 5.1% of revenue and this represented a year-over-year growth of 17% for this metric. We’re focused on earning greater market share, identifying new opportunities for our technologies and investing in innovation. Looking further ahead, we expect to make measurable steady progress toward our strategic plan objectives over the next several years as we unlock our potential to transform Columbus McKinnon into a top-tier intelligent motion solutions enterprise. Latonia, we’re now ready to open the line for questions.

Thank you. Our first question comes from Matt Summerville with D.A. Davidson. Please proceed.

Thanks. You guys had mentioned that unlike normal fiscal year-end, you did not conduct the same level of promotional activity that you normally would otherwise kind of whittle down the backlog, which obviously makes logical sense. Is there any way to sort of quantify what impact that may have had in the quarter on revenue orders and backlog?

Yeah. Matt, I think, that would probably be given historical trends, somewhere on the order of maybe $10 million.

Okay. And then, as a follow-up, if you remove that kind of one-time noise if we want to call it that, how would you characterize inbound order tempo in particular in North America versus Europe as you progressed through the quarter and then also thus far in April and May?

Sure. Sure. So inbound orders were particularly robust in Europe in the fourth quarter, particularly in our short-cycle areas. So they’re up to really all-time highs in the fourth quarter in Europe. And in the Americas, we had a pretty reasonable level of demand that was consistent throughout the quarter. As we head into this quarter, we are seeing typical seasonality play out, and so typically, we’d see a 10% or so reduction sequentially as you had from Q4 into Q1 and orders are tracking more or less to that level. But, again, in Europe, they’re coming off an all-time high peak in Q4 and still moderating by only that typical amount we usually see. And then as you think about broader project orders, we’re really encouraged by the pipeline and the funnel. And although those are lumpy and tough to build into a daily order rate, we’re encouraged by the opportunity landscape and where we stand with those order opportunities.

Thank you, David.

Thanks, Matt.

Our next question comes from Jon Tanwanteng with CJS Securities. Please proceed.

Hi. Good morning. It’s Pete Lukas for Jon. You guys were able to cover a lot in the prepared remarks. Just going back to -- you talked about delevering. If you could kind of talk about your plans for cash allocation there and what you’re seeing in terms of M&A out there and how you think about that versus delevering?

Yeah. So I’ll take the first part of this. So in terms of what we expect to use our free cash flow that we generate, we’re right now targeting $40 million of debt repayment, not including a capital lease that we acquired with the Dorner acquisition in fiscal year 2024, and obviously, we’ll be continuing with our regular dividend payments, which amount to about $8 million. But to the extent that we can overdrive free cash flow, we’ll look to increase the amount of debt that we pay down just given the high interest rates and the negative carry that exists right now with holding cash versus -- and won’t be a non-holding cash versus what we pay from an interest expense perspective.

And Pete, I’ll pick up with that. This is David on the question regarding the M&A landscape and how we think about capital allocation. We’re laser focused on executing the transaction that’s right in front of us. So we’re going to close the montratec deal at the end of this month and we’ll be focused on integrating them and gaining the synergies that we believe are possible by bringing the businesses together and really executing to deliver on our strategic commitments over the next year, which are more organic, given that we’re completing this acquisition at the beginning of the year than they are acquisitive. But we do have a programmatic approach to M&A. We’re going to keep our funnel active and stay engaged to pay attention to the opportunities that are out there with their primary focus on debt repayment in the year and executing to deliver on the integration and synergy value of the M&A program, as well as the organic growth and margin expansion initiatives.

Great. And then I guess just last one for me. Where are you in the product consolidation effort and how long will it take to update all the product lines that you are targeting?

Yeah. So we’re making great progress on that. I think you saw that in the chart from the prepared documents that we have made a significant improvement in the rationalization efforts, reducing SKU counts materially to our current state, but you can see on that same chart that there’s still work to do. And so we’ve got platforming initiatives that are driving the majority of the improvement over the coming year to two years, and over that period, we expect to substantially complete the remainder of that activity.

Very helpful. Thanks. I’ll jump back in the queue.

Okay. Thanks, Pete.

Thank you. Our next question comes from Steve Ferazani with Sidoti. Please proceed.

Good morning, Dave. Good morning, Greg. In terms of your outlook for fiscal 2024 and mid -- low-to-mid single-digit growth. When I think about book-to-bill being under 1 times the last three quarters and the fact that really, it’s pricing, it’s driven topline. Can you help us out in thinking about how you view with book-to-bill trending this way, how you get even modest growth next year? Is that just given the significant size of current backlog or changes in demand trends you’re expecting?

