Columbus McKinnon drops debt to $71.9 million, repurchases $3 million of 8 7/8% notes in third quarter

By Jennifer Lanning Drey

Portland, Ore., May 22 - Columbus McKinnon Corp. decreased net debt by $16.9 million in the fourth quarter of fiscal 2008 and ended the period with net debt of $71.9 million, Karen Howard, chief financial officer of the company, said during its fourth-quarter earnings conference call held Thursday.

The company redeemed $3 million of its 8 7/8% notes during the quarter, she said.

"While our strategy emphasizes profitable sales growth with international expansion, it continues to include a focus on debt and interest expense reduction to further improve our profitability and provide capital structure stability," Howard said.

The company ended fiscal 2008 with $63.8 million available under its $75.0 million revolving credit facility, with the outstanding portion representing $11 million of letters of credit and no borrowings on the revolver.

"Ultimately, we're targeting a 30% debt-to-capitalization ratio with an investment-grade rating," Howard said.

Columbus McKinnon's fourth-quarter cash flow from operating activities was $21.6 million, up by 18% for the quarter and 31% for the year.

The company had cash and cash equivalents of $76.0 million at March 31, up from $48.7 million on the same date in 2007.

In addition to planning to apply cash toward debt repayment, the company is actively seeking acquisition targets and opportunities to further organic growth, Timothy Tevens, chief executive officer of Columbus McKinnon, said during the call.

When asked whether the company would consider a paying a dividend in the future, Tevens said, "I think it's fair to say that we will consider all forms of use for our cash including cash dividends or stock buybacks. Right now, however, we're focused on acquisitions - we're working very diligently in that area - as well as investments in the organic business."

Univeyor brings down earnings

Columbus McKinnon posted net income of $8.4 million for the fourth quarter, representing a decrease of 24% from the prior-year first quarter. The company attributed the lower earnings to losses in its Univeyor operation, which Columbus McKinnon is working to divest.

Univeyor, the company's European material handling systems business, experienced higher costs during the quarter, which caused it to break its previous trend of improving operating results, Howard said.

Columbus McKinnon continues to expect to have unloaded the Univeyor business by the end of the summer.

"Despite the fourth quarter difficulties, Univeyor is still considered a valuable asset, especially to many strategic players in the industry. In fact, we have many strategic and potential buyers currently in the sale process," Tevens said.

Columbus McKinnon is an Amherst, N.Y.-based designer and manufacturer of material handling products.

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