Columbus McKinnon drops debt balance by $52.3 million in fiscal third quarter

By Jennifer Lanning Drey

Portland, Ore., Jan. 24 - Columbus McKinnon Corp. reduced net debt by 11.8% during the third quarter of fiscal 2008, taking the company's total net debt balance down to $88.8 million, Karen Howard, the company's chief financial officer, reported during a quarterly earnings conference call held Thursday.

The decrease represents a $52.3 million reduction and lowered Columbus McKinnon's net debt-to-total capitalization ratio to 24.1%.

"Ultimately we're targeting a sustained 30% to 40% debt-to-total capitalization ratio with an investment-grade rating to give us flexibility to support our growth strategy, which will include strategic bolt-on acquisitions regardless of the point in the economic cycle," Howard said.

The company will look for bolt-on acquisitions that will provide entry in new markets, including foreign markets, or add to its product portfolio.

International markets currently represent approximately 35% of the company's total revenue, but that figure is likely to be closer to 50% "in the not too distant future," chief executive officer Timothy Tevens said during the call.

At the same time, the company intends to continue applying free cash flow toward reducing debt, Tevens said.

During the fiscal third quarter, Columbus McKinnon reported net cash provided by operating activities of $14.1 million.

The company said demand from targeted markets was strong during the quarter and is expected to continue.

At the Dec. 30 quarter end, the company had $63.6 million available under its $75 million revolver. The amount represented $11.4 million of outstanding letters of credit and nothing drawn against the revolver, according to Howard.

Better owners for Univeyor

Though looking to grow internationally, Columbus McKinnon said it is in the process of pursuing strategic alternatives for its European material handling systems business, Univeyor.

Univeyor has dramatically improved under Columbus McKinnon's restructuring of the unit; however it is still not operating at acceptable levels, Tevens said.

"We have spent a considerable amount of time and diligence in studying this business and have concluded that there are better owners for Univeyor," Tevens said.

The company expects to announce details of a transaction by the summer, he said.

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

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