Yeah. Steve, I think, we’re going to see continued strength in the market opportunities that we are pursuing. We’ve got a really robust set of pipeline opportunities the team is excited about. And so we do see the market supporting the level of order activity that gets us to those outcomes. We also, as you know, when you cited in the latter part of your question, have a robust backlog and that’s elevated above historic levels on the order of approximately $100 million. And so when you think about the availability of that incremental backlog, as well as the order trends, and we are in our assumptions, assuming a moderating level of demand throughout the year that’s consistent with a soft landing approach. But that still enables us to achieve that low-to-mid single-digit organic growth rate and then montratec on top of that.

When I think about that outlook, how -- can you give us a sense of how much you think of that is pricing versus volume and where are pricing trends now with inflation appearing to temper a little bit?

Yeah. So we do see material inflation moderating and we expect that it’s probably going to be in the neighborhood of $15 million to $17 million, down from about $24 million this past year. So I think we’re going back to a more normal pricing environment. And as an example, in our U.S. businesses, we have price increases announced for June 15th in the 3% to 7% range, which is a more normal level, I would say. And around the world, we have also implemented price increases in kind of a similar range. So last year was really unusual with the rapid material inflation that in a number of our products, we had up to three price increases and we don’t anticipate that, that’s going to be the case this year.

Okay. But, so if you’re implementing the 3% to 7%, you can get to low-to-mid single-digit growth on flattish type volume. Is that fair?

Yeah. Assuming constant cost…

Yeah.

Constant currency.

Right. Right.

Yeah. Okay.

Okay.

Yeah.

Perfect. And just on the CapEx, can you provide a little bit more color on, obviously, that’s -- I know that some of your original CapEx plans in the year we just finished were pushed out because of ability to get crews and equipment. But can you just give a sense on what’s part of that $30 million to $40 million coming this year?

Yeah. Most of it is related to equipment that’s going to improve the productivity of our factories. We’re laser focused on driving gross margins to 40% plus and our historical CapEx has been in the $15 million range, but we have been focused on this over the past year and it’s just taken longer with lead times from material CapEx suppliers. But we -- our anticipation is that we will be improving buying newer equipment, modernizing our factories, simplifying our factories, looking at a center of excellence that will become a world-class machining centers. And we think there’ll be a very good payback on that and it’s necessary for us to organically move our gross margins, as well as our EBITDA margins.

Great. Thanks, David. Thanks, Greg.

Thanks, Steve.

We have another question that’s coming from Walt Liptak with Seaport Research. Please proceed.

Hi. Thanks. Good morning, guys.

Good morning, Walt.

I want to ask about slide two and sometimes when you’re going through the product line simplification and there’s a headwind to revenues. So I wonder if it’s possible to quantify as you reduce SKUs of products that aren’t moving or lower margin or whatever, does it have an impact on the revenue line and have you quantified that?

Yeah. We would typically see and based on our experience, as well as what we know from people who are -- do this for living, as you could expect maybe a 1% decline in volume. But remember, while these are all leaders and it’s actually a business that you really don’t want. And as we design our new products, we’re building better, more cost-effective products with more features that people can choose. So they’re not required to buy a product that maybe is over specked for what they need and so we think that, that will, in essence, mitigate a little bit of that revenue decline. So we’re not really anticipating much headwind in terms of us getting to our -- and actually no headwind in getting to our $1.5 billion target as a result of PLS and we think it’s a necessary step once again to drive our gross margins.

I’d just add, Walt, we’re doing a lot of work around voice of the customer and making sure that as we platform and simplify, we’re getting features and solutions that are going to be upgrades to where current products situate and actually give us growth potential, because of how those new products can serve the market more broadly in the way that they’re configured and platform. So we are mindful of that and we’re okay to say could buy a certain business where the rationalization results in that outcome, but we’re also thinking there’s going to be an opportunity to offset that with growth in other areas, more problem...

Okay. Great. Yes. Yeah. Sounds great. And then on the backlog, you guys talked about or in the Q&A, you talked about $100 million. Is that where you -- is that normal backlog if you can get $100 -- lowered by $100 million?

Yeah. We’d be more to normalized levels historically for the legacy business as we get that down by about $100 million. That’s correct.

Okay. Great. And then maybe just two really quick ones for me and one is probably obvious to everybody. But the guidance range for revenue, is that including montratec or is that -- or have you -- is not taking guidance basically?

No. Well, montratec is additive to the mid -- low-to-mid single-digit numbers.

For the annual growth.

For the annual growth. Our Q1 guide is inclusive of montratec, but montratec’s contribution will be nominal as it relates to them being picked up for one month and our ramp there.

Okay. Great. So it’s in the one month in the first quarter but not in the full year guide, correct?

Correct. That’s correct.

Okay. Great. And then the -- I wonder if you could just provide a little bit more detail about the $10 million order in the e-commerce…

Yeah.

E-commerce customers and just, I guess, why that happened maybe that’s obvious as well. But and where you’re starting to see some offsets to it.

Right. So let me start off and then I’ll hand it over to Greg to comment further on some of the details. But the relationship we have with that customer is excellent and strong -- as strong as it’s ever been. We had a past program that we’ve been working with them on and we kind of run out of runway on that given shifting investment priorities that they were facing and they had a large set of orders still on our books that they wanted to cancel and so we got into a discussion about how we settle that and Greg can talk to the details of the settlement and how we achieve those outcomes. But what I’ll tell you is that as we go forward, we’re really encouraged by the collaborative work we’re doing with that customer and the opportunity that we have as we go forward. For orders that will -- for multiple programs and each program be potentially equivalent to the kind of volume that we’ve seen historically from the one program that we were working on. And so we think there’s an opportunity to do, as well as that program, but then across multiple programs as we go forward. And we’re also taking the opportunity to expand our position in the market with a broader base of potential customers and opportunities. So really encouraged with the way things sit and really engaged in a positive way with the customer at this point. And Greg, if you can fill in the…

Yeah.

… details on the back.

Sure, David.

Back.

So the relationship is complex in that we are working with an integrator. So the e-commerce company. We work directly with them to spec product and build prototypes and -- but, ultimately, the orders run through an integrator and so this was a complex kind of situation. But at the end of the day, we received cash of $7.6 million at the end of the fiscal fourth quarter. This -- and we agreed to also cancel backlog that was placed in fiscal 2022 for $10 -- a little over $10 million. So we’ve taken it out of the backlog. We did not net it against the orders because those orders were not received in our fiscal 2023. And this -- there is the option to buy a certain amount of product that they have a fixed amount of time to do so over a little over a year from now. And once -- and as they place orders for existing or for new AMRs, we’ll record revenue and profits. So the cash payment we received did not roll through the P&L at all and in the balance sheet of the customer deposit sitting in accrued liabilities. So at the end of the day, we thought it was a fair and equitable solution, because we had made commitments to buy certain amounts of inventory that we were holding and this covers us completely, and as we ship additional units to them, albeit at a much significantly lower level than historical levels, we will recognize normal margins on that product.

Yeah. And that’s associated with that legacy program, but the new programs are a step up from that. And just to confirm, we are working directly with that customer’s R&D team to spec these solutions in that ultimately get fulfilled through their manufacturing or integration partner. But while we feel encouraged by the ability to -- in the face of the need to cancel an order get this kind of an outcome and I think that -- this negotiated settlement speaks to the strength of the relationship that we have with that customer and the value that we place on one another.

Okay. Great. Yeah. Thanks for the detail and the clarification. Appreciate it.

Perfect.

And I just -- I guess, to answer that question a little bit further, as it relates to Dorner more broadly, I think, it’s important to get it out that the Dorner business is performing very well independent of this Amazon adjustment. And so when you think about it on a normalized basis, they’re going to see double-digit growth again this year. They’re in a position where the business is performing as we would have expected it to and providing an aperture of opportunities that are pretty significant as they continue to execute their strategy, as they diversify channels, as they expand into more life science and e-commerce applications. And so I think just to make sure that it’s clear everyone the business is performing very well.

Thank you. At this time, there are no further questions in queue. I would like to turn the floor back over to Mr. David Wilson for closing comments.

Great. Thank you, Latonia. And thank you to everybody for joining us today on the call. We’re really proud of the results that we have delivered over the last year and even more excited about our future. We’re delivering record-breaking results, executing our plan to transform the company into a top-tier intelligent motion solutions enterprise and we’re making steady measurable progress toward our strategic plan objectives. I hope we all have a wonderful day and look forward to speaking to you again soon. Thanks.

This does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation and have a great day.